Date: Fri, 21 Nov 1997 05:07:31 GMT Server: Stronghold/1.3.4 Ben-SSL/1.3 Apache/1.1.3 Content-type: text/html Content-length: 15559 Last-modified: Mon, 13 Oct 1997 21:33:28 GMT Racom Systems Inc. FAQ's About Smart Card Technology

Questions and Answers about Racom Systems and about Contactless Smart Card Applications

This list will change and if you have a particular question for us, please contact us at info@racom.com We'll answer you quickly!

 What are the applications that utilize smart cards?

 I know that there are cards being sold in the US, but there aren't any uses for them yet, are there?

 What is AFC? EPOS? Electronic Purse? Access Control? Ticketless Travel? Multiple Applications?

 Where are smart cards being used now?

 I hear a lot of talk about this type of card being used in the health care industry, is that true?

 How many smart cards being used today?

 I've heard that this technology is being used in both highly developed and under-developed countries, how so?

 What are the main differences between stored-value cards, smart cards, and debit cards?

What are the applications that utilize smart cards?

Contactless "smart card" technology is designed for applications in which continuous movement is an integral part of the transaction. The number of potential applications for smart card technology is astounding. The following list indicates applications where smart cards are currently being used and the related industries: Automatic fare collection (AFC) for public transport (including bus systems, subways, taxi and limousine services), Access Control for public/government offices, parking lots, ski resorts, special conferences/trade shows, Ticketless Travel for airlines, Customer Loyalty for oil and gas retail, general retail, restaurants, long distance telephone service, supermarkets, credit cards, travel services, and Electronic Purse for cruise ships, colleges, universities and schools.

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I know there are cards being sold in the US, but there aren't any uses for them yet, are there?

Why, yes! Although most of the market for smart cards is currently in Europe, Racom alone has installed numerous smart card systems in the US. These include an airport parking access control/AFC system in Lubbock, Texas, an AFC system for the Winston-Salem Transit Authority in North Carolina, an AFC system for Camarillo Area Transit, Ojai transit, Moorpark City Transit, Simi Valley Transit, South Coast Area Transit, Thousand Oaks Transit and VISTA - all located in Southern California, and an access control system for the certain employees of the Chicago Transit Authority (CTA).

Racom is currently planning additional installations for 1996 in the US  for AFC, Access Control and Electronic Purse.

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What is POS? Electronic Purse? Access Control? Ticketless Travel? MultiApps?

AFC means automatic fare collection - a major application for smart cards today. AFC can be applied to various industries including bus, subway or other transit systems, taxicabs and limousine services, even non-stop toll booths. Using smart card technology in AFC applications is smart because it increases load/unload time because the users don't have to look for change, it decreases costs because the users can use the same card over and over - it isn't simply disposed of once its value has been used. Smart card technology also allows for inter-system transfer - no more of those little transfer slips to make sure you don't lose! Could you imagine having one card that would allow you to get on a bus at home, ride to a train stop, transfer to the train, ride to work and then ride home with your spouse or friend in a car and use your "smart card" to drive in the carpool lane?

EPOS means "Electronic Point of Sale" and is geared towards the retail industry. Electronic purse, as defined in a March 1995 Press Release for Schlumberger, a French smart card manufacturer, is a highly convenient replacement for coins and small value notes. The Press Release announced that "First Union chooses Schlumberger smart cards for USA's first large scale 'electronic purse' scheme." First Union, a top US banking and financial services company, plans to issue a million stored value smart cards in Atlanta between September 1995 and the start of the Olympics in 1996. This specific installation included both disposable and rechargeable stored value cards issued in denominations of $25 to $100. Additional value will be added via ATM's or telephones.

Access Control does not only refer to physical access control to buildings or parking lots, but also refers to the encryption and authorization capabilties of smart card technology to limit access to public networks and information networks. A good example of this is the cable television industry.

Ticketless Travel is just that - traveling without a paper ticket. In this type of system high frequency travelers are issued personalized smart cards. The card's interior computer chip maintains the necessary data needed for travel - reservation information, Frequent Flyer information and the method of payment (e.g. credit card number or prepaid balance). Each traveler may go directly to an airline gate, most likely insert the card into a card reader (like an ATM), select a row and available seat, then board the aircraft with the necessary charge and frequent flyer information read from and stored to his/her card automatically. Racom is currently working on a project with American Airlines for Ticketless travel.

