Visa International has begun working with General Instrument Corp. to make smart cards compatible with cable television set-top boxes.
The companies announced an agreement last month to incorporate the Visa Open Platform technology in General Instrument's broadband digital network system.
General Instrument, known as GI, claims the largest share of the set-top market, which has long shown an interest in smart cards as potential customer identification, authentication, and payment devices.
Set-top boxes are examples of "thin client" devices tied to networks that could help spread electronic commerce capabilities to a mass audience, perhaps abetted by smart card slots. But the dearth of chip cards in the United States means that the card-readiness of certain appliances-such as Microsoft Corp.'s WebTV terminals-is not taken advantage of.
General Instrument committed itself to putting smart card readers into advanced interactive set-tops with built-in cable modems. It has already shipped two million digital boxes without smart card slots.
The Horsham, Pa., company said cable operators have requested smart card capabilities in high-end systems.
"Most cable operators are convinced that it's valuable and are willing to commit to the smart card," said Denton Kanouff, GI's vice president of marketing for digital network systems.
"The demand for smart card cable-tops is going to increase over the next five or six years," he said, "as more and more compelling applications require the use of smart cards."
Visa and GI plan to jointly develop prototypes and run market tests. GI would provide the digital set-tops and network systems, while Visa would ensure that systems process payments and other smart card applications.
The smart card boxes, which cost $400 apiece, are scheduled for availability by midyear. They would allow users to simultaneously watch television, surf the Internet, and make a voice phone call.
Smart cards could be used in paying for movies, doing home banking and shopping, getting electronic coupons, and controlling TV-program access.
"The smart card slots give (the set-tops) that much more functionality and value," Mr. Kanouff said.
Set-tops, personal computers, digital assistants and laptops, and mobile telephones are all regarded as promoters of smart card distribution. In November, the European Telecommunications Standards Institute said it would use the Visa Open Platform as the basis for a specification on remote loading of card applications on GSM phones. The GSM standard requires a chip to authenticate the subscriber.
"Visa's interest is in fundamentally ensuring that there are standards in the industry across a multitude of devices," said Linda Kasper, vice president of emerging technologies at Visa in San Francisco.
Dale Reistad, a veteran bank technology consultant who is chairman and chief executive officer of Finsys International in Alexandria, Va., said companies are "now taking this (smart card) combination seriously."
"It's not a new idea, but now the time is right," he said. "Any time Visa, MasterCard, American Express, or Discover get behind something like this, then it's likely to burst forth in a short time frame."
Mr. Kanouff said GI is in talks with other financial organizations as well, but its first signed agreement is with Visa.