Is there a smart card in your future?

Mobile e-commerce, set-top boxes, high-tech bank cards are set to cause a smart card boom

Smart cards tend to conjure up futuristic visions of a credit-card-sized device carrying all sorts of personal information, e-money, an electronic key to your office and a pass card to get through the toll bridge. But these cards are here today, and you might not even know you're using one.

The three-day Smart Card 2000 exhibition and conference launches in London Tuesday, will look at the future of an industry that looks set to boom in the next few years, even as it makes its way invisibly into mobile phones, debit cards and set top boxes.

Today, smart cards -- distinguished from ordinary magnetic-strip cards by the presence of an embedded microchip -- are surprisingly prevalent in Europe. Besides simpler examples such as BT phonecards, many bank cards and mobile phones already contain microchips. "(The smart card's) size and compatibility with the magnetic stripe card theoretically makes (it) an ideal carrier for personal information, such as secret keys, passwords, customisation profiles and medical emergency information," wrote analyst Falk Muller-Veerse of Durlacher in a recent report.

The banking industry has agreed to port all debit and credit cards to a new chip standard called EMV by 2007, and many card issuers have already begun the process; UK banks, for example, are planning to make the transition by 2003.

The proliferation of set-top boxes and mobile phones -- both of which will allow consumers to carry out e-commerce transactions -- has also multiplied the number of access points that can use smart cards. All this leads analysts to predict a smart card boom, leaping from 131 million cards today to 258 million by 2004, according to Forrester Research.

But the transition is one you might not even notice. Rather than the all-in-one card that companies like Microsoft and Sun have long spoken of, many observers now say cards will be created for just one purpose, and may simply take the form of a chip embedded in another device.

"Over time, the physical card format will become less important than the actual chip," wrote Forrester analyst Carsten Schmidt in a recent report. "After a furious start, the growth of smart cards in the market will slow. But chips -- hidden away in appliances like GSM phones and set-top boxes -- will dramatically increase in number and importance... (but) the multiapplication card will never materialise."

That's because, besides financial cards, the biggest drivers for smart cards will probably be devices such as set-top boxes and mobile e-commerce. Schmidt points out that set-top box makers such as BSkyB are moving toward embedded chips, rather than removable cards, to store identification and e-commerce information, while mobile phones are now too small for the insertion of a standard-sized card.

Vendors at Smart Card 2000, including Visa, American Express, British Telecom, Schlumberger, Deutsche Telekom, Open and most of the other major players in the field, will be announcing new strategies and products related to bringing a variety of identification and commercial applications to smart cards.

For example Visa is to announce a partnership with mobile phone giant Nokia to develop ways for financial institutions and mobile phone operators to offer secure payment services to mobile phone customers; part of the technology they will develop includes a virtual wallet for m-commerce transactions.

Visa will also announce a deal with BT Cellnet (quote: BT) to allow users of Cellnet WAP (wireless application protocol) phones to locate their nearest cash machine anywhere in Britain. The service, which uses Visa's Global ATM locator guide (www.visa.com/atms/), will be available in 120 countries worldwide later this year.

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