January 08, 2001, 3:43 PM — UNLIKE MOST DIGITAL TECHNOLOGIES, which roll over cultures like a Schwartzenegger movie, smart cards seem unusually sensitive to geography. Ever since the idea of embedding integrated circuits into cards was invented in France 25 years ago, the technology has flourished in Europe and Asia while going almost nowhere in the United States.
For years, smart-card enthusiasts have inferred from this that the United States was behind the times and would eventually come around. Eight years ago, CIO looked at smart cards and agreed, declaring that the popularity of the technology in Europe and Asia had "proved its mettle" and brought it to "the point where it is a viable option for a variety of applications."
A variety indeed. "The potential utility of smart cards goes beyond traditional ATM banking or calling-card applications to include transportation, pay television, manufacturing, security, medical and human services, marketing, shopping, travel, and agriculture," CIO wrote. The technology even promised to push computing down the path defined by the transitions of mainframe to mini, and mini to micro into a new era -- pocket computing.
It seemed logical that with all these target markets, smart cards would catch on in the United States. Yet, by and large, the landscape looks much the same now as it did then; adoption is widespread overseas and marginal in this country. It might be time to ask whether, instead of being behind Europe in adopting smart cards, the United States might be ahead of Europe in rejecting them.
In retrospect we would have been better advised to consider the competitive environment. Smart cards are naturally contrasted with "dumb cards," which come with a magnetic stripe, bar code or password. Both types of cards connect to a network; smart cards differ in using the network less. They hold their own data and applications and do their own processing, updating lists of transactions or balancing out accounts from time to time. Dumb cards connect with each transaction and rely on the network for everything but the initial contact and authentication. Another difference is that dumb cards are cheaper: The cards themselves cost a tenth as much or less, and their supporting infrastructure is simpler.