To the Editor:

I'm a believer in the smart card's eventual role, but for Jerome Svigals to describe it as "an engine of profitability" (Comment, May 14, page 17) seems the height of hyperbole.

Consider these few points:

* Banks are already enjoying interchange income from most of the merchant categories mentioned, and new ones are being added.

* If the card can be such an attractive advertising medium (and I believe it can), should not banks be using it to advertise themselves?

* It sounds democratic, but from a banking system standpoint it is hard to argue that more consumer credit be extended further down the income spectrum.

* With present credit and debit cards being used for transactions of only a few dollars, smart cards might incrementally be addressing coins rather than currency.

Some supporters of smart cards view them as a marketing program rather than a technbology that must be marketed. Smart cards can help in establishing customer relations, but they are not necessarily a relationship product. That's determined by branding and marketing.

So, to build on Mr. Svigals' note that wars are too important to be left to the generals, (smart card decisions) are also too important to be left to the technologists.

Joseph E. Wallace

Director, System B Division,

Chicago

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