Consumers Can Charge Everything : MasterCard to Test ‘Smart’ Card

MasterCard International said Thursday that it will begin testing a new type of “smart” credit card with a small computer chip implanted in the plastic to make it easier for consumers to charge everything from taxicab rides to department store purchases.

In the first move among major credit card companies to try these “chip cards” in the United States, MasterCard said it would issue the new cards to 40,000 customers in Maryland and Florida.

Each card will contain a circle about the size of a thumbnail where the microprocessor chip is located. The tiny chip, MasterCard said, can store the information equivalent to several pages of an encyclopedia.

Secret Code Set

When the card is used, the consumer will punch a secret code into a special terminal linked to a central computer that automatically will submit the charge and, if approved, add the total to the customer’s bill.

Key advantages of the new card, the company said, will include an expansion of services that banks can offer to card holders, more efficient transactions without paper charge slips and greater protection for consumers against fraudulent credit card use.

But despite the changes, “there is no adjustment for the consumer,” MasterCard International President Russell E. Hogg said in an interview.

MasterCard will test two different technologies in the cards, although the company said that both will perform the same functions.

Cards being tested in Florida--with the chip on the back--are produced by Casio, while those to be used in Maryland--with the chip on the front--are produced by Microcard Technologies, a division of the French company Bull. Casio said its cards also could be used as debit cards--which work more like a check than a credit card--and to store medical records and health- insurance information.

“We are trying to develop a set of standards” so that customers can use the new cards abroad as well as in the United States, Hogg said. “We believe we will write the standard specifications used in any card in the world.”

Meanwhile, Visa spokesman David Brancoli said Visa completed a test of a chip card through a French partner, Carta Bleue, which expects to expand the program to 3 million cards in France this year.

“We know it already works,” Brancoli said. “We don’t have to test it anymore.”

He said Visa is now reviewing the market for such a product in the United States and the investment required for new terminals to read the chip cards.

In making its announcement, MasterCard--with 110 million cards in circulation and $80 billion in sales projected this year--sees a healthy future for the new card.

According to Hogg, declining prices for both chips and terminals have made this market increasingly attractive. Within the next year, MasterCard plans to experiment with a new hand-held terminal that people like taxi drivers and home repairmen could use.

For example, officials said, at the end of a day a taxi driver could stop by a bank and be reimbursed in cash for the amount that his customers had charged--and, of course, the tips.