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"SMART CARD" EASES TRANSACTIONS WITH COMPUTER CHIP

A card that is smarter than the rest of us

Those coins in your pocket, those bills in your wallet, look at them closely, feel them in your hand, because someday sooner than you think they will be collectors' items. That's due to the "smart card," a card the size of a credit card with a two-by-two millimeter computer chip on it able to record money amounts and process transactions.
"The future is so clear, it's obvious," said Dušan Budzák, the general director of LBS s.r.o., one of the companies marketing and promoting the smart card in Slovakia. "It will be common to put a set amount of money from your bank account on to a card, the so-called 'electronic purse,' with which you will be able to go to a store and pay for goods with it."
An "electronic purse" is real money, not credit, drawn by a user on to their card from a bank or bank machine. The card can then be used in designated outlets with a scanner reading the chip and subtracting the amount from the electronic purse.


Not just plastic. The smart card and its computer chip.
Courtesy of UniKredit

Those coins in your pocket, those bills in your wallet, look at them closely, feel them in your hand, because someday sooner than you think they will be collectors' items. That's due to the "smart card," a card the size of a credit card with a two-by-two millimeter computer chip on it able to record money amounts and process transactions.

"The future is so clear, it's obvious," said Dušan Budzák, the general director of LBS s.r.o., one of the companies marketing and promoting the smart card in Slovakia. "It will be common to put a set amount of money from your bank account on to a card, the so-called 'electronic purse,' with which you will be able to go to a store and pay for goods with it."

An "electronic purse" is real money, not credit, drawn by a user on to their card from a bank or bank machine. The card can then be used in designated outlets with a scanner reading the chip and subtracting the amount from the electronic purse. Simple, easy, and no loose change. If you lose the card, you lose that money on the card, just as if you lost your wallet.

To demonstrate how the smart card works, LBS set up a grocery store at the banking and finance fair Finex in Banská Bystrica in which all goods could be paid for electronically. LBS is responsible for Unikredit, a loan/leasing finance company. Anyone with a Unikredit card - and there are 35,000 customers in Slovakia - could have made a purchase at the store at Finex.

For the most part Unikredit is known throughout Slovakia for its reasonable leasing terms on the purchase of high-price items such as furniture, computers, other electronics. Applicants need to have 35,000 Sk ($1,030) and a clean credit history. Users can shop with the card at over 1,500 outlets.

LBS's main concern with Unikredit users was that they were mostly one-time buyers, explained Budzák. "A company such as ours in the Czech Republic died because they could not adapt to this problem," Budzák said.

So at a secret meeting at a mountain chalet in the High Tatras in 1994, top management decided to seek partners to market the smart card. "We were afraid someone else might seek partners ahead of us and steal the idea," Budzák said.

One of LBS's partners is Thyron, an innovative automation software and hardware provider based in the United Kingdom. "We are in Slovakia because of the vision of that man," said Bill Thompson, an account manager for Thyron, pointing at Budzák. "Budzák met with us in London. He impressed us that they could carry it out. And now we are here part of an effective partnership."

Thyron provides point-of-sale (POS) terminals that can read and process information off the smart card computer chip. Since transferring money electronically is sensitive, Thyron concentrates on providing security.

"The application of smart cards is growing all over the world," Thompson said. "I know in Slovakia they want the smart card to hold the 'electronic purse.' The potential is enormous, especially in telecommunications and transportation."

Thompson went on to say that the smart card is compatible with card phones and that in Austria, for example, it is accepted in taxis.

But in order for the smart card to be more than a glorified phone card, its proponents must convince banks that it's worthwhile to invest in the hardware and software necessary to give the smart card universal applications.

The many layers of technology mirror the partners who are bringing smart card technology to Slovakia.

LBS is the marketer and promoter. The firm is teamed with Thyron - which provides that hardware, Siemens Nixdorf - provides project management and the server that manages the whole process, Austria Card - produces the actual smart card and personalizes it for users, and SWH (owned by Siemens Austria) - which provides the software.

So far, the only bank that has shown interest is Československá Obchodná Banka. "The more it's accepted at outlets, the number of which is growing every day, the more banks will open their doors to the idea," Budzák said.

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