Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, March 23, 1994 TAG: 9403230147
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
The company said Tuesday it is joining with an international group of nine other financial companies to develop the product, called the Electronic Purse. The consortium will try to establish universal standards so cards could be used anywhere.
The Electronic Purse would be plastic, like a credit card, but would carry a microchip. It could pay for small-ticket items, such as fast-food burgers, unlike many credit cards.
A consumer would ``load'' money onto the card before using it, probably through a bank automatic teller machine. The card could be loaded repeatedly.
Similar cards, often dubbed ``smart cards'' or ``chip cards,'' have been tested in the United States and more widely in Europe. The consortium expects to test the Electronic Purse by late 1995.
Before the cards could be used widely, pay telephones, vending machines and toll booths would have to be fitted to process them. Visa said it was forming a separate consortium to work on developing equipment for the cards.
Credit-card analysts, however, said the cards might not be popular for years.
``This is a lot of baloney,'' said Spencer Nilson, publisher of the Nilson Report, a credit-card trade publication in Santa Monica, Calif.
``Smart cards are not efficient; they're too costly, there are a lot of flaws in them still,'' he said.
Robert McKinley, president of RAM Research Corp. of Frederick, Md., was more optimistic. But he said cards with microchips are easily damaged.
``It can be a reality,'' he said, ``but there is a lot of work involved in getting these systems in place.''
Analysts said cards with microchips cost $3 to $8 each. But Peter Hill, Visa's senior vice president for payment technologies, said he expected they would cost about $1, ``given the volume of card holders we'd attract'' and improvements in technology.
by CNB