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 Background news analysis Can Smartcards Unlock Electronic Cash Vaults? By Christy Hudgins-Bonafield It may seem a slow, covert creep, but electronic cash is wending its way to North America, reaching our shores like so many tiny lint-trapped seeds, wedged in the pockets of other security and electronic-commerce trends--notably, chip-based smartcards. Many experts believe trends like using smartcards for Internet/intranet authentication will lead to a national smartcard rollout in three to seven years and promote the acceptance of the "electronic purse." They also predict that t he smartcard's multiapplication OS will help unify the fractured worlds of electronic banking, investing, network commerce, physical building access, network authentication and even vending machine use.
Experts agree that Mondex's smartcard technology is probably the closest electronic equivalent to actual cash--especially since it does not involve back-end settlements. The card is designed to be used with PC keyboard readers, special floppy-based devices, phone systems, point-of-sale (POS) systems and ATM machines. With the card, users can make Web purchases, participate in loyalty programs, download cash from a bank over an ATM or a network, or pay for merchandise in stores and at vending machines; monetary value can also be exchanged between two cards. On an international scale, the technology can accommodate about 30 currencies, with each card capable of handling about six. Currently, the United States limits the value on a card to $1,000 as a precaution against money laundering, but experts say actual value limits are likely to hover around $250 until more is known about the security of the cards. Although Mondex USA isn't c ounting on having a production scheme in place until mid-to-late 1998, the franchise expects to pursue a series of pilots this summer and fall and is building a protocol infrastructure that it plans to introduce to the Internet community as an open standard. SET Not Yet In early May, AT&T Labs' Dave Maher said Mondex members anal yzed reactions from a select group of reviewers--including CyberCash, Hewlett-Packard Co., Hitachi, Microsoft Corp., Sun Microsystems and several banks--to Open Trading Protocols developed by AT&T and HP. The biggest question raised by that group is whether the spec should rely on the certificate infrastructure established in the Secure Electronic Transaction (SET) protocol.
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Forrester Research analyst Karen Epper says smartcard
-maker Mondex vaulted to a leadership position in this emerging U.S. market when MasterCard announced plans to grab a 51 percent stake in Mondex's international smartcard technology, as well as a 10 percent stake in the domestic Mondex franchise (which also embraces AT&T's Universal Card, Chase Manhattan, Dean Witter Discover/NOVUS, First Chicago NBD, Michigan National Bank and Wells Fargo). The potential for combined credit-debit cards and electronic purses is great, especially given MasterCard's dominance through the international Cirrus automatic teller machine (ATM) network. Mondex's primary competition comes from Visa Cash (which, in May, had yet to support an ele
ctronic purse over the Internet) and Proton (used by American Express).
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News and Analysis by Christy Hudgins-Bonafield and Kelly Jackson Higgins Internet Sun Sees Multidirectory in Java-Based Systems. by Christy Hudgins-Bonafield Updated June 27, 1997 |
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