Inside this story:
Still a hard sell
The customer promise
Smart cards in Australia
Planning an effective roll-out
Smart card enthusiasts are a patient bunch. Although the technology and its applications have been well understood for most of the past decade, the adoption of smart cards has consistently failed to live up to even the most conservative forecasts.
Early enthusiasm over the identification and payment cards once led analysts to laud their potential in reinventing commerce, but the cards have so far struggled to find an audience among businesses in Australia, the US, and most other places.
Smart cards are credit card-sized pieces of plastic with an embedded microchip and telltale copper contacts on the surface that provide an interface for reading and writing data.
Many cards are printed with photographs and individual identification details; many feature magnetic stripes (magstripes) so they can be used in existing card readers; and some "contactless" cards have embedded, invisible circuits that transmit information to devices such as door security controls whenever they're put close to a reader.
Years of development have advanced the state of the art to the point where smart cards are now as flexible, capable, and useful as they were once expected to be; electronic cash, passwords, personal preferences, past shopping information, digital certificates, health-related data, and mountains of other data can be securely stored on the cards using widely available applications.
So far, European companies have been the most enthusiastic, adopting smart cards in a range of financial, transport, and other applications. Thanks in large part to the coalescing of major financial powers around Europe's EMV (Eurocard MasterCard Visa) financial payment standard, smart cards are growing at a steady clip on that continent.
Analyst firm IDC, for one, has projected that shipments of smart cards would grow from 284 million units in 1999 to more than one billion in 2004. This makes Europe the world's largest market for smart cards, although other geographies--China in particular--are expected to catch up soon after that.
Despite its strong overall technology base, Australia still fails to rate a mention in analyses of smart cards' potential. Here, smart cards are mainly used in niche applications focused on a specific purpose applicable to a small number of people: as identification cards at NSW TAFEs, for example, and for controlling employee facilities access within some companies. On the whole, however, Australian businesses have been relatively disinterested in the technology.
Deborah Stanley, company secretary of industry advocacy group the Asia-Pacific Smartcard Forum, has watched interest in smart cards dwindle over the years despite early hype about their potential. "It has just not happened at all," she concedes.
"It's not the technology that everyone was excited about a few years ago; it was just another technology swept along by e-commerce enthusiasm. While we did have a lot of government support early in the piece, it seems to have gone cold."
While Europeans have quickly become accustomed to smart cards because of their ubiquity in high-profile financial applications, Stanley blames Australia's well-developed EFT (electronic financial transaction) networks for marginalising the cards' profile and importance here: "The business case to replace [EFT] with a smart card infrastructure would have been expensive. It's not going to be replaced just for the sake of having a smart card in our wallets that is a cash replacement. I think it has to fit in with some other applications, like digital signatures."
Even when used for multiple purposes, smart cards are far from a sure bet; trials in several academic settings have produced mixed results. Melbourne's La Trobe University, for one, runs financial competitions to encourage use of its La Trobe Card smart card ID card, which combines library, photocopying, ID, and access control functions with an electronic purse.
However, after trialling Telstra smart cards for three years, the University of Adelaide reverted to magstripe-based identification cards and began refunding money stored on the cards.
It's obvious...isn't it?
Probably 4 or so factors affecting Smartcard deployment in Australia.
1) The cost of outlaying new POS terminals to accept smartcards. There are few initiatives out there. AMEX is a classic example. They deployed their new chip card but where are the readers. ANZ looks the most promising and are in the process of upgrading their ATMS and POS terminals to accept their own branded cards.
2) Magstripe card fraud is relatively low in Australia and banks cover the cost of any fraudulent transactions, so there is no real advantage for customers to transfer over to the new schemes.
3) Apart from Financial, GSM, and some security based applications, there's no real interesting applications for customers.
4) There are no dominating Smart Card standards. Telstra initiative at Adelaide UNI was a disaster. There needs to be an open and free SC standard (without any fine print). There are more smartcard forums and other group bodies, than actual standards.
5) Serious investment no were to be found for smart schemes. Whether this is a failure to deliver affect businesses cases, or no interest is difficult to tell.
Rob