U.S. Signs On with Smart Cards

Thursday 30 October 2003 19:57 CET | News

U.S. consumers, businesses and government agencies are increasingly signing on with smart cards, using them for everything from transit fare payment to information system security, and demand is likely to keep growing according to the consensus view expressed by speakers at the fall conference of the Smart Card Alliance.

One of the changes evident at the event was the increased activity in contactless smart card technology. Today most of the industry shipments are for contact smart cards, and that will continue to be true; however, contactless technology promises to add new applications and markets that will further accelerate the growth of the industry. Transit Most transit operators in urban areas of the United States are implementing smart card-based fare ticketing systems. Wireless Smart cards serve as Subscriber Information Modules (SIMs) in wireless phones compatible with the GSM standard. With more than 30 million Americans carrying smart card-equipped mobile phones, wireless is the largest sector for smart cards in the U.S. market. Enterprise Security Corporate employees on the move, both physically and logically, are increasingly likely to use a smart card in their day-to-day activity. At the Alliance meeting, Boeing, Northrop Grumman and Sun all presented their smart card-based corporate ID credential programs. Financial Contactless RF technology was a big focus in the presentations and panels discussing retail payment. David Owen, principal, U.S. Financial Services for Booz Allen Hamilton, estimates that more that 20 million U.S. households are already using RF-based payment systems, of which 75% are RF toll transponders and the rest RF payment fobs. Owen explained why this technology is getting so much attention for payment. Owen cited statistics showing that U.S. credit card industry charge volume growth rates slowed to 11.6% during 1996 to 2001, down from 15.9% in the prior five-year period. Similarly, new accounts are harder to get, with response rates to card industry mailings falling to 0.5% from 3.0% in the last ten years. At the same time, 65% of the $6.7 trillion in U.S. consumer payments are still made by check or cash, and sizable cash and transaction intensive merchant segments still exist. As financial services providers look for additional growth, they have found that RF-based payment enables them to extend current card platforms into these still available segments. Contactless payment was also one of the primary themes of the financial services panel that included representatives from American Express, JCB, MasterCard International and Visa USA. This type of dialogue and cooperative discussion is an important advantage of Smart Card Alliance conferences, and the organization itself. The panel also discussed the future of contact cards in the United States, and the outlook for migration to EMV-compliant smart bankcards.

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Categories: Payments & Commerce | Cards
Countries: World
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Payments & Commerce