NEW YORK -- New York City residents will need to wait a while longer to live in a cashless society, with the smart card pilot on Manhattan's Upper West Side facing a shutdown at the end of the year.
Citibank and Chase Manhattan Bank here teamed up with Visa U.S.A., San Mateo, Calif., and MasterCard International, Purchase, N.Y., to launch New York's first taste of smart card technology last October.
"Our goals were to understand the product, and how to deploy the technology," said Mark Rodgers, spokesman for Citibank. "What started out as a six-month program was expanded into a 14-month pilot. We attained the learning we set out to achieve."
While program participants reported that the test prompted sporadic consumer card usage, they do see a future for the technology if additional applications are added to the cards.
A key element tested during the pilot was the interoperability of the terminals that processed card transactions at point-of-sale. "We used both a Visa and Mondex product during the test, and we deployed a common card processing terminal that would access both cards," said Greg Jones, spokesman for Visa.
The test, which originally encompassed 600 participating retailers, has dwindled to 200 retailers that will continue to accept the cards, which house a microprocessor chip that can store up to $500 in cash value.
Customers can use the cards as a method of payment until the end of 1998. At that point, cardholders have until the card's expiration date to transfer remaining funds back into their existing bank accounts.
Since the test was launched, approximately 100,000 cards were distributed, but only $1 million in customer purchases via smart cards were made during the test.
While Food Emporium, Broadway and 68th St., reported it saw daily use of the card, "it was sporadic," said Thomas Boyd, store manager. "I would say that we saw an average transaction of $20 by card users." Citibank and Visa reported that an average card transaction was less than $5 in most retail outlets.
"I do not feel the pilot went over well, and I blame advertising," said Boyd. "I do not think the public was well enough aware of the test or the advantages it could have provided."
In addition to Food Emporium, a banner of A&P, Montvale, N.J., other retailers involved in the test include D'Agostino Supermarkets, Larchmont, N.Y., Duane Reade, Long Island City, N.Y., and Rite Aid, Camp Hill, Pa.
Another factor that may have slowed card usage was a lack of multiple applications. "A drawback was that this method of payment was not universally accepted [beyond retailers]," said Citibank's Rodgers.
"In the future we need to look at multiple applications like adding the transit system, telephones, parking meters, vending machines, and loyalty programs," he added. "We need to make the card a convenient substitute to carrying cash. As other information and additional programs are added, the product becomes more attractive to consumers."
Though the test is drawing to a close, sources do not believe this is the last New York will see of the smart card technology. "If the test was not confined to one area of New York the usage could have been more widespread," said a representative for Chase.
"I believe in a paperless society," said Food Emporium's Boyd. "People are afraid to carry cash nowadays, and I think people tend to spend more when they are using plastic, rather than paper money."
Since the New York smart card pilot began, Burger King, Miami, launched a smart card-based program that enables customers to pay for orders and earn loyalty points based on purchases made with the smart card. The fast food retailer is working with Chase and Mondex U.S.A., San Francisco.
Other venues that have tested smart cards include the 1996 Summer Olympic Games in Atlanta, and the cards have also been used in controlled environments such as college campuses and theme parks.