Visa's plan to launch a huge stored-value card project in Atlanta in time for next summer's Olympic Games far eclipses any other smart card initiative yet announced in the United States.

Three southeastern banks, working with Visa International and several technology partners, plan to issue more than one million cards, to be accepted by more than 5,000 merchants by mid-1996 for small purchases.

The banks - First Union Corp., NationsBank Corp., and Wachovia Corp. - expect eventually to bring smart cards, which are embedded with a computer chip, to other locales throughout the Southeast.

"We are taking a leadership position and working to bring banking services of the 21st century to our customers today," said Fred Winkler, senior vice president and head of First Union's card products division.

The potential market for stored-value cards is immense, according to Visa statistics. The San Francisco-based card association said consumers spent $450 billion in cash purchases in the United States in 1994. What's more, 83% of surveyed consumers said they would use the cards instead of cash.

First Union's plans for the stored-value card are by far the most ambitious of the three banks in the Atlanta alliance.

The Charlotte, N.C.-based bank has signed up several technology partners, including Diebold Inc. and BellSouth Telecommunications Inc., to embark on what it hopes will be a trend-setting role in the industry.

The $77 billion-asset bank plans to offer two versions of the stored value card: disposable and reloadable.

The disposable cards will be similar to other stored-value cards. Once their value is depleted, they may be discarded. NationsBank and Wachovia will also offer disposable cards.

It is with the reloadable card, however, that First Union plans to diverge from the other two banks. The bank intends to reissue 300,000 automated teller machine cards to its customers in the Atlanta area by next summer; the new cards will have ATM/debit functionality as well as the stored-value feature.

First Union asked Diebold to retrofit its 128 ATMs in the Atlanta area to make the units smart card capable.

Also, the bank teamed up with BellSouth, which plans to market specially designed screen phones that consumers can use to add value to their cards. BellSouth also agreed to install public phones in the Atlanta region that can be used to add value to the cards.

A Wachovia spokesman said that while the Winston-Salem, N.C.-based bank also intended to reissue its ATM cards, it was not yet ready to discuss details, pending review of technical specifications.

The Atlanta alliance is more ambitious than any other planned smart card rollout in the United States, including an Electronic Payment Services Inc. launch scheduled for later this year. EPS will initially issue 50,000 cards in two zip code areas in Delaware, with some 150 merchants expected to participate.

MasterCard International, which has been engaged in a long battle with Visa for smart card dominance, said that it would announce a pilot smart card program next week.

Visa's involvement and support are viewed as crucial to the success of the Atlanta rollout, according to spokesmen for the three participating banks. Visa will be working closely with merchants - both those that already accept some sort of card-based payment method and those that do not - to convince them of the feasibility of the smart card.

Merchants will, however, be required to install a new smart card reader in order to accept the cards - a potential roadblock that may stall acceptance of the cards.

Visa plans to cite research that shows merchants would derive benefits such as immediate payment for goods; increased sales, time savings in handling, sorting, and replenishing coins; reduced cashier handling errors; and less potential for employee theft.

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