Visa Seeks Net Security with ‘Smart Card’

In a bid to provide tighter security for e-commerce and other transactions, Visa U.S.A. rolled out its new digital-based “smart card” on Tuesday. The smart card will store customer identification and account information within a microprocessor chip, and only smart card readers will be able to access the secured data.

In addition, the card will include a traditional magnetic strip to ensure acceptance in all Visa merchant locations.

When used in conjunction with a smart card reader connected to a PC, according to Visa officials, the card will allow consumers to access content on an issuing bank’s Web site, make online payments, and download enhancements.

Among the Visa member financial institutions that are planning on offering the smart cards in the fall are First USA, Fleet Boston Financial Corp. and Providian Financial Corp.

Market Primed

While smart cards are widely used across Europe, they have yet to take hold in the United States. However, industry analysts say that a number of factors have primed the domestic market.

The explosive growth forecasted for mobile e-commerce through cellular phones, wireless devices, and personal digital assistants (PDAs) as well as the push for digital signatures may drive consumer demand for beefed up protective measures. Some see credit card companies as the logical promoters of smart cards as payment services and options expand.

Visa officials say that with the decreasing cost of chip technology and the rise of home computer use, the potential for smart cards in the United States will increase. The financial services company has more than 23 million Visa-branded chips currently in use worldwide, and more than 80 smart card programs in place in over 35 countries and on the Internet.

Creating a Technological Standard

While many observers anticipate that smart card technology applications will grow quickly in the United States, analysts also say that before widescale public use is possible, the industry must create a technological standard that can be adopted by consumers and merchants everywhere.

They also warn that corporate and government players face the challenge of implementing smart cards in a way that will allow them to coexist with technology already in place, such as magnetic stripe cards.

Card technology experts from the Smart Card Forum, a multi-industry group formed to explore the use of smart cards in various applications, forsee the development of so-called hybrid cards, which may contain not only an embedded microprocessor chip or memory module, but also a mag stripe and bar coding.

This single card would be able to access different hardware systems, such as merchant card readers, ATM machines and bar code applications. To enhance the hybrid’s security features, the cardholder’s photograph, printed name and signature could also be added.