ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, March 12, 1996 TAG: 9603120109
SECTION: BUSINESS PAGE: B-7 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: ROB WELLS ASSOCIATED PRESS
A NEW WAY TO PAY WITH PLASTIC will offer convenience. But the amount of personal information that can be stored on its computer chip is raising privacy concerns.
Will the new generation of ``smart'' credit cards know a bit too much about your personal life?
Privacy is one of several issues that bankers and regulators are examining as a new breed of computer-chip-embedded payment cards come to the market.
The new smart credit cards promise to offer consumers substantial flexibility because one clever piece of plastic can be used to withdraw cash from an ATM machine, pay for making copies in the library, cover a long-distance telephone call or pay a subway fare.
NationsBank and First Union Corp., both of Charlotte, N.C. and Wachovia Bank of Winston-Salem, N.C. are unveiling the first generation of Visa-branded smart cards, also known as stored value cards, in Atlanta ahead of this summer's Olympics. Designers eventually plan to let consumers add value to their cards by plugging them into an ATM machine and transferring funds from their bank account or credit lines.
The cards also could carry an enormous amount of personal information.
Jerome F. Page, who's developing smart cards for the New York Metropolitan Transportation Authority, told a House panel last week that the agency's new MetroCard could be powerful enough to ``enable us to track an individual customer's travel behavior'' throughout New York's subway and bus systems.
While emphasizing that the MTA doesn't intend to do this, Page described how subway riders using MetroCards could be tracked under some circumstances because each card carries a unique serial number. The time and place of every entry through subway turnstiles or onto a bus is logged electronically against that serial number when a customer swipes the card through an electronic reader.
While people purchasing the cards with cash would remain anonymous, their identities could be discerned, in theory, if they ``loaded'' value onto the cards through their bank ATM or credit card accounts, said Page, general counsel of MTA Card Company, a transit authority subsidiary.
``The gravity of the privacy issue expands dramatically when the stored value card has multiple applications,'' Page said in prepared testimony to a House Banking subcommittee. He asked whether banks and others issuing smart cards will be able to ``convince consumers that their privacy will be maintained even though there is a technological capability to tie electronic cash transactions to an individual?''
Rep. Michael N. Castle, R-Del., the banking subcommittee's chairman, agreed that Page raised some valid concerns.
``There should be a reasonable expectation of privacy among the users,'' Castle said. He said there may be a need for legislation to protect smart card users' privacy, along the lines of protecting personal telephone records. Castle emphasized he doesn't want to rush in with new laws in a quickly developing market, but said his committee intends to monitor the evolution of new electronic payments systems.
American Bankers Association spokesman John Hall said bankers are studying privacy and other policy issues arising from smart card use. As it stands now, customer records generally are turned over to law enforcement if the authorities meet the requirements of the Financial Right to Privacy Act, such as obtaining a judicial or administrative subpoena or the customer's permission.
Visa USA spokeswoman Susan Murdy said the credit card association generally asks its members to let the consumers choose whether their personal account information will be used for marketing purposes. With smart cards, the evolving model is to let customers decide what personal information they want included on their cards.
``As we look at new payment technologies, privacy is the major issue for us,'' Murdy said.
LENGTH: Medium: 75 linesby CNB