SPECIAL REPORT:
The Future is in the Cards
As we’ve all been snowed under by the humongous heeps of material covering the
Internet and the Web, smart card technology is slowly gaining ground all around the world
because of an ever expanding global network of terminals and ease of use. Smart cards are
going beyond their traditional uses such as for ATM machines or rechargable pre-paid
calling cards. And as the cards become more economical to produce, distribution will grow
exponentially.
Frost & Sullivan’s (F&S) latest report on smart cards declares the arrival
of multi-function smart cards is almost upon us.
The report, entitled "Electronic Access Control," predicts that it will soon
be possible for a smart card to carry out credit and debit card transactions, as well as
holding details of your medical records, your frequent flyer mileage, your social security
number, your address.
According to the information technology research company, users’ wallets and
purses are likely to become very thin when this type of card arrives, as just one card
could replace all of a users’ other cards.
"No more carrying five different types of credit cards, three types of video store
memberships, and a driver’s license — the smart card would contain all this
information," F&S notes.
The same shape and size of a credit card with an embedded microcontroller, a smart card
is capable of holding up to 500 times more data than traditional magnetic stripe cards
like a credit card or ATM (automated teller machine) card.
The global smart card is creating high growth markets in regions not traditionally
known for technological advances. Latin America and the Asia Pacific regions are
forecasted for tremendous growth.
The Latin American market grew from $31.5 million in 1993 to $75.1 million in 1996
— this growth, F&S claims, makes it the second largest smart card market
worldwide. Since these areas lack centralized data coordination, online services such as
electronic banking and prepaid phone cards had not been possible due to a lack of
infrastructure. Smart cards, however, the company claims, have changed the scenario
because such services can now be offered offline.
According to F&S, the opportunities for growth in the smart cards market is
tremendous and can affect many different applications: Internet commerce, pay-TV
subscription, university cards, wireless telecommunications, laundromats, automatic fare
collection booths, and banking — to name a few.
"The key characteristic of all smart cards is their enabling of higher security
standards and offering greater multi-functionality than provided by a traditional
technology such as magnetic stripes," explained F&S semiconductors analyst Alyxia
Do.
A threat to this technological advance, F&S claims, may be the consumer concern for
the loss of privacy and a potential Big Brother scenario. Who, the company asks, gets to
access the information is an issue on the minds of the consumer? For example, will your
doctor be able to get a hold of your financial records?
F&S’ research also forecasts patterns of the technological migrations among
the different smart card product segments of the token memory, wired logic, and
microcontroller cards.
Token memory cards, the company claims, can be used as pre-paid phone cards and
pre-paid debit cards, applications which represent the bulk of the market. But, the
company’s report suggests, there are technologies such as contact wired logic cards
that are leading to the replacement of token memory cards.
F&S claims that contactless cards are also driving a secondary migration. These
cards do not require a connection with a terminal and uses radio frequency transmissions
for transactions. The greater robustness of the contactless cards and the lower costs
associated with contactless card terminal maintenance are driving the replacement of
contact cards by contactless cards, the company said.
F&S’ Web pages are at http://www.frost.com.
Electronic Transactions has unveiled a low-cost smart card for loyalty card
applications, that unlike traditional magnetic stripe cards, has a built-in computer chip
which allows interactive loyalty schemes to enjoy the similar high levels of security used
by bank payment cards.
Known as MicroPayflex, the card can track parameters such as RFM (recency, frequency,
monetary value), for example, enabling operators to "tune" loyalty benefits to
individual customers and reward them with bonus points on the spot.
This is possible, the company claims, because smart cards can store information and
perform calculations locally at the point of sale, so rewards can be transferred or
redeemed dynamically, without the overhead of administration costs.
Portions of the card’s extensive memory may also be used or rented by third party
companies for electronic couponing or co-branding functions, creating loyalty scheme
possibilities for card issuers and customers alike.
Thanks to the use of a new high volume chip, costs for Schlumberger’s MicroPayflex
are expected to be comparable with conventional magnetic stripe cards.
According to Schlumberger, an industry-standard smart card interface means that
MicroPayflex loyalty cards can be read by the same terminals as those used for bank cards
and e-purse applications, optimizing the investment in a smart card infrastructure.
(Contact: Kristina Menzefricke, Frost & Sullivan Europe +44-171-915-7824; Fax
+44-171-730-3343; E-mail: kristina_menzefricke@frost.com;
Schlumberger Electronic Transactions France +33-1-4746-7020; Fax +33-1-4746-6866; E-mail: ferdane@montrouge.ts.slb.com)
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