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Smart Card Technology Takes Step Forward
by Laura Hughes
A "SMART CARD" scheme launched in Britain features new technology which
will bring the cashless society closer to reality. The scheme,
Citycard, uses technology which is designed to eliminate the need for
loose change for small cash payments, such as parking fees, bus or
train tickets or leisure activity charges.
Citycard technology provides consumers with the convenience of using
plastic rather than searching for loose change. It also features the
added benefit of a contactless card, which does not need to be
inserted into a traditional reader - rather it just requires the card
to be passed over the top of a reader for added speed, which is
regarded as vital in these applications.
The use of plastic cards, such as Visa, MasterCard and Switch, is
growing at 10 per cent plus per annum. Plastic cards are used for
more than three billion pounds sterling of payments in the United
Kingdom each year.
This however only accounts for a small proportion of all consumer
transactions. Despite the increasing popularity and convenience of
plastic payments the majority of the remaining transactions are of
too low value to use existing cards. The existing credit card
infrastructure, for example, can not profitably handle transactions
under 25 pounds sterling.
Global payment schemes are now keen to expand into lower value
payment segments. This opens up whole new areas for cashless payment
such as self service and Internet transactions, with completely new
volume and risk profiles which established payment networks were
never designed to handle.
Even recent trials of electronic purse schemes, such as Proton or
Mondex, have not been successful in handling small transactions.
Future worldwide electronic purse initiatives, like VisaCash, will
encompass Citycard technology to enable the lower value transactions
to be added.
The Citycard technology also includes the first comprehensive data
transfer and clearing system designed to support local schemes for
the accurate allocation of costs and revenues between multiple card
issuers and acceptors. Growth of Smart Cards Smart cards are growing
in popularity worldwide.
More secure than conventional magnetic stripe cards, smart cards
contain a small embedded computer chip that enables the card to store
more information. In France smart cards are used for payphones and
bank cards, in Germany they are used for national insurance and
In the UK many new retailer loyalty schemes, like the Shell reward
scheme, use smart cards and the UK banks are set to start replacing
existing magnetic stripe plastic bank, debit and credit cards with
smart cards during 1998.
Rather than increase the plethora of plastic cards in everyone's
wallet or purse, smart card technology with the ability to store more
information on one card, offers the opportunity to develop
multi-application cards. This has been central to the development of
Citycard technology: the vision of one card with many uses.
Multiple applications, ranging from electronic purse or storage of
membership details or passes and season tickets for transport,
parking, leisure, libraries, housing benefits and retailer loyalty
can be stored within one smart Citycard.
The Herts Smart Scheme is the first UK application of Citycard
technology. It has been pioneered by a partnership of Transmo
Citycard, a technology service provider based in Royston,
Hertfordshire (southern England), the Hertfordshire County Council
and The Shires, the county's largest bus company.
The first phase of the Herts Smart Scheme involves bus travel. Bus
travel was identified as the key application within the region and
provides a self-financing framework for county-wide travel, parking
and other local services to be added to the Citycard. It is expected
that the scheme will be county-wide by the year 2000. Many other
local authorities and cities are also poised to follow the
As part of phase one of the scheme children at schools in Hemel
Hempstead, southern England, have been issued with smart cards
instead of cardboard free bus passes. Frequent use fare discount
cards for students are also being converted to smart cards.
Hertfordshire County Council (HCC), in southern England, will be
extending the scheme throughout 1998, issuing approximately 30,000
cards. Local companies are being encouraged to issue staff with
discount cards as part of the Business TravelWise initiative, a
scheme to encourage businesses to bring forward measures to cut down
peak time travel congestion. Discussions are also underway to issue
cards to the elderly and disabled.
The Herts Smart Scheme was already being installed when British
Deputy Prime Minister John Prescott's vision for a truly integrated
transport revolution in the UK was published, in the document
Developing and Integrated Transport Policy.
The scheme shows how electronic card technology can be used to
achieve the vision for Mr Prescott, who is also Secretary of State
for the Environment, Transport and the Regions. It works with local
government and transport operators to develop an integrated transport
''We are delighted to be involved in such a pioneering scheme, and
confidently expect major cities to follow suit,'' said Spencer Robeson,
head of the passenger transport unit at HCC. How the scheme works: A
smart card is rather like a sophisticated credit card or phone card,
with a computer chip hidden inside. This enables the card to store
information about where and when the pupils are entitled to travel.
The smart cards in the Herts Smart Scheme carry a digitised
identification photograph, a name, a pass number and issuer. The chip
on the cards is encoded with ID details issue, term and authorised
The Shires buses have been fitted with a smart pass reader which is
integrated into the ticketing machine. The user simply passes the
card over the top of the reader on the top of the ticketing machine
and it is read instantly.
Every payment terminal is also fitted with a TSM, or Transmo Security
Module. This module, in the form of a small printed circuit board,
captures an independent audit of card transactions. It relays
information back to the Transmo Clearing Centre, where the data is
This pioneering technology gives the scheme a comprehensive clearing
and payment infrastructure, allowing it to allocate costs and
revenues. It enables HCC to control the use of the pass for
authorised journeys, allocate accurate reimbursements to The Shires
on a journeys-made basis and allocate reimbursed costs of those
journeys to the District Council responsible for the pass holders. It
will also help planning the allocation of subsidised routes.
Further benefits include user-friendly, fast and easy card handling,
savings in scheme administration costs and reduced loss from pass
abuse and statistical data collection on frequency of use.
John Batten, Managing Director, Transmo Citycard, Unit 1
Maltings, Green Drift, Royston, Hertfordshire, United Kingdom, SG8
Telephone: +44 1763 249933
Fax: +44 1763 249955
Hertfordshire County Council
Telephone: +44 1992
Telephone: +44 1923 682262
Elizabeth Grindlay/ Becky Green/ Fiona Armstrong at icas public
Telephone: +44 1442 261199
Fax +44 1442 236401