Multi-Applications represent a new generation of smart cards. This highly evolved card will effectively combine the applications discussed above with the additional capability to keep the various applications effectively separated from each other. In a recent "Smart Card Technology International" article, Stephen Lee stated that "it is envisaged that such a card will act as a 'personal proxy' for the individual in the Information Age. The card will allow the consumer to pay securely, to gain access to electronic services, for personal identification and to customise his interaction with the network. The card will provide consumer choice and be flexible to change as his or her lifestyle changes."

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Where are smart cards being used now?

Smart cards are being used all over the world. Basic statistics tell the story. Germany has issued over 80 million smart cards to its citizens in conjunction their national health care program. 60% of French citizens currently use smart cards. Over 50 major cities in the World are either currently running pilot programs or otherwise seriously evaluating introduction of smart cards for use on their mass transit and with related parking and other retail and service businesses. The top five smart card producers in Europe alone distributed over 370 million smart cards in 1994; nearly 500 million in `95.

The following uses were obtained from CP8 Transac, of the Bull Groupe from the brochure "Smart Solutions for Secured Transactions"; Smart cards have been used by the Marines as a means to make purchases and cash withdrawals with reduced manpower and costs for materials required to administer the paper system. The US Department of Agriculture has conducted a test for use of smart cards as a replacement for Food Stamps. Because of the security features in smart cards, the benefits cannot be sold or traded. Smart cards have been used in worldwide/national Expo's/trade shows. In one instance, the cards were used in conjunction with fingerprint data for use in access control to the exhibition area.The Royal Bank of Canada has used smart card technology since 1985 for access control to the bank's on-line electronic business banking services.The US Department of Agriculture has used smart card technology to monitor and control crop sales. The card's memory stores crop quota and loan information, and allows the USDA to receive accurate, timely data about crop sales for use in price forecasting. Students, faculty and staff at the University of Rome-Italy have used smart cards for access control to student records, verification that the "real" student is taking an exam, data entry/verification in the university's mainframe computer.

The French public telephone company also has issued smart cards as stored value cards to make long distance telephone calls. This reduces or eliminates the usage of coins at pay telephones, reducing the manpower required by the telephone company in handling the coins and increasing the convenience for the customers. All French bank cards now have microprocessor - reducing the bank's communications and paper processing costs, eliminating fraud and expediting retail check-outs.In Norway, the Norwegian bank association is issuing smart cards to be used a debit cards throughout the country. Club Med has replaced its bead necklace payment system with smart cards to automate payments at clubs in Spain, France and on cruises. In France, the smart card is now used as the key to reception for pay TV programs. In Switzerland, smart cards are used similarly to ATM cards in the US. The Swiss use the cards for cash withdrawals at ATM's and purchases at a national grocery store chain.This is only a handful of the current applications in place, there are many more out there and yet to come.

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I hear a lot of talk about this type of card being used in the health care industry, is that true?

Yes, in Germany over 80 million smart cards have been issued to its citizens in conjunction their national health care program. These cards allow easy access to your health history and even easier update of the information.

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How many smart cards being used today?

It's hard to say, but market research indicates that nearly two billion cards have been issued in the past few years. The majority have been issued in Europe, but the US and Asia are soon to follow.

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I've heard that this technology is being used in both highly developed and under-developed countries, how so?

In many countries where there is little or no telecommunications infrastructure compared to the U.S., smart card technology is quickly and productively solving the needs of people to conduct transactions for personal, public and industrial use. This is happening even though there are still very few agreed-upon "standards" for generalized worldwide use of either contact or contactless smart cards.

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What are the main differences between stored-value cards, smart cards, and debit cards?

Fundamentally, a stored-value card is usually issued in low dollar amounts ranging from $25-$100 and is intended to replace cash. These cards may be disposed of or reloaded with value. A smart card has a microchip in the card and can perform Multi-functions. In the October 30,1995 issue of "Fortune" magazine, the article about American Express stated that "an MCI test card at Florida State acts as photo ID, door key, and credit and ATM card. On a debit card purchases are deducted directly from cardholder checking accounts.

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