SmartCards in the news

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   [ Features ]

   February 02, 1998
   Smart Cards Smarten the Net

   By Albert Pang

   For many contractors to the U.S. Department of Defense, the Internet
   will become an important ally this year, helping them resolve one of
   the most daunting challenges when doing business with the government:
   Getting paid on time and with a minimal amount of hassle.

   Thanks to a new breed of smart cards backed by sophisticated Web
   applications, 200 defense contractors will start receiving electronic
   checks (e-check) from the government via secure Internet e-mail
   through a pilot program launched in January 1998. 

   The contractors will use their smart cards to access the mail box,
   validate, and endorse the checks. They will then forward the checks to
   BankBoston or NationsBank, the two authorized banks, that will deposit
   them into their accounts.

   The smart cards, which include digital certificates developed by GTE
   Cybertrust, will play a critical role in helping the defense
   department and other agencies comply with a mandate that requires most
   of the 800 million payments the government makes every year be
   converted to electronic form by January 1, 1999. 

   Because of the mandate, the number of smart-card applications in
   different stages of development within the government has doubled to
   more than 900 in the past year, says Jim Hagedorn, a spokesperson for
   the Treasury Department.

   That's good news for vendors such as Anthony Caputo, chairman of
   Information Resource Engineering (IRE) in Baltimore, which develops
   the smart cards and the readers for the e-check program. 

   "It will create a nice revenue stream," Caputo says, adding that his
   company has issued 100,000 smart cards to government and corporate
   customers mostly for use in private networks.

   Now with the Internet, the smart card market could grow
   substantially, especially in Asia and Europe. "Smart cards are the
   ultimate personal network computers," capable of handling everything
   from simple tasks such as identification to complex ones such as
   online banking and electronic commerce, says Philip Yen, senior vice
   president of chip platform at Visa International in Foster City, CA.

   [TABLE NOT SHOWN]

   Both Visa and its rival MasterCard are engaged in smart-card pilots
   around the world, promoting the use of stored-valued chip cards that
   run on private networks or the Internet.

   For example, AT&T Universal Card is working with Mondex, the
   electronic cash venture majority-owned by MasterCard, to sign up a
   small number of online merchants for a pilot program that will allow
   Internet users to buy products from them using smart cards issued by
   AT&T.

   However, analysts expect acceptance of smart cards in the United
   States to be slower than that in other countries because of privacy
   concerns, interoperability issues (Visa and MasterCard use different
   operating systems, for example), and the desire to put as many complex
   applications as possible on a single card.

   Albert Pang is the online editor of the Internet Computing MagaSite
   Send e-mail to apang@zd.com.

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