14 October, 2002
PRINCETON JUNCTION, N.J., Oct. 14 /PRNewswire/ – Attendees were upbeatand justifiably optimistic about the future at the recently concluded Smart
Card Alliance Annual Conference, where the Alliance announced that smart card
module shipments to the U.S. and Canada had doubled in the first half of 2002
to 31.2 million, and total more than 120 million units since 1999.
“It is obvious there is a significant uptake of smart cards in the U.S.,”
said Paul Beverly, chairman of the Alliance and vice president of smart cards
and e-transactions, SchlumbergerSema. “With most U.S. wireless operators now
using smart cards in their mobile phones, there is an insatiable demand for
value added applications running on smart cards. What is really exciting,
however, is the large number of other sectors that are now implementing smart
card-based solutions,” said Beverly.
At the conference, speakers from government, enterprise IT, financial
services, retail, entertainment and transit reported on their rapidly growing
use of smart card technology to add convenience and solve common problems of
identification, authentication and security.
In a keynote address, Lee Holcomb director of Infostructure from the
Office of Homeland Security cited more than a dozen active smart card
initiatives in transportation, defense, justice and other federal agencies.
Holcomb said the U.S. government would broadly utilize smart cards to enhance
the security of the nation’s governmental operations and infrastructure.
“For example, smart cards can play a key role in making sure trusted
travelers, workers and cargo can move efficiently into, out of and around this
country,” said Holcomb. He also outlined his own strategy to use smart cards,
adding, “One of our smart card priorities is providing physical and
cybersecurity for Federal Homeland Security employees. After the Department
of Defense Common Access Card (CAC), this may become the largest federal smart
An impressive series of speakers from several government agencies joined
Holcomb in presenting how they are converging on the smart card as a single
card solution for both physical access control and cybersecurity.
Cybersecurity, also referred to as logical access control, is a catchall
phrase that encompasses network sign-on, identification, encryption and
digital signature. Smart cards are ideal for cybersecurity because they are a
central component of a public key infrastructure (PKI), which in turn is
rapidly becoming the cornerstone of IT security implementations. Smart cards
can also securely store biometrics, another security technology that has the
attention of both government and private sector policy makers.
Mary Dixon, director of the Department of Defense Access Card Office,
presented the most advanced project. “We have issued over one million smart
cards to date and are issuing 7,000 cards a day. We have 200,000 smart card
readers installed and will have three million issued by next year. This is
the largest PKI implementation that we know of.”
Other government organizations are actively pursuing similar plans.
“The Department of Interior is increasing the security of our facilities and
systems through the implementation of a smart authentication card,” said
Robert Donelson, senior property manager of the Bureau of Land Management at
the Department of Interior (DOI). The third largest law enforcement agency in
the country, the DOI is beginning a program to issue smart cards and public
key certificates to its 70,000 employees for use in physical access and
IT security. As to the business case, Donelson said, “We did not have to sell
our management on the cost benefits. They understand that failure to provide
high levels of IT security presents unacceptably high levels of risk. Believe
me we know that from experience.”
Similar government initiatives have been implemented in Canada as well.
Gary Miller, vice president marketing and strategy for Qunara, a systems
integrator in Canada, reported that the Canadian Department of National
Defense (DND) had issued more than 80,000 smart cards and 56,000 readers in
250 locations worldwide as part of an end-to-end network solution.
“The DND wanted to take advantage of public networks while maintaining
security. The solution we implemented included smart cards and public key
certificates,” said Miller, emphasizing the DND does not use public networks
for any classified information.
As in government, more and more organizations in the private sector are
turning to smart cards for security. At the conference, SchlumbergerSema
presented lessons learned from their program to issue a hybrid contact and
contactless ID card for both secure physical and logical access to its
80,000 global employees. Since the company is a leader in oil exploration and
reservoir management services, “the security of information is of paramount
importance to our clients and our company,” said Neville Pattinson, director
of business development and technology for SchlumbergerSema. The company has
put in place a solution that includes smart cards built on the same Open
Platform standards as the DOD CAC card program combined with a contactless
chip for physical access control. Applications include secure network logon
and Web access, electronic signatures and encryption of email and documents.
