A smart card in every wallet may not be what industry experts are predicting this year, but the utility and value of these micro-chip bankcards are rising, according to Visa U.S.A.
“The U.S. business case for smart cards is becoming stronger as financial institutions and other businesses evaluate how single-function and multi-function cards with micro chips can solve business problems regarding payment, customer service and other benefits,” said Diana P. Knox, senior vice president of chip products for Visa U.S.A. “Today’s telecommunications are very efficient for authorizing traditional magnetic-stripe bankcards, so it is the value-added service that will increase our nation’s demand for smart-cards.”
Smart cards with payment and other functions stored on a single micro chip are being rolled out in United States today. Later this year, a major company will put in Visa Corporate smart cards in the hands of hundreds of its business travelers who frequently rely on a major airline, hotel and rental-car agency. The program is expected to substantially reduce travel costs by ensuring that employees pay the lower rates negotiated by their corporate travel planner.
Multi-use smart cards are also in use on corporate campuses. All employees at Bank of America’s Clock Tower Building in San Francisco carry and identification card that has a traditional, multi-function “contact” micro chip (with Visa Cash and two PC security applications), and a “contactless” micro chip (that allows access to the office building of parking garage when read by a proximity reader).
“Multi-function Visa smart cards are real today, and we are developing our open chip-card platform to enable financial institutions to flexibility utilize whatever range of applications they choose,” said Knox. “For example, an issuer might put Visa Cash stored value in three currencies, credit and several loyalty applications on a chip. It is really up to each bank.”
Visa’s Open Platform strategy, which features the globally popular Java programming language, will enable bankcard issuers to select applications (such as credit, debit, Visa Cash, loyalty, and transit) for their card programs. Issuers can use a range of operating systems. Using Java’s “Write Once, Use Anywhere capability, financial institutions will be able to develop their own non-payment applications and place them onto any Java-based micro chip. Issuers will also be able to dynamically update customer accounts without re-issuing cards.
Single-function smart cards are also helping solve business problems today. Visa Cash, the most widely used open-systems, stored-value product in the world, is being used in a number of environments to reduce cash-handling costs. At Ft. Leonard Wood, Mo., for example, thousands of new soldiers are using Visa Cash cards, instead of hard currency, for everyday purchases on the base. Supported by First Union and the U.S. Department of Treasury’s Financial Management Service (FMS), the program has significantly reduced the flow of actual cash.
The Internet, an environment where cash and coins cannot be exchanged, is transmitting real Visa Cash purchases today. Approximately 500 employees of Bank of America and Visa are using reloadable Visa Cash cards to make purchases from seven merchants on the World Wide Web.
Overall in the United States, 3 million Visa Cash cards have been produced by seven financial institutions since the product was introduced in 1996.
To help financial institutions strategically assess the smart-card industry. Visa is introducing Visa Smart, a communications initiative that packages key industry trends, technologies, products and services.
The new initiative includes Visa Smart Solutions, a program designed to help financial institutions plan and implement their eventual migration to smart cards. To be introduced to financial institutions later this year, the program will combine planning and implementation support, endorsed lists of leading chip-card and terminal manufacturers, Visa Smart Solutions is being designed to give financial institutions a streamlined approach to adopting smart-card technologies, by including:
– Visa Smart products – Visa Smart Credit and Visa Cash – as well as value-added applications such as loyalty programs;
– Customized planning services to help financial institutions manage and prepare for marketplace changes and trends; and
– Implementation services to support planning and program launches.
“As the circles of smart-card activity on the U.S. map grow in number, they will eventually become concentric and fill in any remaining pockets over time … probably in five to 10 years,” said Diana P. Knox, senior vice president of chip products, Visa U.S.A. “Our role is to support our member financial institutions by helping to acheive open and global chip-card standards, and by streamlining research, planning and implementation services.”
Visa is the leader in the emerging payment technology arena with more than 21 million smart cards issued, and more than 70 chip-based and electronic commerce programs in 30 countries.
As the world’s best way to pay, Visa is the preferred payment brand and the largest consumer payment system worldwide, with more volume than all othe major payment cards combined. Visa plays a pivotal role in advancing new payment products and technologies to benefit its 21,000 member financial institutions, their cardholders and the global economy.
In addition to its leadership in smart cards, Visa is pioneering SET Secure Electronic Transaction programs to enable and advance Internet commerce. Visa’s 618 million cards, generating $1 trillion in annual volume, are accepted at more than 14 million worldwide locations, including 380,000 ATMs in the Visa Global ATM Network.Details