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February 19, 1997updated 05 Sep 2016 12:17pm

HYPERCOM PARES SMART CARD SPEC TO CUT PRICE TO $1

By CBR Staff Writer

The problem with Smart Cards is that they are not cheap, so that with a card costing $4 to $6, promoting it for small transactions such as buying a newspaper at a time when Rupert Murdoch is trying to put every other newspaper publisher out of business by charging around 35 cents a time for his papers, it is going to take the commission on an awful lot of newspaper sales to cover the cost of one card. This is why the Mondex card is backed up by no audit trail and really is as untraceable and anonymous as cash. The same problem arises when retailers want to use cards for loyalty schemes – where pennies at a time are being loaded onto the card, the retailer has first to cover the cost of the cards in increased business before the scheme starts doing anything for his bottom line. Which is why most retailers operating such schemes use a 35 cent magnetic stripe card and use it only as an identifier, storing all the updated details on their central computer. But if the loyalty scheme covers a club of independent retailers, that is not an option, and Hypercom’s answer is a much cheaper Smart Card that costs about a dollar a time if you order 500,000. Called ChipStripe, it is intended to provide a low-cost alternative to magnetic stripe cards in credit, debit and loyalty applications. The company has also added a $50 reader, the ICR-2, but it is available as a field upgrade only to Hypercom terminals – and then only ones manufactured since 1989. It is claimed to read any ISO 7816- compatible card. The company says the ChipStripe system embeds a hard-wired chip with 128 bytes of memory. It stores the Track 1 and Track 2 magnetic stripe data securely, incorporates a highly secure on-line card authentication system, and has 16 bytes of read-write storage for simple loyalty applications. Security is achieved with the Keeloq cryptographic algorithm from Microchip Technology Inc, which is implemented in silicon. Hypercom says it provides server software to enable ChipStripe to be added to any existing credit or debit transaction processing system without making changes to the host. Hypercom, which stresses that the card is not suitable for use in stored-value applications, will offer ChipStripe in either a micro- module format or embedded in a card.

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