IP: [FP] Smart Cards -- Public Acceptance?

[Vladimir Z. Nuri]

From: "ScanThisNews" <mcdonalds at airnet.net>
Subject: IP: [FP] Smart Cards -- Public Acceptance?
Date: Wed, 9 Sep 1998 22:07:48 -0500
To: ignition-point at majordomo.pobox.com

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SCAN THIS NEWS
9/9/98

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New Poll: 76% Indicate Interest in Smart Cards

 SAN FRANCISCO--(BUSINESS WIRE)--Sept. 9, 1998--

 Smart Card Forum research study seeks keys to market success, ways to
bridge the gap between early adopters and the mainstream consumer market

 The Smart Card Forum (SCF), a multi-industry organization working to
accelerate the widespread acceptance of smart card technology, today
announced some initial top-line poll results of a qualitative and
quantitative research study it has commissioned. A detailed analysis of the
comprehensive study will be finalized in tandem with the Forum's Work Group
meetings this November in Florida.

 The Forum is attempting to better understand what North American consumers
would like in a smart card that they could carry around with them that
stores information or value (or both) from various applications (e.g.,
health care, insurance, banking, loyalty programs). These applications are
just some of what a smart card can do (the technology has many more
applications), but a study of how consumers perceive them will help the
industry better understand the potential size and shape of the future market
for smart card technology.

 "The smart card is a very exciting and powerful emerging technology," says
Forum President William J. Barr. "To extend its promise into the mainstream
commercial marketplace means understanding and then delivering what
consumers want. After all, it's a basic marketing premise that you have to
understand the public's needs before you can deliver a solution that will
win their support and loyalty. Previous Forum market research has shown
consumer interest in our industry; this next wave of research is designed to
provide us with more specific information that we can apply to the task of
introducing smart cards to the broadest possible consumer audience."

 FIND/SVP, a nationally known New York-based research and consulting firm,
was asked by the Forum to design the research study to capture consumer
perceptions of smart cards and the keys to their acceptance and use. To do
this, they designed a qualitative (14 focus groups) and quantitative
(telephone survey of 2,400) research study(a) conducted in the United States
and Canada. It was tightly focused to determine certain attributes of smart
cards, which applications would be supported and why, plus servicing,
branding, and pricing issues.

 For the purposes of the research, a very specific "smart card concept" was
developed and tested. It was described as a "card-sized unit with a memory
that can hold just about any kind of information but requires some sort of
reader to input or output data." Among the research findings:

- three quarters of those polled (76%) said they were "extremely," "very" or
"somewhat" interested in the smart card concept; about one-third (31%) were
"very" or "extremely" interested

- of the 31% "very" or "extremely" interested, the majority said that they
would "definitely want" smart cards for applications such as med-alert
information (74%); health insurance ID (62%); ATM and related bank access
(59%); drivers licenses (56%); and credit cards (53%)

- the most interested group were, in general, willing to pay up to $50 to
obtain a smart card, and a $25 annual fee to maintain the card

- that same group carried far more cards in their wallets than those not
interested (6.3 cards vs. 3.9 cards)

- those most interested fit the profile of early technology adopters:
younger, higher income, own a PC, etc.

- convenience and security were seen as key motivating factors for adoption

 "These initial results reveal a number of interesting things we didn't know
before," says Barr. "First, smart cards -- as they were conservatively
described in the research -- have a potential core early-adopter
constituency to start with of about a third of the population. Second, some
of the applications a smart card can enable are easily understood and
appreciated by that segment of the population. That's good news for the
industry, because it is the use of smart cards for each of these individual
things that will collectively increase the momentum towards
multiple-application smart card interoperability and ubiquity."

Interest in smart cards.

 All focus group respondents expressed interest in the "smart card concept."
It should be noted that these groups were pre-screened to eliminate
"technophobes," and participants developed concepts themselves, so higher
levels of enthusiasm for smart card technology were to be expected.

 However, approximately three-quarters of those polled in the telephone
survey said they were either "somewhat," "very" or "extremely" interested in
the smart card concept. About a quarter were not interested.

 Who are most interested in the idea of smart cards?

 The research discovered that those interested in smart cards - compared to
those "not interested" in the concept -- are:

- much more likely to have PCs, cell phones, or other high-tech devices (98%
vs. 68%) - much more likely to look forward to new technology (44% vs.
18%) - younger (38 vs. 48 years old) - have higher incomes ($54,000 vs.
$45,000) - already carrying more cards than those not interested (6.3 vs.
3.9)

 "Those numbers tell us that as an industry, we must extend our efforts
beyond the classic early adopter community and connect with the majority of
consumers who need to be educated about the many benefits to them of smart
card technology," says Barr.

 "Our ability to bridge that gap will determine the future success of our
industry."

One card to replace many.

 As designed by the focus groups, "Such a (smart) card would replace most of
what they now carried in their pockets and do other things as well. It would
not be used in addition to the cards in the wallets, but instead of those
cards."

