The Virginian-Pilot
                             THE VIRGINIAN-PILOT 
              Copyright (c) 1995, Landmark Communications, Inc.

DATE: Wednesday, March 22, 1995              TAG: 9503220252
SECTION: BUSINESS                 PAGE: D1   EDITION: FINAL 
SOURCE: BY TOM SHEAN, STAFF WRITER 
                                             LENGTH: Medium:   58 lines

``SMART CARDS'' AIM TO REPLACE CHANGE

In another step into the world of electronic banking, First Union Corp. will offer stored-payment ``smart cards'' to consumers for routine retail purchases.

The Charlotte-based banking company, which has teamed up with the VISA bank-card group, said it expects consumers to be using one million of its smart cards by September 1996.

Hampton Roads isn't high on First Union's list of area's to receive the cards. However, it may be just a matter of time before smart cards are available locally through other financial institutions.

Already in wide use in parts of Europe, the cards have a microchip that stores electronic payments and tracks how much value remains on a card after each purchase.

The cards appeal to consumers by reducing their need for small change and by being faster to use than credit cards and debit cards, said Fred Winkler, senior vice president and head of First Union's card products division.

``We expect it to replace a lot of bills and coins in the marketplace,'' Winkler said of First Union's smart card.

Debit cards allow shoppers to pay for a purchase by immediately deducting the amount from a checking account.

In contrast to debit and credit-card transactions, use of a smart card requires no signed receipts and no personal identification number.

Banks issuing the cards profit from having free use of the money that consumers put into the cards but have not yet used for payments. In addition, banks collect fees from retailers for processing transactions with the cards.

Winkler said that First Union also expects to make money from selling advertising on some of its smart cards.

First Union said it will launch its smart-card program in Atlanta and promote their use during the the Summer Olympics, which begin in Atlanta in September 1996. By then, more than 5,000 retailers in that city will be able to accept smart-card payments, First Union predicts.

Hampton Roads has not been included on its timetable for introduction, the company said. First Union will introduce its cards in the Washington and Richmond metropolitan areas in 1997 and in the Charlotte and Raleigh-Durham areas in 1998.

Consumers will be able to buy the disposable payment cards from free-standing machines in values of $25, $50 and $100, First Union said. When the stored value of a card has been spent, the card can be thrown away.

First Union said it also will offer rechargeable cards that will double as debit cards and teller-machine cards.

The company said it expects to have 700,000 rechargeable cards and 300,000 disposable cards in use by September 1996.

Stored-value cards have been available in some parts of the country as forms of payment for telephone calls and subway rides. However, First Union's card program is the broadest of its kind in this country, Winkler said. by CNB