How Smart Is It To Use New Smart Cash Cards? Strong Marketing, Widespread Retailer Acceptance Will Be Crucial In Bid To Win Over Consumers

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Soon customers around the globe will whip out a pre-loaded electronic cash card, insert it into a small terminal and buy a cup of coffee, a hamburger, newspaper, gasoline or you name it-at least if Visa International, MasterCard International and U.K.-based Mondex International prevail. So-called smart cards, carrying a cash balance, have caught on in Belgium, Denmark and France, where 20 million cards are in circulation. Now the cashless concept is poised to go global if Australian pilots and a South African roll-out succeed.

But marketers must convince retailers and consumers alike that smart cards really are smart.

In a chicken-and-egg situation, consumers welcome cash cards only if they are widely accepted while merchants want to see demand before buying terminals.

Cash cards, which can be reloaded at ATMs or by phone in some places, may be convenient. But unlike cash, they aren't free. Banks plan to charge retailers 2% to 3% of each transaction's value plus $500 to $750 for a smart card terminal. Plus, card consumers may be billed as much as $3 monthly. Moreover, the two companies' equipment is incompatible.

"If Visa and MasterCard can overcome those issues, we will see competition in different regions," said David Lott, a senior analyst with Dove Associates, an Atlanta-based electronic funds consultant. Visa estimates the world market at a huge $1.8 trillion, overshadowing global card volume of $1.5 billion.

"Smart cards will greatly outpace the credit and debit market but it will be a slow process," said Mr. Lott. Cards combining cash, credit, debit and ATM options should be most popular, he noted.

At MasterCard International, VP-marketing Janice Wiggins is eyeing a mid-1997 global launch of full-featured MasterCard Cash after preliminary research showed 55% of bank card holders would definitely or probably get MasterCard Cash, and 60% would change banks to gain access to the service. As a first step, MasterCard Cash will be rolled out nationally by mid-1997 in South Africa to 25,000 to 50,000 cardholders and more than 500 merchants.

Ads are in the planning stage but an agency has not been selected, Ms. Wiggins said. South Africa offers a good testing ground because cards are popular, few have bank accounts and cash is unsafe in crime-ridden cities.

MasterCard Cash passed one major hurdle with a successful testTime now to win over public begun March 1996 with 160 merchants and 2,200 cardholders in Australia's capital, Canberra. Follow-up research in May showed purchases averaged $5.40 for 10 transactions monthly. Additional studies are forthcoming this fall.

"We know the technology works, the system works. Now it's all about a bit of marketing to make people feel comfortable with it," said MasterCard Cash project manager Beth Horowitz.


Handled by Ammirati Puris Lintas Sydney, Australian ads launched during March in local newspapers and cinema ads offering a welcome video, coupons and a retailer directory. The four-phase campaign-with the theme "Cash 'n' Carry," "Ready Cash" and "Cash Bonus"-aims to create awareness, provide information via an 800 number, encourage use and add value with promotional discounts at McDonald's, Hungry Jack's and Mobil.

Meanwhile, Australia's advanced banking technology and acceptance also have attracted Visa, which has been successfully testing its disposable Visa Cash in Queensland since November 1995. More than 70,000 Visa Cash cards have been sold, registering 150,000 transactions in excess of $770,000 at 550 terminals. Visa expects to nearly double the terminals by November 1996, aiming for 100,000 cards in the next six months, in addition to tests of 20,000 reloadable cards, card dispensing machines and even parking meters, said Hilton Sack, Visa Inernational Executive VP.

Kmart, McDonald's, KFC, discount retailer Target and gas stations accept the card and by October, so will 30 Coca-Cola vending machines. Enclosed environments, however, such as theme parks and carnivals have tested the best.

Visa's Gold Coast trial, supported by outdoor, newspaper and radio ads from Clemenger BBDO, Sydney, are themed, "The easy alternative to carrying hard cash." To help prove it, Mobil and the BCC cinema chain offered a free Coke with a Visa Cash purchase.

Besides Australia, Visa Cash is being tested in Buenos Aires, Montreal, Toronto, Vancouver, Bogota, Wellington, New Zealand, Spain, Hong Kong, Atlanta and New York City. Over the next year, Visa plans to add Campinas, Brazil; Bormio, Italy; Tokyo, a U.K. site and southern China. Visa Cash "will establish market area launches worldwide," testing environments, functionality and technology, said Doug Lawson, Singapore-based director-marketing and business development at Visa International/Asia-Pacific.

"Demand is already there and will skyrocket," he added.

To boost demand in Hong Kong tests, ads by Batey Ads HK translate from Cantonese as "Change. For the better." The three-week campaign, begun Aug. 21, consisted of prime-time :30s on local broadcaster TVB Jade, newspaper ads, a radio promotion with a local dessert shop, subway posters, coupons, plus balloons and leaflets at participating merchants.


By early 1997, MasterCard and Visa will learn which card is better. They plan to test their own cards in a joint test on New York City's Upper West Side. Chase and Citibank will issue 50,000 Visa and MasterCard cash cards and sign up 500 merchants.

Meanwhile, a new contender spun off from NatWest Group, Mondex International Limited in London, has been testing smart cards in Swindon, England, since July 1995 and will add Hong Kong, Guelph, Ontario; and San Francisco by yearend. So far, U.K. marketing has targeted acceptance by 700 retailers. And as in other cases, consumer ads debut only after successful market tests.

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