Smart Cards target US Youth

Smart Cards, which have been an “emerging technology” for quite a long time. I too had looked at smart cards in 1999 and had thought then that they could be a useful payment alternative in India where the credit/debit card penetration is still quite low. But somehow, smart cards have not taken off though many banks are making attempts. I have a feeling that smart cards have been like ISDN in the telecom area – “I Still Don’t Know” what to do with them!

Writes WSJ on a new approach being taken in the US:

Having seen the near-complete failure of large-scale smart-card applications, a handful of companies now are thinking small. They’re seeding rock concerts, movies and playgrounds with smart cards, hoping to spur young consumers to adopt the technology.

“The young-adult marketplace is the ideal place to start with new technology, especially if it’s low cost,” says David Morrison, president of Twentysomething, a Radnor, Pa., marketing-research firm that focuses on young people. “The companies can start recovering some capital investments and get a better feeling about the applications.”

The theory goes that once American kids have adopted the technology, their parents will become more familiar with it, and eventually more comfortable in using it. “Not only are you conditioning the youth market, but through demonstration and explanation, the larger market as well,” Mr. Morrison says.
One of the chief lessons learned in the 1998 [New York Upper West Side] experiment was that the cards need to offer more than just a cash substitute. The project’s credit-card sponsors said in the future they would like to put more functions on the cards — for example, allowing you to use the cards as subway passes or phone cards in addition to making simple purchases — and would introduce wider loyalty programs that offer perks to users.

As the article says later, “Smart cards have long been popular in Europe and Asia. In Hong Kong, the Octopus card started as a simple subway-fare card, but is now accepted by businesses ranging from fast-food giant McDonald’s Corp. to local movie theaters, and even street parking meters. The cards also are increasingly used for security purposes at schools and residential complexes.”

I still feel Smart Cards have got good potential – what’s needed is a consortium of a few companies to aggregate together apps (so I can use the same smart card in multiple places).

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Rajesh Jain

An Entrepreneur based in Mumbai, India.