Here's an interesting exerpt from InformationWeek on N.Y. Bank's experience with smartcards.
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Technology News
Smart Cards' Appeal Lasts A New York Minute
(03/26/98 1:55 p.m. ET)
By Mo Krochmal, TechWeb
Five months into a Manhattan smart card pilot program -- the first major test of the cash-storing cards in the United States -- some participating merchants say they're nothing but trouble.
"I don't think smart cards are the way to go," said Barry Gluck, the owner of the Royale Kosher Bake Shop and Cafe on West 72nd Street.
It was at Gluck's shop last October that Chase Manhattan Bank, Citibank, MasterCard, and Visa launched a six-month test of the cards, embedded with a computer chip that stores monetary value.
Gluck and more than 600 other merchants on Manhattan's Upper West Side, including grocery stores, restaurants, bodegas, and newsstands, were given card readers. The banks supplied the cards to more than 50,000 customers, while teams of bank employees worked the streets to build enthusiasm for the project.
But by Wednesday, the Royale's card reader was far from the cash register, and instead sat at the back of the cafe, near the ovens.
Gluck wasn't impressed with the card's results. "I got $24 from it, and I get $10,000 to $15,000 a month in Visa or MasterCard use," he said. "I don't think it has taken off like they wanted it to."
The Manhattan pilot is the first major U.S. test of the product in a sophisticated consumer market -- and the first step toward a cashless economy and an evolution in the technology of finance that started with the credit card 30 years ago. Since then, the ATM has come along, then the debit card, and now the smart card.
Brian Russell, who oversees the project for MasterCard, says it is too early to tell whether the cards will catch on.
"It took a good 20 years to get credit cards up and running," Russell said. "We have learned a lot so far, even though there were fits and starts at the beginning."
The four-way partnership will continue through the end of this year, and then the banks will decide whether to pursue it further. "We are committed," Russell said.
But getting merchants to commit will be a difficult task. Joe Aguilera, the owner of Giacomo's, a European take-out store a few doors down from Royale, displays the Visa smart card logo on his cash register, but he's not sold on the idea yet.
Since Aguilera doesn't have a bookkeeper, it takes him an extra 15 minutes at closing time to process the six or seven smart card transactions he gets a day. "It's cheaper not to have it," he said. "It's a pain in the neck."
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