Visa International announced the launch last week of a major smart card project in the Shibuya district of Tokyo.

The program, related to a previous modernization initiative called Smart Commerce Japan, would involve issuance over the next 18 months of up to 100,000 Visa Cash cards.

More than 2,000 merchant locations will participate in an active shopping and entertainment area, including department stores, cinemas, restaurants, convenience stores, pharmacies, electronics stores, and vending machine operators.

"This is the next step beyond a pilot or a trial," said Gaylon Howe, senior vice present of Visa International. "It is a very widespread and major commitment of credit card, banking, and technology partners."

The San Francisco-based card association initiated the 18-month Smart Commerce Japan pilot in Kobe, Japan, last October, which tested the combination of cash and credit functions on a single card.

In six months, Kobe cardholders loaded the equivalent of $640,000 on the nearly 25,000 Visa Cash cards issued. Purchases totaling $520,000 were made on credit cards.

Mr. Howe said Kobe indicated a broad acceptance of chip cards by consumers, and now Visa is going "to a real-world implementation" with reloadable, disposable, and dual-function credit-cash cards.

Visa said it will add in September Visa Cash cards with magnetic stripes for use in automated teller machines not adapted for chip cards. Loyalty applications are also likely to be tested.

The program is overseen by a consortium, the Shibuya Smart Card Society, consisting of 10 major commercial banks, including Bank of Tokyo-Mitsubishi and Sumitomo; 10 credit issuers such as Credit Saison and Nippon Shinpan; and 25 technology vendors, including card and device manufacturers.

Jerome Svigals, a smart card consultant based in Redwood City, Calif., said he sees Japan as crucial to Visa's smart card ambitions in Asia.

"The whole Asia market has huge potential and Visa is trying to maintain its stature against MasterCard," Mr. Svigals said. MasterCard, in a regional partnership with Hongkong and Shanghai Banking Corp., is pushing the Mondex electronic cash system.

In China, Mr. Svigals said, there are at least six major smart card programs with about 100 million cards in the market.

Mr. Svigals said Japan is fertile ground because it is a cash-oriented economy. "There are no checks in Japan, and the percentage of people who have credit cards is still under 25%."

Visa wants to lead the way in providing "a bank in the pocket" for cardholders, said Daniel R. Eitingon, president of global support services. Shibuya "is an important milestone in the global migration to smart cards."

Mr. Svigals noted the program lacks an on-line commerce element. Mr. Howe said some participants may later consider incorporating the technology in home banking or other Internet activities.

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