Success relies on multi-functionality

Smart card providers need to put a variety of applications on cards or consumers will not use them widely, according to Peter Nankivell, national manager for cards and integrated applications at telecommunications carrier Telstra.

Speaking at the Cards Asia '99 show here yesterday, Nankivell said that providing multi-function cards is fundamental to a project's success, and that using smart cards as a straight substitute for cash will not win customers.

"Success depends on whether the industry delivers solutions that customers want," he said. "The industry has so far delivered a lot of hype, but not a whole lot of substance."

Nankivell said that smart cards have to address the different requirements and concerns of card holders, card issuers, merchants and application providers.

"Card holders ask why they should pay money up front to store value on a card," he said. "They are also concerned about security, and where they will be able to use the cards. If cards are not universal and interoperable, the mass of cards will not be accepted.

"Merchants will ask how much it is going to cost them, and what they get out of it. You can't force merchants to join a card scheme, and the majority of them right now question the value of smart cards," he added.

Three different applications sectors exist for smart cards, according to Nankivell; closed environment systems for universities, employers or trade associations; vertical market schemes such as transport or parking; and payment mechanisms in a wide commercial environment.

Nankivell said smart card projects need to show tangible benefits to customers and merchants, provide a greater range of services, and offer cost savings and rewards. These could include loyalty programs for frequent use, and greater convenience in banking and transit applications.

To give customers more control over their smart cards, Telstra has begun installing multimedia payphones through which customers can manage their cards, choosing the applications they want and transferring funds, Nankivell said. The system is currently running as a commercial pilot scheme with around 60,000 cards in use, and will be rolled out nationwide later in the year, he said.

But the ability to use cards anywhere, at any time, for a variety of applications, ultimately determines the success of a project, Nankivell stressed.

"Universality of card use will lead to a big customer market," he said. "And a big customer market leads to cost effectiveness for a project. But getting this right is not straightforward."

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