First USA to offer three-in-one "smart card"

09/26/2000

Associated Press Newswires

WILMINGTON, Del. (AP) - Delaware-based First USA Bank will join two other major U.S. credit card issuers in offering expanded "smart cards" from Visa USA.

The microchip-enhanced cards can be used as debit or credit cards, carry security features to make online purchasing safer from fraud, and have the capacity to store electronic airline tickets, for example, or be used as keys to open cars and homes.

There have also been proposals to use smart cards to disburse welfare money without checks.

Besides First USA, headquartered in Wilmington, the new cards are being offered by Providian Financial Corp. of San Francisco and FleetBoston Financial Corp. First USA plans to make the card available before the end of the year.

The Smart Visa card represents the latest effort by banks to bring smart card technology, already popular overseas, into the U.S. credit card market.

Americans have halfheartedly embraced basic smart cards, such as prepaid cards for use in more than one store. It is hoped that the new card's expanded features - such as greater online security - will encourage more to carry the new piece of plastic in their wallet.

"Consumers are very savvy. They need a product that matches their lifestyles," said Chris Keenan, marketing director for De Novo Corp., a consulting firm in Hockessin.

With a microchip embedded in the plastic, the new smart card holds more information than the traditional credit card with the magnetic strip on the back. Special card readers, available for $20 from banks, will allow cardholders to download files, such as airline tickets, onto their cards from a home computer.

But the additional equipment needed has proven to be a slight drawback. The card reader is needed for cardholders to make online purchases, and merchants need to buy the special "smart card" reader also.

So far, businesses have been hesitant to invest in the new equipment, industry experts say.

Despite that, card issuers believe they can make the "smart cards" as popular in the United States as they are in Europe and elsewhere.

"We believe that chip cards will become standard in the United States - once somebody puts them in consumers' wallets," said David Alvarez, head of Integrated Card Business for Providian.