NEW YORK-When it comes to smart cards, potential consumer demand is the proverbial tail wagging the dog of available supply, according to Avi Zahavi, chairman of the Smart Card Forum’s telephony work group.
Right behind secure storage of their medical insurance and health information, consumers in recent marketing surveys conducted for the forum ranked automated-teller-machine and credit-card services as preferred uses for smart cards.
Some prognosticators believe personal ATMs used ubiquitously will be a fact of life within three years, said Zahavi, who manages an AT&T Laboratories’ project addressing service quality in Internet Protocol networks. “I think that may be pushing the envelope, but (eventually) the biggest, most massive use of ATMs probably will be inside cellular phones,” he said.
The Smart Card Forum, headquartered in McLean, Va., is a 200-member organization representing diverse industries that works to accelerate the acceptance of smart card technology through open forums involving participants from the public and private sectors.
Consumers are looking to simplify and reduce the big bulge in their wallets caused by growing numbers of credit and other cards, according to results of just-completed focus groups and telephone surveys conducted for the forum by FIND/SVP, a New York-based market research firm.
In response, the ideal solution in the wireless world would be for handset and computer chip makers to develop phones that can use a single smart card to store and process a variety of functions, Zahavi said.
Subscriber identity modules, one kind of smart card, are used in Global System for Mobile communications phones for customer authentication and other functions related to wireless services. At least one manufacturer, Motorola Inc., is developing a two-slot handset, the GSM CardFone, that has a SIM card plus a slot for a credit-card sized smart card for ATM functions.
Zahavi’s view is that a single smart card eventually could and should provide both SIM and other functions for GSM carriers. Without the SIM card functionality, multipurpose smart cards could be inserted into non-GSM wireless phones, he said.
However, handset development is just the tip of the iceberg when it comes to smart card deployment on the universal scale envisioned by Smart Card Forum members.
“Smart card technology is deceptively complex because it is not a device but becomes a surrogate for a person’s identity, representing someone who does many things in life-makes purchases, has medical records, needs security of identity …,” he said.
“You can never beat the thief. You can only reduce losses until he catches up with you. But smart cards offer extremely good security for industry and will cause a big reduction in fraud.”
Interoperability among various users, systems and industry segments also is a major hurdle to be cleared before smart card use can become universal.
“Technologies typically evolve in vertical markets. Telecommunications is the area today where the majority of smart cards are deployed-50 million GSM cards,” he said. “There is a lot of commonality of standards within vertical markets, and there will be some consolidation in the smart card industry.”
However, crossing the boundaries between telecommunications and other sectors to achieve the multifunctional potential of smart cards will require a lot of cooperation between industry sectors.
“Sometimes, there are many standards or a de facto standard,” Zahavi said. “There is a lot of jockeying for position, but it would be great if people in industry would cooperate to create a market before getting into fierce competition.”
In addition, there already is an infrastructure in place-for ATM and other services-that relies heavily on magnetic-stripe cards, which are simpler and less multi-functional.
“Replacement of existing infrastructure becomes a different business case than starting from scratch,” Zahavi said.
Nevertheless, he said, at least two key indicators point toward the expansion of smart cards into many diverse areas of daily life in the not-so-distant future.
“Consumers understand the concept and price points are coming down.”
