MISSISAUGA, Ontario -- Heartened by the news that Visa and other payment companies are working to create a standard specification for smart card readers, VHS Network thinks demand for smart cards in the U.S. will quickly catch up to Europe.
"Even though Europe is far ahead of the United States, we believe that once major companies learn about the benefits of smart card technology, the U.S. will catch up with Europe very quickly," said Elwin Cathcart, president of VHS Network, an emerging player in the smart card market.
VHS Network recently entered into an agreement with Groupmark Canada Ltd. to exclusively license its SmartCARD technology in the U.S.
Cathcart said increase in Internet usage will fuel demand for smart cards in the U.S.
"Banks and other major financial institutions have a growing concern over the vulnerability of the magnetic strip cards to fraud. With the growing use of card transactions over the Internet, the concern becomes even greater. Our technology effectively eliminates most of these safety fears, making it the ideal method of payment for Internet transactions," he said. "And since the Internet market penetration in the U.S. is much higher than in Europe, it should be just a matter of time before the market will explode in the U.S."
Because they store up to 8,000 characters of data, versus 125 characters in a typical magnetic card, smart cards also will be popular for retail loyalty card programs, Cathcart predicted.
"The retailer can offer instant point of sale special promotions on high-margin merchandise or instant rewards or gifts based on past consumption patterns. Stores are able to attract more repeat business, and even decrease the importance of advertising low prices to attract customers," Cathcart said. "With smart card-based loyalty programs, retailers can do individualized marketing within the store without ever posting sale prices on store windows or walls. This makes it harder for the competition to know what and how much the store is discounting."
Because the information is accessed instantly and further data is collected without linking to a network, Cathcart said retailers can load updates on a central database just once a day.
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