 Of those interested in having a smart card (N=741): *T Would want only one
smart card 35% Would want two smart cards 30 Would want three smart cards 27
Would want four or more cards 6 *T One card that does many things.

 Within the qualitative phase, people were able to easily generate potential
uses for a smart card. More than 100 plausible application ideas were
generated, both for personal and for business use. These included: replacing
money and credit cards, replacing many of the cards in one's wallet, storing
records, and managing daily events.

 Of those interested the smart cards, respondents said that they would
"definitely want" them for:

Med-Alert information 74%, Health insurance ID 62, ATM and related bank
access 59, Drivers license 56, Credit cards 53, Prescription card 51, Car
information 50, Money for small purchases 48, Medical records 44, "Other" ID
39, Discount shopping cards 39, Money for larger purchases 36, Frequent
flyer information 34, "Other" membership cards 26.

 According to Barr, "we are pleased by these findings on applications,
because that's what smart cards are supposed to be all about. Smart cards
are supposed to perform lots of diverse functions, and we're pleased that
those surveyed could identify so many of them. Multi-application
interoperability is both the objective of the Smart Card Forum and the key
to unlocking the business potential of our industry."

The ideal way to distribute and control smart cards.

 A consensus emerged among those most interested in the concept about how
one would/should get and maintain a smart card:

- consumers would obtain a "starter" smart card from one of many sources,
either free or for a small fee

- they would "build" onto it by adding identification and licenses, personal
data, and credit data (among others), either free or for a small fee

- users would pay an independent service an annual fee to help maintain and
protect the card

- individual smart card-holders would allow different organizations
different levels of access to the card

Respondents disliked the idea of a single authority having access to all
their smart card key data. They accepted that in the absence of such an
authority, problems with maintaining the card, replacing it, canceling it,
etc. would become overwhelming. Accordingly, their plausible solution was
"distributed," allowing for widespread sale of smart cards at a very low
price, with the cards supported by an individual choice of one of many
independent "bonding agencies" paid monthly or annual fees for their
services. It was thought that data might also be backed up by this agency
(in encrypted form), or saved by the card's owner who would have two
versions of his/her card made.

Mild preference for adding data oneself 61%, Mild preference for having one
company to call for problems 59%, Mild preference for many suppliers 58%.

Pricing.

 In general, the research discovered that of those most interested in the
smart card concept, respondents were willing to pay up to $50 to obtain a
card, and approximately a $25 annual fee to maintain the card.

 Potential smart card users rarely envisioned a single-use card that would
be used in addition to the cards in their wallets. Rather, they were
interested in a card that would put multiple uses on a single device. The
key reasons for embracing the card thus focused heavily on convenience:
fewer things in one's wallet, fewer things to remember to carry.

 Another initial motivator might be security. A smart card can be made
significantly more secure than a normal magnetic stripe card, and when
introduced to that information, survey participants indicated that smart
cards might, by "electronically storing receipts in some way," provide
additional reassurance. The use of electronic fingerprinting (biometrics) as
proof of identity was also seen as a way to protect the security of
information stored on smart cards.

 "Security" was also interpreted as meaning medical safety and physical well
being. Accordingly, a smart card with emergency information accessible by
physicians and paramedics was also considered desirable.

 Other ways to encourage initial smart card use focused on having a smart
card doing certain things better than its "dumb" predecessor (e.g. a
"faster" or "less expensive" card). Using the card as an electronic key, to
which other applications might be added later, was also seen as a possible
benefit.

The bottom-line.

 "Using a very precise and narrow definition of a smart card, we have
discovered useful new information that we can apply as the full spectrum of
smart card applications emerges into the mainstream commercial environment,"
says Barr. "This is just the beginning of our industry's efforts to learn
about how we can connect with and educate consumers whose interest in smart
card technology increases in relation to the information they have about
it."

 The Smart Card Forum (www.smartcardforum.org) is a non-profit, multi-
industry organization of 200 members working to accelerate the widespread
acceptance of multiple application smart card technology by bringing
together, in an open forum, leading users and technologists from both the
public and private sectors.

NOTES:

- The "qualitative" aspect of this study comprised a set of 14 focus groups
that were conducted in four US cities (New York City, NY; Chicago, IL; San
Francisco, CA; and Jacksonville, FL), and two Canadian cities (Guelph and
Toronto, ON).

- The "quantitative" aspect comprised a much larger and more "projectable"
sample of 2,400 American and English-speaking Canadian citizens aged 18 and
over who completed a structured telephone interview. Respondents were
capable of using a smart card (e.g., had some other form of "plastic" card
or checking accounts) but otherwise were randomly selected.

CONTACT:
Megan McDonnell
Environics Communications
1 (203) 325-8772, #14
mmcdonnell at environics-usa.com
or
Karen Silberman
Smart Card Forum
1 (703) 610-9023
help at smartcardforum.org

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[forwarded from F.D. Bowden]
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