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SmartCash (NewsClip)

Alliance formed to develop first nationwide smart card

New York, Aug. 16 (Reuters) - The United States is a step 
closer to cashless commerce.

Fourteen banks and financial instutions said Wednesday
that they will form a company to develop and issue the
first debit card that can be used nationwide instead of
cash for purchases under $20.

The new company, to be called SmartCash, will help speed
the implementation of so-called "smart card" technology
that uses a micro-processor chip embedded in the card to
store vast amounts of information, including improved
security features.

"The chip gives the card an amazing abitity to contain
stored information," said Nancy Elder, a spokeswoman for
MasterCard International Inc., one of the companies
participating in the creation of SmartCash.

In addition to Mastercard International, other founding
companies include Banc One Corp., Bank of America,
Chemical Bank Corp., CoreStates Financial Corp.,
NationsBank Corp. and Wachovia Corp. However,
participation in SmartCash will be open to all U.S.
financial institutions and card providers, the companies

"SmartCash represents a shared vision and a shared
commitment to deliver the increased convenience,
flexibility and efficiency of electronic cash to U.S.
consumers, merchants and banks," said Hatim Tyabji,
chairman of VeriFone Inc., a pioneer in stored value
technology and another founder of SmartCash.

The SmartCash card also will be standardised with similar
efforts already underway for smart cards developed by
credit card companies Europay, MasterCard and Visa.

"Standardized specifications are all woven into the
process. If you use your card in New York, it will be the
same as if you use it on the West Coast," Elder said.

The stored value application, one of the many uses of the
card's embedded chip, enables funds from the cardholder's
bank or credit-card account to be loaded into the card
from an automated teller machine or from one of the
terminals now under developement specifically for the
SmartCash card.

Elder said the companies have not identified what the
cost to the consumer would be, but noted, "the consumer
is going to have to see the value in it for them to want
to use it."

She also said there was a potential for the card to be
expanded for use by those without bank accounts, who
could credit the card in person at various locations.

Elder added that the demand for such a versatile card was
the driving force behind the broad alliance of companies
already signed on to the SmartCash plan.

"Sixty percent of consumers surveyed in the U.S. said
they would be willing to switch banks to get the use of
stored value (cards)," Elder said.

Amy Brinkley, executive vice president at NationsBank,
said the venture showed "unprecedented industry
cooperation to develop an innovative financial product."

SmartCash will combine assets and staff of the founding
companies and pursue technology being developed by
MasterCard, VeriFone, Electronic Payment Services Inc.,
and privately held Gemplus.

A pilot programme is already under development in
Delaware that will be overseen by Wilmington Trust and
Electronic Payment and other regional pilot programmes
were likely to spring up around the country next year,
Elder said.