A complete system including card issuance, card management and PKI are in
place, and more than 35,000 smart cards and 21,000 certificates are in use.
So far 30 PKI-enabled Web applications have been deployed, and they expect to
have 80 by year-end.
Financial Services and Retail
One of the largest sectors contributing to the rapid growth of smart cards
in the U.S. is payment cards. Ted Iacobuzio, financial analyst for
TowerGroup, estimated that 6% of all active credit cards in the U.S. are now
chip cards. Although it may take up to ten years, Iacobuzio predicted that
eventually the smart card is going to replace magnetic stripe cards for
Evolution, not revolution, was also the consensus view of other
representatives of the financial services and retail sectors at the Alliance
conference. Steve Van Fleet, senior vice president of product and business
development for First Data Merchant Services, said, “The migration to chip is
part of the natural infrastructure change. Progress is continually taking
place. How many years this will take no one knows, but at some time we’ll see
that we have critical mass and we’ll say ‘go.’”
Eric Dumois, vice president card association relations for Hypercom,
agreed and reported that large retailers are preparing for the acceptance of
smart payment cards by purchasing smart card ready terminals. “Fully 50% of
all Hypercom payment terminals shipped in the U.S. are EMV certified and ready
to download Hypercom’s EMV certified smart card applications,” said Dumois.
EMV, an acronym for Europay, MasterCard and Visa, is the global standard for
smart payment cards established jointly by the three organizations.
One major player that is taking the lead is Target Corporation who has
already issued over seven million smart card cards and plans to accept the
cards in their stores and on their Web site with a new loyalty application
that includes electronic couponing. “I think the Target program is
brilliant,” said TowerGroup’s Iacobuzio. “It is capitalizing on the early
days of chip to get traffic. It is capitalizing on bricks and clicks. And
they are addressing an issue that faces every major private card issuer –
How do you get your high transactors out of a private card and into a
MasterCard or Visa and keep them loyal? For Target the answer is smart
cards,” he concluded.
Taking a completely different tack, Arthur Swanberg CEO of Stat Card said,
“Our basic rule is if it’s not fun, punt! If there is one thing I would like
to get you to start thinking about, it’s using entertainment as the catalyst
for smart card expansion in the U.S.” His company launched Skateboarding
Smart Trading Cards(TM) in January 2002 at the Toys ‘R Us in Times Square, now
available in all 702 Toys ‘R Us stores. Later this year Stat Card will launch
Mattel Hot Wheels(R) smart cards. The shrink-wrapped products in stores let
children use the cards with their PCs when they play games online and store
points, trophies, moves and other information on the cards that they can carry
around and show their friends with mini-readers. “We wanted to do something
fun, and we found out that smart cards are the perfect solution. There is a
pent-up demand for smart cards – people want to have fun with them,” added
Another sector moving towards smart cards is public transportation.
Agapito Diaz, chair of the revenue management committee of the American Public
Transit Association and vice president transit services for ACS, reported,
“Most major cities have programs to replace their automated fare collection
systems for the simple reason that they are old. In the next two or three
years you will see new AFC systems that will use contactless smart cards in
most major metropolitan areas.” Diaz said today there are 270,000 active
smart cards in the Washington DC transit system, and programs are underway in
San Francisco, Chicago and New York. New AFC systems that use smart cards are
also planned in Atlanta, Seattle, Minneapolis and Los Angeles among other
About the Smart Card Alliance
The Smart Card Alliance is a not-for-profit, multi-industry association
working to accelerate the acceptance of smart card technology. Smart
card-based systems verify, authenticate and protect a cardholder’s identity
and personal information. Major financial institutions, retailers, government
agencies, healthcare organizations and enterprises use smart cards worldwide
for secure identification, payment, transit and mobile telecommunications
Through specific projects such as education programs, market research,
advocacy, industry relations and open forums, the Alliance keeps its members
connected to industry leaders and innovative thought. The Alliance is the
single industry voice for smart cards, leading industry discussion on the
impact and value of smart cards in the U.S. For more information please visit
CONTACT: Debra Montner
Montner & Associates
<br /><br /> Bob Johnston <br /><br /> Smart Card Alliance <br /><br /> 800-556-6828 <br /><br /> [email protected]