Smart Cards Have Slow Adoption In US
from the someone-needs-to-work-on-their-marketing dept
Have you seen Visa’s new commercials for their “wannabe-Blue” smart cards? They show credit cards with a “smart chip” being added to the tune of “If I Only Had A Brain”. Now, I’m a fairly tech-savvy person and I have no clue what the advantage of this new Visa smart card is. It seems that I’m not the only one confused. People in the US still aren’t very interested in smart cards, and a lot of it is because they simply have no clue what they are and what the advantages are. That’s a huge marketing problem that American Express or Visa really should tackle. Of course, maybe there is no real advantage – which explains why both of them have just had commercials focusing on what the card looks like, rather than what it does.
Comments on “Smart Cards Have Slow Adoption In US”
fraud protection, cash
two of the biggest potential uses of the smart card chip are in fraud protection and stored value (cash) cards.
Depending on the size of the smart card storage (anywhere from 4K to 128K, with 256K coming soon), lots of user data can be kept, like: fingerprint info, drivers’ license image, full color picture of you, etc. Since this data is combined with your account number and encrypted, it is impossible for a stripe pirate to take his picture and your stripe and start buying away…
Stored value (cash) cards would be a welcome relief in the urban jungle — Mike, you may have forgotten the cash drain that is life in the city. In Chicago (where you can get a cab, as opposed to sf where you can’t), you always have to have small bills. So maintaining a cache of small bills is a p.i.t.a., that the stored value aspect would eliminate.
Now visa/mastercard want cash transactions to happen b/c they get their “vig” (called interchange) on the transactions over their network today, which does not include cash transactions. The interchange would have to be lower to induce merchants to be indifferent to smart card versus cash, and the process would have to be fast. Those have been challenges in the past.
Add to the challenge that interoperability is essential. The NYC test of 3-4 years ago failed largely because there were different machines for different cards, confusing everybody.
Consumers won’t drive this adoption alone — it will take merchants (economics) and interoperability.
Re: fraud protection, cash
On interoperability…
Is it just me, or has anyone else noticed that the contact points on each of the Visa / MC / etc. appear to be different and therefore requiring of different terminals for use?
Re: Re: fraud protection, cash
Good points, but the main point of the post is that the great majority of people don’t know what smart cards are/will be used for. It’s great and all that all of us reading Techdirt will know what the main advantages are and why we should adopt them, but, (sorry Mike) I don’t think there are enough of us to change the public’s perception. I do agree that the commercials are stupid – if they didn’t identify them as smart cards, I would think they’re just advertising a new look for the cards themselves.
Re: Re: Re: fraud protection, cash
The fraud protection feature seems largely theoretical to me. What difference does it make if there’s 256K of highly personal info in my card (a prospect which does not make me happy, by the way), but most sales clerks won’t even do a proper job of checking signatures? The theives will know which stores have upgraded terminals with picture verification and which ones don’t.
Re: Re: Re:2 fraud protection, cash
Ed, you’re right — since no one has put smart cards to work in this way, it is theoretical. Lots of companies working to put this in place, but I can’t say much about that.
Either your photo or your fingerprint can be used for verification — each has plusses and minuses. Sleeping clerks are the bane of fraud reduction in the retail industry, but you’re right: they’re out there.
Stores will only pay to put these things in if they can be assured that the fraud costs are going to be sufficiently lower (enough so to offset costs, training, etc. — and then some). Hard to convince anyone when the technology is unproven.
At the margin, I still encourage people to get a card with “smart” in it (joke). No seriously, when the industry can say “we have 1M people with smart cards out there” the adoption curve will be closer to reality. If it costs you no more, please get one — if for no other reason as to make ME happy? You might never choose to use any of the smarts, but you’d make the network model work that much faster. Good points, and thanks. Todd