REPORTER'S NOTEBOOK: Smart Card Forum: Growing Pains in Year Six
Kutler, Jeffrey, American Banker
Warts and all, the Smart Card Forum tried valiantly again last week to bring some sense and order to an increasingly frustrating struggle for market acceptance.
The occasion was the sixth annual meeting of the forum, which was born into an abundance of optimism fueled by a worldwide membership drawn from banking, government, telecommunications, entertainment, retailing, and the high-technology community.
The membership remains ample, at around 200 organizations and growing, and there are pockets of optimism about plastic cards powered with computer chips instead of the outmoded magnetic stripes still prevalent on credit cards and similar devices. But those most evident pockets tend to be not in the United States and not necessarily driven by the banks and payment associations that were expected to seize the day in the early 1990s.
So when a predominantly American sampling of the smart card community, with healthy financial industry representation, gathers 400 strong as it did last week at the Smart Card Forum session in San Francisco, more souls are searched and more dirty laundry aired than at the typical, formulaic business conference.
"We have the Internet, which has meant an explosion of innovation in this country," said a technology company executive, exasperated because smart cards have not yet found a role in on-line commerce and security.
The Smart Card Forum commissioned a survey from Find/SVP showing 31% of North American adults to be "potential early adopters." It was, on its face, an encouraging result, but forum president William J. Barr had no choice but to characterize it as "just the beginning" of an industry's education. And he vowed to focus the forum more on consumer and policymaker education as well.
Charles House, vice president at Dialogic Corp. after 30 years with Hewlett-Packard Co., reported results of a survey of people in the high- tech circles in which he travels. Many of the 48 people were in the dark about smart cards; the overall, unsurprising conclusion was "they are not there yet."
Tom Kippola, managing partner of Chasm Group, an influential Silicon Valley consulting firm, said classic "chicken and egg" problems are festering unresolved.
Chasm Group, which takes its name from the technology evolution book "Crossing the Chasm" by Geoffrey Moore, advises innovators to focus on "compelling reasons to buy." But after spending most of a day leading what was supposed to be an edifying brainstorming session with about 15 Smart Card Forum leaders and invited guests, Mr. Kippola sounded lost at sea.
"If there were applications with compelling reasons to buy, I didn't hear them," Mr. Kippola said in a panel discussion recounting the group effort.
"Reality was reflected in the process," said Mr. Barr, who is director of information networking at Bellcore, Morristown, N.J.
Hatim Tyabji, the retired chief executive officer of Verifone Inc. and a bona fide payment systems visionary, was appropriately upbeat for a keynote speaker and smart-card true believer.
He ticked off numerous inroads by the technology-national chip card rollouts in Sweden and Holland, sizable shopper loyalty programs in Australia and Brazil, and, in the United States, major commitments by the military, other government agencies, colleges and universities, sports facilities, and the Rite-Aid pharmacy chain.
Mr. Tyabji said he is convinced that smart cards are about to explode because of the prevalence of the Internet and generational and demographic shifts that will change all aspects of service delivery. He predicted "the automated teller machine as we know it (will be) obsolete" as cash is loaded via electronic channels onto chip cards.
"Electronic commerce, albeit embryonic, is clearly happening." Earlier assumptions were wrong, he said, because e-commerce is "not in isolation" from conventional forms. Rather, "the physical and virtual worlds are blurring. …