Alliance formed to develop first nationwide smart card company New York, Aug. 16 (Reuters) - The United States is a step closer to cashless commerce. Fourteen banks and financial instutions said Wednesday that they will form a company to develop and issue the first debit card that can be used nationwide instead of cash for purchases under $20. The new company, to be called SmartCash, will help speed the implementation of so-called "smart card" technology that uses a micro-processor chip embedded in the card to store vast amounts of information, including improved security features. "The chip gives the card an amazing abitity to contain stored information," said Nancy Elder, a spokeswoman for MasterCard International Inc., one of the companies participating in the creation of SmartCash. In addition to Mastercard International, other founding companies include Banc One Corp., Bank of America, Chemical Bank Corp., CoreStates Financial Corp., NationsBank Corp. and Wachovia Corp. However, participation in SmartCash will be open to all U.S. financial institutions and card providers, the companies said. "SmartCash represents a shared vision and a shared commitment to deliver the increased convenience, flexibility and efficiency of electronic cash to U.S. consumers, merchants and banks," said Hatim Tyabji, chairman of VeriFone Inc., a pioneer in stored value technology and another founder of SmartCash. The SmartCash card also will be standardised with similar efforts already underway for smart cards developed by credit card companies Europay, MasterCard and Visa. "Standardized specifications are all woven into the process. If you use your card in New York, it will be the same as if you use it on the West Coast," Elder said. The stored value application, one of the many uses of the card's embedded chip, enables funds from the cardholder's bank or credit-card account to be loaded into the card from an automated teller machine or from one of the terminals now under developement specifically for the SmartCash card. Elder said the companies have not identified what the cost to the consumer would be, but noted, "the consumer is going to have to see the value in it for them to want to use it." She also said there was a potential for the card to be expanded for use by those without bank accounts, who could credit the card in person at various locations. Elder added that the demand for such a versatile card was the driving force behind the broad alliance of companies already signed on to the SmartCash plan. "Sixty percent of consumers surveyed in the U.S. said they would be willing to switch banks to get the use of stored value (cards)," Elder said. Amy Brinkley, executive vice president at NationsBank, said the venture showed "unprecedented industry cooperation to develop an innovative financial product." SmartCash will combine assets and staff of the founding companies and pursue technology being developed by MasterCard, VeriFone, Electronic Payment Services Inc., and privately held Gemplus. A pilot programme is already under development in Delaware that will be overseen by Wilmington Trust and Electronic Payment and other regional pilot programmes were likely to spring up around the country next year, Elder said. -----