Magazine article American Banker

Tech Scene: Smart Card Issuers Flexing Their Muscles

Magazine article American Banker

Tech Scene: Smart Card Issuers Flexing Their Muscles

Article excerpt

Interesting fact: U.S. merchants are being told that by 2003, most if not all U.S. credit cards will have microprocessor chips on them (as well as magnetic stripes), and that retailers who install more secure point of sale terminals -- meaning ones that can take smart cards -- will get breaks on interchange.

Moreover, Visa and MasterCard continue to work closely with the major computer manufacturers, and are coaxing more promises that all new keyboards will come with smart card slots.

The funny thing is that as smart card technology inches toward ubiquity, most U.S. consumers are blissfully unaware of it. Even people with smart cards in their wallets usually have no idea that those cards are any different from standard credit cards. They got the smart cards for a favorable rate, an appealing look, or some other reason, but not for the chip, which so far can do precious little.

The card industry's growing success in pushing smart cards into the market may have little to do with the technology and much to do with the marketing campaigns and introductory strategies that have made these cards fashionable and desirable.

Now that a critical mass of cards is out there (neither the card-issuing companies nor the associations will estimate the number of people who carry them), the industry has the clout to demand compliance from computer makers and merchants.

For long-suffering smart card believers, there is a certain poetic justice to these developments.

In the mid-1990s, payment card executives thought smart cards would catch on in the United States because consumers would want them. The pilots that banks set up were supposed to be fun for consumers: Spectators at the 1996 Atlanta Olympics could buy chicken sandwiches with stored value cards featuring pretty pictures of athletes; residents of Manhattan's Upper West Side got sleek smart cards with LCD screens and readers to use at local merchants. …

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