Disclaimer:  This paper was formatted as a memo to the Director of my agency in accordance with requirements specified in my course on electronic commerce at the University of Maryland University College.  It is purely an academic exercise.  It has no connection to my official duties and has not been transmitted to the Director.  Additional papers on this and other information resources management (IRM) topics are available on my personal home page at http://www.erols.com/ambur.

November 1, 1998
To: Director, U.S. Fish and Wildlife Service
From: Owen Ambur
Subject: Smart Cards - Opportunities, Threats and European Versus U.S. Acceptance

In testimony before the Federal Deposit Insurance Corporation, Vartanian (1996) referenced what are perhaps the two greatest threats facing any organization that may wish to embark upon the use of smart cards:

Based upon the requirements associated with our authorities and responsibilities, the use of smart cards is not a central, much less a critical issue for us. However, two important issues that must be addressed if this technology is to be widely accepted by our stakeholders are: As far as our agency is concerned, the risks associated with smart cards are offset to a large degree by two significant opportunities: The success of GSA's efforts will determine when critical mass is reached for the application of smart card technology in the Federal Government. The Vice President, through the National Partnership for Reinventing Government (NPR), can also be expected to continue to exert vocal leadership on this issue.(3) The Office of Management and Budget (OMB) is charged by law with providing oversight, coordination, and guidance on technology policy issues Governmentwide and the National Institutes of Standards and Technology (NIST) is responsible for technical guidance, particularly with respect to privacy and security issues.(4) However based upon recent experience, it seems unlikely that enlightened, progressive, or aggressive leadership will be forthcoming from either OMB or NIST.

On the topic of leadership, Gleick (1996) observed:

Regardless of who takes the leadership and how well they carry out their responsibilities, the proper role and strategy for our agency is to be a willing and eager team player in the implementation and use of this important emerging technology. In that role, not only should we be preparing ourselves and working with our partners to take the fullest advantage of smart cards internally as well as in our interactions with our stakeholders, but we should also actively convey to those in the leadership our interest and willingness to follow their lead in adopting the necessary standards and building critical mass. Of course, as always, we should look to DOI, particularly the Chief Information Officer (CIO), for leadership on this issue. As progress occurs and momentum builds, we should begin to explore in a brainstorming mode such innovative and even radical notions as smart card "branding" and value-added taxes for conservation purposes.(5)

While it is outside the scope of our direct concern, the short history of smart cards is both interesting and instructive. In a Web-based "smart card museum," an organization known as Analyses & Synthèses (1998) provides a detailed history of the technology through the decades of the 1970s and 1980s. Among the highlights are the following: In September 1981 smart card experiments were initiated in three French cities - Blois, Caen, and Lyon - and those experiments actually got under way in 1982. By 1986, 250,000 bank smart cards were in use in France. In March 1986, 64,000 cards were distributed to banking customers in Virginia, Maryland, and Florida. As of October 1, 1987, the French chip bank card could be used in pay phones and later that month a former French Finance Minister declared:

However, in 1988 three concerns arose that caused the French to have second thoughts: First, revenues were lower than expected while expenses were higher. Second, technical problems were encountered. Third, there were indications that MasterCard and Visa would develop a new electronic anti-fraud system that would not use the French technology, thus raising fears of launching a system that only the French banks would use. The close of the decade of the '80s found Thomas Cook experimenting with the use of a memory card as an electronic traveler's check. Meanwhile the president of a French pay TV channel who had been favorable to a memory-card decoding system concluded that it was "much too expensive."

Speaking of the potential market for "stored value cards," Vartanian (1996) observed:

Gleick (1996) noted that the average American signs 270 checks a year, compared with 10 for the average German. (For additional astute observations made by Gleick, see end note 6.)(6) With respect to U.S. versus European acceptance of smart cards, Harris et al. point out: They also note that the U.S. has lagged a few years behind the Europe but that smart cards are beginning to infiltrate many sectors of our economy, with many projects in the pilot stage. They cite industry and government applications in banking, health care, transportation, access security, point of purchase sales, and military operations. Van Eg (1996) concurs that Europe is in the lead, and Newsbyte Pacifica (1996) reports that Asia is ahead of the U.S. in smart card acceptance as well. ETHOS (1997) cites an even higher estimate - 90 percent for Europe versus only 2 percent in the U.S. - and notes: ETHOS cites an estimate that smart card shipments in the Americas will grow to 6.8 million by 2001, or about 20 percent of the estimated 3.4 billion units worldwide. ETHOS also reports that e-cash and smart cards could make up half of the $7.3 billion in online sales by 2000. Brancheau (1996) offers an explanation for why smart cards have found greater acceptance in Europe than the U.S.: Leibert (1998) avers, "Smart cards will figure strongly ... as a means of empowerment for citizens as well as a way to promote harmonisation and interoperability throughout the European Union." (With reference to citizen empowerment, see also end note 5.) As far as the U.S. is concerned, Mechling (1998) expresses suspicion that: Mechling concludes: GSA's smart card initiative together with DOI's employee ID and charge card consolidation projects establish the foundation for additional applications on an incremental basis, consistent with the continuous improvement in the technology that may be anticipated.(7) We should strive to be among the "leading followers" in the implementation and use of this exciting technology for innovative applications directly related to our mission.


