Visa International and two major European electronic purse operators on Monday announced an agreement to make their systems compatible.

Visa and the two European organizations - Zentraler Kredit Ausschuss in Germany and Sermepa in Spain - have more than 50 million cards in the market.

"We are developing a common and open electronic purse specification that encompasses the whole system, end to end," said Gaylon Howe, senior vice president of Visa International in San Francisco.

Visa said that this year it will publish standards that will "pave the way for worldwide interoperability of electronic purse schemes." Any smart card organization could license the product, Visa said.

Daniel Cunningham, president and chief executive officer of the Smart Card Industry Association, called Visa's news "a major step toward cooperation" in smart card standards.

"For cards to be ubiquitous and interoperable, there has to be a consolidation," Mr. Cunningham said. "I think we will see a lot more of this."

Many smart card systems do not "talk" to one another. Though a user of MasterCard International's Mondex system could use his or her card at any location that accepts Mondex, the same is not true of Visa Cash. Nor, until this deal is consummated, are Visa Cash cards usable in the systems of Visa's European partners.

ZKA, which represents the German banking industry, operates the Geldkarte scheme. Sermepa, the technology subsidiary of Visa Espana, represents more than 150 financial organizations and operates the world's largest Visa Cash program.

Even in the New York City smart card pilot on the Upper West Side - in which Citibank and Chase Manhattan Bank are testing the Visa Cash and Mondex systems side by side - back-office functions are processed separately, Mr. Howe said. The system seems interoperable only to the consumer, he said.

Monday's interoperability announcement "goes well beyond what was done in New York," Mr. Howe said.

Mr. Howe said Visa will adopt the new specifications for all its implementations worldwide and will invite any organization to join it. Two that will adopt the specifications when they are published are SSB, an Italian smart card operator, and a consortium of Swedish banks.

Rival Mondex would be unlikely to jump on Visa's bandwagon. But Cynthia Bengier, director of strategy and product management for Mondex USA, said any move toward interoperability is good news.

"We would certainly be interested in talking with Visa about the right solution," she said.

"Interoperability is something we believe in - in Europe or globally," said Gerry Hopkinson, head of corporate affairs for Mondex International in London. But that "doesn't mean to say we have to have the same product" as Visa.

"It is too early to get into the game of promoting one system," Mr. Hopkinson said. "Merchants are perfectly able to cope with different schemes, and they need to have the opportunity to choose a system in order to promote healthy competition."

Visa said its specifications will let cardholders do business in multiple currencies, including the euro, which is scheduled to be introduced in Europe next year.

"Currency conversion is very expensive," said Jerome Svigals, an electronic banking consultant in Redwood City, Calif.

"If you start in Scotland with $100 and you go through the 14 EU countries without spending anything, the value would be zero at the end because of conversion costs."

A card with the capabilities Visa describes could bring "a great reduction in cross-border complexity," Mr. Svigals said.

Visa is said to be pursuing an investment in Proton, the Belgian smart card program with five million cardholders. Mr. Howe said Visa is "in conversations with a lot of the electronic purse organizations" and that a deal with Proton might make sense.

He said there is "a lot of synergy" between Visa Cash and Proton, because Proton is "an accountable system" with a track record in European communities.

Mr. Howe added, "We are in talks with anyone who will talk to us."

Jon Prideaux, senior vice president of new products for the Visa European Union region in London, told Interfinances, a conference in Paris last week, to expect "some far-reaching announcements" by Visa and others supporting open and interoperable smart card technology.

Only hinting about what was in the offing, Mr. Prideaux said companies were coming together in philosophical agreement on open standards and in disagreement with Mondex's alleged "proprietary" approach. The open approach, he said, could create some compatibility among the growing number of national electronic purse programs in Europe.

Proton's technology is the basis for many of them.

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