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CHICAGO -- Like the "We Have Beany Babies" signs that have popped up in virtually every storefront in this city, the majority of booths at the recently completed Retail Systems '97 show held at the Navy Pier boasted "We Have Smart Cards."

As far as their current impact on U.S. consumers is concerned, smart cards are the payment systems equivalent of the DVD player: really cool, but with few applications so far. The cards, like common credit cards with low-power microprocessors built in, allow several functions to reside on one card and communicate with each other. For instance, a consumer could include credit and loyalty functions; each transaction would automatically include loyalty points, which could be redeemed instantly at the point of sale, without the usual flurry of paperwork.

In the future, smart card proponents see the cards adding electronic ticketing, digital cash and other payment functions, while storing electronic versions of a consumer's passport, drivers license, medical identification and even more specialized functions, such as a full version of medical records, including x-rays and other graphics.

The catch, of course, is that before consumers embrace smart cards as a viable payment solution, U.S. businesses will have to build up an infrastructure of smart card readers to take advantage of the technology. And they don't come cheap.

Siemens Business Communications Systems, the Santa Clara, Calif.-based division of high-tech superpower Siemens Nixdorf has introduced the most high-profile smart card application, a $23,000 two-way video kiosk that can give retailers a massive improvement in customer service according to Peter McLellan, general manager of Siemens' access terminal solutions group.

"A home center customer could dial up a plumber, get advice on a project, download a shopping list and itemized directions, and pay a small fee instantly for the advice," he said. "Or a customer could apply for and receive a loan in minutes, then download the cash onto his smart card."

The kiosks would allow retailers to enter very specialized businesses with minimum additional investment, McLellan said. "You only need one person at headquarters who really knows the business," he pointed out. Possible applications include wedding counseling (Ames Department Stores tried to enter this business in the early '90s, but found that having live counselors on premises was too expensive), catering, travel services and the like.

There are roughly 150,000 on-line kiosks in operation in the United States today, McLellan said, and Siemens sees that number reaching one million within seven years. "People are much more protective of their time today," he noted. "Kiosks can drive true one-stop shopping."

At a more prosaic level, vendors are introducing smart card enabled POS terminals of varying configurations at a rapid pace. Checkmate Systems, for instance, has come out with a modular system that allows retailers to mix and match features according to their needs. The terminals can be fully operational, or they can be equipped with a smart card slot that can be upgraded later. "The smart card readers are very difficult to build, and the standards are still evolving," a spokesperson said. "Retailers are faced, though with the need to replace aging equipment, and they don't want to invest in terminals that will be out of date in two or three years. We're offering the opportunity to invest now and upgrade later."

The inclusion of a smart card reader today adds between $150 and $300 to a terminal, vendors said, depending on the number purchased and the sophistication of the reader.

Interest is very high in smart cards, said a spokesperson for Penware, the digital signature capture vendor. "But no one wants to invest yet. It's unclear which standards will eventually be adopted, and right now we have to support them all, as well as traditional magnetic stripe technology." Penware is offering an upgradable version of its hardware, with two PCMCIA ports that will allow a plug-in smart card reader to be attached in the future. "We started thinking about this several months ago, we realized that without this capability, we would be selling throwaways. This allows retailers to buy now," the spokesperson said.

And, according to Scott Tubbs of terminal maker VeriFone Inc. "retailers want to be ready. They don't want to be caught unprepared like they were with debit cards six years ago." On the other hand, no one is stepping up and buying to date, he noted. VeriFone is offering a snap-in module system, with a traditional magnetic stripe reader containing ports on the bottom where a smart card reader can be snapped in at some later date.

According to Kees Klomp, senior executive officer of Dutch retailer Ideta B.V., a division of the KBB Group, the case for smart cards is far from settled. Many European retailers are already using smart cards, generally for electronic purse, store card and loyalty programs. And the European case is quite different from the U.S.; credit cards are rarely used in most European countries, but debit cards are far more prevalent.

# posted by Medical Information : 2:47 AM