Scotiabank helps town residents get smarter

People in Barrie, Ont., are getting used to being electronic guinea pigs.

Three years ago The Bank of Nova Scotia tested its first microchip-equipped plastic cards, known as smart cards, on Barrie’s residents (Barrie is located about 80 km north of Toronto). Unlike magnetic stripe cards, the smart cards use an embedded microchip to store up to $20 in virtual cash. Town merchants were equipped with point-of-sale terminals that transferred cash from the card, giving residents the option of leaving their change at home.

“We started it as an electronic purse to replace coins,” said Albert Wahbe, chairman and CEO of e-Scotia and executive vice-president of electronic banking at Scotiabank in Toronto.

The response was enthusiastic, Wahbe said. Consumers told they bank they liked being able to rid themselves of small change. Wahbe noted that in Canada, nearly two-thirds of all purchases are worth less than $20, the bulk of which are coin-based.

The program was later expanded to include loyalty card points, scoring more points with users. “No one can keep track of all those cards,” Wahbe said.

Today, 60,000 Barrie residents – two-thirds of the town’s entire population – carry the combined electronic purse/loyalty cards. “No bank has that kind of marketshare in any market in Canada,” Wahbe said.

Now Scotiabank is hoping to convince 12,000 of them to take the next step and merge their credit cards with the previously tested microchip, combining all their credit, debit and loyalty program tasks on a single piece of plastic. The new “all-in-one” cards, designed by Visa, Mastercard and Europay, are simpler to use and designed to offer customers higher levels of security, sais Wahbe.

The bank is working with the Solstice Alliance, a collection of technology companies formed in May, that are pitching in their expertise in order to get the new card off the ground.

Scotiabank said users who are interested in taking part in the project could call their local Scotiabank branch. They will be assigned a personal identification number to enable them to access their credit. Otherwise the card will operate like its predecessors.

But if consumers like it so much, why aren’t all Canadians, which have shown such enthusiasm for swiping for their purchases, using smart cards? According to Wahbe, it’s not a technology issue. It’s simply a matter of getting all the parties involved – including Interac and the credit card companies – to get their heads together.

“To bring different groups together takes awhile. But the technology is there,” he said.

Sales of smart cards soared in 2000, according to a recent study compiled by the U.K. office of research company Dataquest Inc. It found smart card makers worldwide shipped 628 million units in 2000. This total marked a 45 per cent increase over 1999.

– With files from IDG News Service.

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