Smart cards start to experience growth in U.S. markets.
Because of the many benefits they offer to many different markets, smart cards have enjoyed immense popularity worldwide—and are finally beginning to see some action in the United States.
"Smart cards can store great amounts of information—information that can be both accessed and rewritten," noted Jerry Sumner, regional sales manager for Arthur Blank & Company in Boston. "There can be interaction between the system and the information on the chip at a much higher level than with a bar-coded or magnetic stripe card."
Schlumberger's Simera Airflex smart card, used in mobile communications, is transferable between smart mobile phones.
Because of these benefits, more market segments are smartening up and starting to utilize the cards. "We're seeing some traction in the financial trade, with a thrust toward giving people increased security and functionality for shopping on the Web," said Sumner. "The American Express Blue program has been successful in this country and it is leading the way for other programs."
Thomas Tang, the manager of partners and associates in North America and Canada, for Austin, Texas-based Schlumberger, noted that smart card sales have increased in many other American markets as well, including large corporations and biometrics.
"Large corporations are starting to issue the cards to employees for access to doors, sensitive information and e-mail," he said. "Smart cards are also being used in combination with fingerprint recognition and retinal scans to identify a person through biometrics."
With its passing of the GSA smart card initiative, one market that is sure to see growth is the government, noted Gary Funck, vice president of marketing for IDenticard Systems in Lancaster, Pa. "Over the course of the next 10 years, all government employees will have a smart card that they'll use for various reasons, such as building access control and entry to secure computer networks," he explained.
Another growing market for smart cards is telecommunications—specifically cellular service providers. Tang explained that soon a person will be able to walk into the store of Company A and sign up for service. The company will provide a smart card to be inserted into the phone. If the customer is not satisfied with the service, the card can be removed and the customer can go to another service while keeping the same phone.
What's the Hold-Up?
Considering all of markets that could benefit from smart cards, why has the U.S. taken so long to start utilizing them? Sumner believes it is because of two major obstacles—the number of chip standards available and the lack of infrastructure to read the chips. "I think people are holding off until the standards are set and there are one or two platforms to choose from instead of four or five," he said.
The cost in restructuring systems to read the chips also attributes to the cards' slow-arriving popularity. "Some people are estimating the cost to retool the entire retail infrastructure in North America at $2 billion," Sumner said.
And the expenses don't stop there. "Once you start working with the chip, with its storage and processing capabilities, your back-end systems and your networking have to be more sophisticated," added Sumner. "Retailers will really need to see some significant benefits before making the investment in smart card reader infrastructure."
Funck thinks that the real key to selling smart cards is to sell the applications—or how the cards will be used—but that the problem lies within the need to customize these applications.
"We can't just give customers a smart card with multiple applications right away," he noted. "In most cases, the applications have to be customized for each card—meaning we have to design the software for each specific end-user for the different applications they want." This customization process leads to additional cost and production time.
Once standard applications are developed, Funck said, smart card popularity will grow even more as their cost and production time will decrease. Tang believes that once people become aware of the benefits that smart cards have to offer, they will buy into them.
U.S. Within Two Years
"The rest of the world has gotten over the first step, which is awareness. We're confident the United States will do so as well," he noted. "In the next two years, everyone in the country will either be exposed to smart cards or have one of their own."
Aside from the basic knowledge distributors should have when making a smart card sale—including what the card will be used for and in which markets it will be used—there is also some technical knowledge that they should have.
First, be aware of the difference between contact and contactless cards. Contact cards must be inserted into a reader, whereas contactless cards need only a close proximity to the reader.
Sumner noted that contact cards are most popular in the financial transaction arena, whereas contactless have gained traction in the computer security and access entry areas.
Cards that are both contact and contactless, however, are also evolving, noted Tang. With these, end-users can, for example, wave the card at the office door to gain access, then insert the card into a terminal at their computers to buy something from the Web or send an e-mail with an electronic signature.
"Distributors also need to clearly understand the customers' systems, what smart card standard they need and how much memory the cards re-quire," noted Sumner. The card standards detail the physical, electrical, mechanical and application programming of smart cards. Smart card programs available include Microsoft Windows, JavaCard, ActiveCard and Mondex, which is popular in Europe.
By Danielle Litka
- People:
- Gary Funck
- Jerry Sumner