Smart Cards Gaining Traction

According to a white paper issued late last year by the Smart Card Alliance, more than 21 million smart cards will be in circulation in the United States by the end of this quarter.

"While the main driver for smart-card usage in Europe is credit-card-fraud deterrence, the primary driver in the United States is the convenience of a multipurpose application card for shopping," said Randy Vanderhoof, executive director at the alliance, Princeton Junction, N.J. "Ideally, consumers could use a single card for all their online and in-store purchases."

Right now, everyone has their eye on one model,that of Target department stores,to see if North America's first high-profile smart-card initiative will get off the ground, Vanderhoof said.

Over the past two years, the chain has issued about 7 million of its self-branded Visa smart cards. The Minneapolis-based retailer originally slated the system to go live last fall, but the launch probably will take place sometime during the first quarter of this year, Vanderhoof said.

In the meantime, Target has been retrofitting its POS terminals for smart-card acceptance and shipping smart-card readers to its registered customers, he said.

Once the Target Visas have been activated, customers will be able to visit the company's Web site, www.target.com, and download "coupons" to their cards.

Some solution providers and others with a stake in the POS arena are champing at the bit to get their own smart-card programs up and running.

"I've gotten several calls from [independent sales organizations that want to talk to me about this technology," Vanderhoof said. "Some of them are already writing their own software applications and marketing them to local retailers."

One such company is United Smart Cards, Dothan, Ala., which launched a proprietary smart card-based gift and loyalty program for local merchants and consumers.

Under the company's four-month-old initiative, consumers receive a smart card they can use to earn "cash back," or points toward future purchases, at stores where they shop. "A customer who spends $50 at Buffalo's American Grille, for example, might earn $10 toward another merchant's services or products," said Bruce Rowland, president and CEO of United Smart Cards. "What we're doing is creating foot traffic into these businesses."

Participating merchants include jewelry, printing and computer stores, and even law offices. In the next year, the company plans to expand its smart-card initiative into other states such as Texas and California, he said.