February 28, 2001, 12:00 AM

Desperately seeking a market

After wandering aimlessly for 10 years, stored-value smart cards may have found their place in the sun on the Internet.

Smart cards have been looking for a market in the U.S. for nearly two decades. Tests of stored-value smart cards in the 1990s in New York and Atlanta flopped, primarily because consumers already had a viable alternative form of payment, but also because the participating entities did a poor job of promoting the cards to consumers and merchants.

Since the rise of the Internet as a shopping medium, smart card advocates have looked to the web as the potential launching pad for smart cards. Now a new study shows web-experienced consumers have a fairly high level of interest in smart cards. But the real question is: Can smart card advocates make them work?

Research released in January by Synergistics Research Corp. of Atlanta offers tantalizing clues to consumers’ receptiveness to smart cards. After researchers explained what a smart card is, what it could be used for online and the fact that it required another piece of equipment to make it work, 48% of 1,226 holders of major credit cards surveyed by e-mail said they are very or somewhat interested in smart cards.

Synergistics says interest is greater among younger respondents and credit card revolvers. Only 1% of the respondents indicate they have a smart card.

Large numbers of those who express interest in smart cards identify useful applications for it. Nine in 10 say a smart card would be useful for making purchases on the Internet. More than eight in 10 indicate it would be useful for keeping records of purchases in order to receive discounts, for storing personal financial information, and for loading cash value onto the card from a checking account. Interestingly, the “very interested” category generated a higher rate of response than researchers normally expect, indicating that smart cards have a broad and deep appeal-at least in theory. Synergistics is embarking on a survey of attitudes toward the smart card among the general population.

The first challenge to the success of smart cards on the Internet will be generating awareness. Genie Driskill, Synergistics COO and senior vice president of research, believes the card associations and American Express learned lessons from the earlier tests. “There’s a lot more activity in terms of creating awareness of smart cards,” Driskill says. American Express has promoted its Blue Card heavily and the few MasterCard/Visa issuers who issue smart cards have advertised as well. But that’s just the start, Driskill says: “They have to get beyond the marketing hype and to the value of the card. Eventually you’re going to have to be able to do something with the card.” And that’s where the real challenge lies.

comments powered by Disqus




From The IR Blog


Rochelle Bailis / E-Commerce

Nordstrom vs. Macy’s: a department store showdown

Not only does Macy’s attract more online traffic, more of that traffic comes from mobile ...


Jaysen Gillespie / E-Commerce

Be a smart marketing Cupid in February to maximize sales

Campaigns optimized for smartphones will capture more last-minute sales and keep in mind that shoppers ...

Research Guides