By 2003, it is estimated that there will be one smart card for every person in the world. In order to accomplish this feat, the smart card industry will have to cross a major hurdle of consumer acceptance worldwide.

In late 1997, Mastercard and Visa USA co-sponsored a pilot program on the Upper West Side of New York City distributing 96,000 smart cards to consumers along with hundreds of smart card readers to merchants. The pilot program was a test to determine how popular the smart cards were with both consumers and merchants. The answer to this test is that not many people were interested.

The reasons for this failure were quite simple. Technology issues played a major role in the failure of the pilot smart card readers, which had been developed for the test case primarily by Hewlett Packard, failed numerous times which made the use of the smart cards more of a hassle than anything else. This technology failure also lead to a high drop-off rate with merchants. Many merchants became dissatisfied with the problems and left the program while others cited very few transactions as a reason to drop out. These constant technical problems also forced the card issuers to maintain a costly repair staff in the neighborhood to fix the problems.

On the consumer side, on of the biggest issues with the test case is that smart card readers were not available in the most common locations for using cash in New York City -- taxis, buses & subways. Because of this, the consumers not only had to carry their smart card, but also cash as well.

This pilot program is significant for many reasons. First of all, it shows that there will be a huge hurdle to cross in the United States to gain consumer acceptance. Secondly, it shows that major technology problems need to be worked out before wide scale programs are rolled out. Finally, it shows that the United States is way behind Europe in terms of consumer acceptance. The reason for this final point could lie in the war between American Express and Visa/Mastercard over the unfair practices by Visa and Mastercard by not allowing issuers of their cards issue American Express cards. This battle is currently being fought in the Justice Department, but some have claimed that the blockage by Visa and Mastercard has lead to a complete lack of innovation in the industry primarily on smart card technology.

In order for consumers to gain acceptance, the industry must focus on three major motivational factors: convenience and security and versatility. The industry must market the card as an all-in-one type of device that will allow for consumers' wallets to become much lighter. Secondly, the industry must focus on the security of the cards as being much better than magnetic stripe cards. Finally, the cards must be marketed as versatile devices that may have a multitude of uses on the long run.