In the wake of domestic smart-card launches by Visa and American Express Co., MasterCard International Inc. will debut its own card for secure online purchases through its 28,000 member banks in the United States during the first quarter of 2001.
No stranger to the so-called smart cards, MasterCard has sold roughly 30 million of them in Japan, Brazil and Europe since 1995.
“Japan is technology-loving and wanted to be there first, while Europe and Brazil saw a strong need for the card because of high credit card fraud in those regions,” said Adam Gluck, vice president of M/Chip product management at MasterCard International Inc., Purchase, NY. “U.S. banks are risk averse and wanted to wait and see how the card worked abroad first.”
He added that U.S. banks view the technology as a means to provide more value to the cardholders rather than to protect against fraud.
MasterCard expects to sell 15 million smart cards globally by 2003. The company would not disclose any details about the anticipated marketing campaigns for the cards.
While the card will be targeted to a range of tech-savvy credit card users, “from college students to high-net-worth individuals,” Gluck anticipates that the member banks issuing the card will focus primarily on customers with high net worths.
“Banks are always looking for ways to keep relationships with these wealthier consumers,” he said.
The card will cost $3 each to the issuing banks. There are no figures available on possible costs to consumers, as each bank will be able to set its own pricing structure.
When the card first launched five years ago, it was priced at up to $12. “Every year technology advances and the card becomes less expensive to use,” Gluck said.
Issuing banks will market the card to consumers with a scanning mechanism that can be connected to the user's computer. Gluck said it is too early in the process to provide details about the scanner.
The smart cards will include debit and credit functions, a pre-loaded online and offline loyalty program application and a digital identity application that allows cardholders to uniquely identify themselves to the merchant or bank with which they are interacting. The identification code on the card changes with each use.
“While traditional credit card numbers can be duplicated, the smart card constantly changing identification cannot be,” Gluck said.
The card will also feature electronic cash capabilities, which will enable consumers to transfer cash on their card accounts to family members and friends who also own smart cards.
MasterCard will pre-load all of the features into the card's memory, but each card issuer will decide what will be available to consumers.