Under-a-Buck Wonder

J ust awhile back, chip-based credit or debit cards would cost $5 or more, and issuers often cited the price as a major obstacle to converting from 50- cent magnetic stripe cards. Who could blame them?

Those days are over.

Visa International and STMicro-electronics have launched a new smart card that will cost less than one U.S. dollar. The companies believe the new card will accelerate the migration to chip and encourage others in the payment-services marketplace to follow suit.

Gaylon Howe, Executive Vice President, Consumer Product Platforms at Visa International, said: "The number of Visa smart cards being issued by banks worldwide has been increasing significantly. However, there are still many banks that would like to issue smart cards but are concerned about the cost compared to traditional magnetic stripe cards.

"While the cost of multi-application smart cards has been reduced significantly in recent months, we have also wanted to reduce the cost of simple, single-application cards.

"This new card product does just that. It will allow Visa member banks to enter the market at a low cost and to benefit from the increased security and functionality provided by chip technology."

Contrary to its $2.89 counterpart, which possesses 16K of EEPROM1 to support such applications as loyalty programs, the under-a-buck wonder smart card will narrow its operational vision and concentrate on handling Visa's credit and debit applications.

Being developed in partnership with IBM, the new smart card is part of a major Visa program to reduce the cost of issuing smart cards and will be the first in a family of low-cost products from STMicroelectronics.

The new card will be manufactured by ORGA Kartensysteme GmbH, although other manufacturers are negotiating with Visa to join the program.

Maurizio Felici, General Manager, Smart Card division, STMicroelec-tronics, said: "We believe that this will help banks to migrate to appropriate smart card solutions according to their local and specific needs."

1 Electrically erasable programmable read-only memory.