Analyses & Synthèses. (1998, October 22.) "The Birth of Smart Cards:1981 & 1982." The Smart Card Cybershow. Available at: http://www.cardshow.com/index.html

Boyd, J. (1998, January 21). "Smart cards not smart enough." The Japan Times. Available at: http://www.japantimes.co.jp/features/ccorner/cc98/cc980121.html

Brancheau, J. (1996, December 31). "Smart Cards." Available at: http://www.colorado.edu/infs/jcb/sinewave/service/epayments/smartcards.html

CompUSA. (1998, October 26). "Open for Government Business." Advertising supplement in Government Computer News.

ETHOS. (1997, June 19). "The varying adoption of smart cards." Available at: http://www.tagish.co.uk/ethosub/lit6/8fb6.htm

General Services Administration. (1998) SmartGov: The Smart Government Community. Available at: http://policyworks.gov/org/main/me/smartgov/

Gleick, J. (1996, June 16). "Dead as a Dollar." The New York Times. p. 26.

Harris, J., Kennedy, J., Lindsay, S., and Widowski, B. (1998). SMART CARDS: The Future is in the Cards. Available at: http://spider.cwru.edu/projects/mids409/fall97/smart/smart1.html

Leibert, A., Director. (1998, October 30). "What's Hot." Card Europe, The Association For Smart Card And Related Industries. Available at: http://www.cardeurope.demon.co.uk/hot.htm .

Mechling, J. (1998) "Smart Cards as Infrastructure: Is Government Missing the Big Bets?" Available at: http://policyworks.gov/org/main/mg/intergov/letter/harvard3.htm

Newsbytes Pacifica. (1996, February 27). "Asian Smart Card Market Booming."  Available at: http://www.nb-pacifica.com/headline/asiansmartcardmarketb_515.shtml

Van Eng, R. (1996, October 17). "Europe Leads The World In Smart Card Usage. France,

Spain, Germany and Netherlands see widespread use in health care, social security and electronic cash." Available at: http://www.cosmo21.com/wind/news/w1096_08.htm

Vartanian, T.P. (1996, September 12). Statement to the Federal Deposit Insurance Corporation Concerning Stored Value Cards and Electronic Payment Systems. Available at: http://www.ffhsj.com/bancmail/tpvtest.htm.

End Notes

1. In his testimony to the FDIC, Vartanian (1996) proffered the following 14 conclusions:

2. Boyd (1998) notes that the proliferation of different cards may be their undoing, since no one wants to be forced to carry around still more plastic.

3. An indication of the Vice President's involvement with smart cards can be seen in the White House's Framework for Global Electronic Commerce, which is available at: http://www.whitehouse.gov/WH/New/Commerce/read.html. Documentation on NPR's involvement in this technology can be retrieved by conducting a "smart cards" search at http://www.npr.gov/nprsrch.html.

4. Documentation on NIST's involvement with smart cards can be retrieved by conducting a search at http://search.nist.gov/external/external_search.html.

5. Innovative opportunities that may warrant consideration include such things as:

Such innovations might serve as means of generating additional revenue and/or offsetting reductions in general tax revenues in support of our natural resources conservation programs. We already have authority to license the Duck Stamp image to vendors of commercial products. We are also authorized to collect entrance fees at various of our National Wildlife Refuges and the Golden Eagle pass provides general admission to Federal recreation and conservation areas nationwide, with revenues split among the participating agencies. Offering the pass as a component of a smart card may be an effective way to greatly expand its customer base. Moreover, commercial vendors may be willing to pay a significant share of their revenue for the right to license and brand a natural resources conservation smart card.

Open dissent and vociferous debate are the hallmark and strength of our democracy. However, even the staunchest fiscal conservatives on the one hand and liberals on the other may concur in the wisdom of efficiently associating environmental costs with the revenue streams appurtenant thereto, as well as offering citizens the opportunity to voluntarily contribute to the cause of natural resources conservation. As Congress and the nation deliberate changes in our tax policies, the potential economic efficiencies of branded smart cards and environmental impact taxes are worth of consideration in the debate.

It has been said that in the market, one dollar equals one vote. To that degree, it would be interesting to see what might happen if Members of Congress were willing to disintermediate themselves and empower the American public to vote directly with their dollars on important natural resources conservation issues. Electronic commerce in general, and smart cards in particular, hold vast potential to enhance the economic efficiency with which such a voting process might be conducted. At the very least, it seems worthy of a few carefully selected pilots and it would be well if the interests of our agency could be represented among them.

6. Other observations that made by Gleick (1996) include:

7. A review of DOI's Web site (http://www.doi.gov) didn't turn up any reference to smart cards, the DOI ID or the consolidation of procurement and travel charge cards. However, additional details on GSA's initiative are provided by CompUSA (1998), which reports the following: