Smart cards in loyalty applications may catch on

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By: Wise Marketer Staff |

Posted on October 24, 2002

The future of smart card logic in customer loyalty applications is optimistic, according to the attendees of the Smart Card Alliance annual conference. Apart from shipments to the US and Canada having doubled in the first half of 2002, loyalty applications are on the increase as well.

There is a significant uptake of smart cards in the US, and in other countries around the world, with most mobile telephone operators using smart cards in their mobile phones, and it seems there is a growing demand for value-added applications that run on smart cards. A large number of other sectors, including loyalty marketing, are also now starting to implement smart card-based solutions.

One of the largest sectors contributing to the rapid growth of smart cards in the US is payment cards. Ted Iacobuzio, financial analyst for Tower Group, estimates that 6% of all active credit cards in the US are now chip cards.

Eric Dumois, vice president of card association relations for Hypercom, reported that large retailers are preparing for the acceptance of smart payment cards and loyalty cards by installing smart card terminals. "At least 50% of all our payment terminals shipped in the US are EMV certified and ready to download our EMV smart card applications," he added.

EMV (Europay/Mastercard/Visa) is the global standard for smart payment cards established jointly by the three companies.

Taking the lead on loyalty...
One company that is taking the lead in loyalty applications is Target Corporation, which has already issued over seven million smart card cards. The firm plans to accept the cards in its stores and on its web site with a new loyalty application that includes electronic couponing.

"Target is capitalising on the early days of chip cards to get traffic, and also capitalising on bricks and clicks," said Ted Iacobuzio of Tower Group. "Target is addressing an issue that faces every major private card issuer: How do you get your big spenders out of a private card and into a MasterCard or Visa while keeping them loyal? For Target, the answer is smart cards."

And, emphasising fun for the consumer, entertainments firm Stat Card, which is behind the Toys'R'Us Skateboarding smart trading cards, hopes to use entertainment as a catalyst for the expansion of the smart card market. Later this year Stat Card will launch Mattel Hot Wheels smart cards, which let children use the cards with their PCs when they play games online, storing points, trophies, and moves on the cards, which they can show their friends using mini-readers.

At the conference, speakers from retail, entertainment, financial services, enterprise IT, government, and transit reported on their increasing use of smart cards to add convenience for the consumer, and to and solve the common problems of identification and security.

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