Visitors to the annual Great American Rib Cook-Off last month didn’t have to worry about smearing barbecue sauce on their food and drink tickets as they ambled around Burke Lakefront Airport with ribs in one hand and an ice-cold beer in the other. That’s because Belkin Productions replaced its antiquated paper ticket system with a more streamlined operation — Smart Cards.
Although Smart Cards have been used in Europe for everything from bus passes to long distance phone service for several years, companies in the United States have not yet warmed to the idea of spending large sums of money on the infrastructure necessary to realize the benefits.
However, with Microsoft Corp.’s plan to release its Smart Cards for Windows operating system before the end of 1999, the use of the plastic cards — which contain embedded computer chips of varying complexity — could mushroom to proportions never before seen on this side of the Atlantic.
“The forecast in the United States is within the next 18 to 24 months, we’re going to see the market develop very, very rapidly, and you’ll see a very aggressive growth curve here,” says Dan Cunningam, director emeritus for the Smart Card Industry Association. “We think it’s partially been slowed down here by the Y2K problem and also the fact that Microsoft is developing its Smart Cards for Windows operating system. People are waiting to see what it is like and how it can be used.”
Although a large number of Smart Cards issued worldwide serve primarily the same function as a checking account debit card, companies in the U.S. are more impressed with the potential of using the technology to learn more about their customers. Some business are already distributing customer “loyalty cards” that accumulate discount points with every purchase in exchange for basic personal information at the time it is issued.
“There seems to be a growing consensus that the stored value itself will not fly in the U.S.,” says Cunningham. “You need some other applications to go with it, and loyalty is one that’s most frequently mentioned.”
That ability to snare consumer profiles is at least part of the reason Belkin turned to the use of Smart Cards, explains Barry Gabel, Belkin senior vice president of marketing. By randomly distributing prizes on the Smart Cards, visitors were invited to check their card at certain locations to see if they had won. The promotion directed traffic to event sponsors or computer kiosks, where customers were asked to take short surveys before swiping their card to learn whether they had won anything.
Although the surveys, which quizzed patrons on issues such as gender, ZIP code, age, income and whether they used specific sponsor products, took only a minute or two, the information gathered is very beneficial to the companies which use it.
“They are pretty much simple questions so we can know who our consumer is and pass that information on to the sponsors who participated or future sponsors,” says Gabel. “Once we show the sponsors the viability of this program, we are convinced they will be fighting over participating in this type of technology. We’ve only touched the tip of the iceberg on the potential for this technology.”
The simple Smart Cards that store credit and perform other basic memory functions each cost about $1. Multiply that by the 125,000 people who descended on Burke Lakefront Airport during the Memorial Day weekend, and rental cost for all the hardware associated with it, and one can easily see it is not an inexpensive endeavor.
For individual businesses, the good news is that the cost of implementing Smart Card technology seems to be shrinking. New debit and credit card scanners, which cost around $100, are now routinely created to also read Smart Cards, as are most new point-of-sale terminals. Meanwhile, Hewlett Packard is creating computer keyboards capable of reading them as well.
The cost of the cards themselves still range from $1 to $15, depending on the complexity of the operations for which they are being used.
Currently, 10 million Smart Cards are used in the U.S. for digital satellite and digital cellular communication. The cards act as encryption devices that personalize the equipment to a particular individual. About 30 college campuses have fully converted to Smart Card use for vending, copying machines and laundry facilities.
Whether the use of Smart Cards will reach wider use in the United States depends a great deal on Microsoft’s new Smart Card operating system, says Cunningham. If it carries through on its promises, today’s Smart Card uses could be looked on as primitive in just a few years.
“One of the things Microsoft is saying is with the Windows for Smart Card, the world of Smart Card will be opened to all those programmers who can write in BASIC or in C++,” says Cunningam. “You will literally have millions of application developers and it could blow the market wide open.”