Everywhere we look there are articles about smart cards and how we'll be using them to purchase items directly from the Net, with ease and convenience. The only problem is, no one seems to own one and even if they did, there isn't anywhere to use it. The reason is because PC-based electronic commerce is still years away.
The lag is due to the lack of industry smart card standards. But, the reason there aren't standards is because there isn't a demand for smart cards. It's the classic chicken-egg dilemma. For example, officials at Hewlett Packard report that they've not witnessed enough demand to justify adding a commerce component to their smart card products. They are selling evaluation kits to banks, but they don't plan to offer the technology to consumers any time soon.
SCM Microsystems (a smart card reader manufacturer) has made steps toward standardization by customizing their products to work with Windows and Unix platforms. Also, Microsoft's Windows 98 and NT 5.0 are equipped with smart card standardization. But, even with these two efforts, manufacturers still believe it will be a few years before there is a substantial demand for the cards and consumer groups continue to push legislation.
Mark Budnits, a professor at Georgia State University of Law, has some concerns about the future of smart cards. In 1978 it was Professor Budnit's report that prompted congress to pass the Electronic Funds Transfer Act, and now his concerns are being echoed by many others in the industry. In an interview with Smart Card newsletter Budnits notes, "Tens of thousands of consumers have bought prepaid phone cards from issuers who have since gone out of business. These consumers were left with worthless cards. If the same thing happens with other kinds of electronic money, consumers won't differentiate; they will lose confidence in all systems. Once consumers find out there is no government regulation or protections whatsoever, they will feel hesitant about using other payment systems. We should not have certain systems that are fly-by-night, seat-of-the-pants money transfer systems. That would damage public confidence in payment systems generally."
