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Forrester's Epper suggests that a standard programming language, operating system and networking protocols must be in place before smartcards make i t big in the United States. Mondex recently began establishing such a framework by announcing a consortium that stands behind a new multiapplication firewalled smartcard OS known as MULTOS, which will become commercially available in early 1998. Members include Dai Nippon Printing, Gemplus, Hitachi, Keycorp, MasterCard International, Mondex International, Motorola and Siemens. MULTOS has its own API and programming language and supports C. Mondex says it also plans to support Sun's JavaCard API.

Many contend that applications will determine the future of smartcards in the United States. AT&T's Maher says that the prototype card he is working with has three applications now--though early trials at AT&T facilities in Jacksonville, Fla., will involve only the electronic purse. The merchant system will be based on an OpenMarket server for the trials. By next year, Maher said he expects the non-volatile memory in cards to double, which will permit up to six applications--with the possibility of eight ti mes that amount in two to three years. By fall, Maher says trials might involve applications that include a Mondex purse, a digital signature and physical door access.

The popularity of smartcards also hinges on the availability of PC, ATM and POS readers, as well as back-end merchant and bank systems. Gary O'Neall, general manager of electronic commerce at HP, says HP has readers that run off of keyboards and is working with Microsoft to leverage the OS for this task, which should drive down reader costs. HP's offer to acquire VeriFone, which manufactures a phone-based reader used by Citicorp and others, may also extend support for Mondex. In addition, HP is collaborating with AT&T on the client application for Mondex, as well as the merchant system and a banking back-end system that accepts cash transactions. AT&T plans to integrate Mondex's electronic-purse capability early next year into its SecureBuy merchant server, used today with credit cards.

O'Neall adds that HP is quite interested in putting its own smartcard database--the Imagine Card, which is used to store information like credit-card numbers and authentication certificates--together with the Mondex purse. Once smartcard memory doubles, that becomes a stronger possibility.

ATMs will also have to support electronic purses, if s martcards are to take off. A spokesman for Wells Fargo says Mondex will be testing card interoperability--as will Visa and Citibank, testing Visa Cash--with 50,000 consumers and 500 merchants using retrofitted ATM machines on Manhattan's Upper West Side in October. Devices are also needed to transfer value from one card to another--which may present a unique challenge. It is in this card-to-card transfer that Mondex is most like cash: There are no merchant records of such transactions, and a card user obtains an audit trail only for the prior 10 transactions (unless he or she downloads transactions to a PC).

What happens when a card is lost? Although the cards can be set up using a password to prevent a thief from accessing funds, Mondex investors see it as cash--which when lost is simply gone. However, it will be up to licensees to set the policy on this. Licensees will also determine whether they want to put the Mondex purse on their own credit cards or offer them individually, and how they will recover costs.