Ray Van Eng (09/24/97)              

Even Russia will have its own smart card now that Visa International has designed a unique prototype that is ideally suited to be used in the former Soviet Union.

The card which is to be launched next month as a four months pilot project is known as a COPAC (Chip Off-line Pre-authorized Card) and will be named as the Visa Roskart which will be issued by Inkombank in St. Petersburg, Russia. Gemplus Corp., a leading French chip card maker will supply the card.

The Roskart operates like a debit card, albeit without going through a central computer for every transaction like it has to in North America and many other countries. That is because the card is modeled for use in places where the telecommunication and banking infrastructure is primitive and cannot always be relied upon.

To use the card, the consumer has to load a pre-authorized monetary value into the card's microchip from his/her account. The fund actually never leaves the bank nor is it being deducted at this point. The card merely serves as an indication of how much money that particular person is allowed to spend.

When making a purchase at the point-of-sale, the consumer inserts the card into a smart card terminal which also holds another card from the merchant. After the consumer keys in the personal identification number (PIN), transaction data including the sale amount is transferred from the consumer card to the merchant card.

At the end of the day, the merchant either runs a trip to the bank to make a "deposit" or downloads the sales information on the merchant card to the bank's computer which will then sort out the individual purchases, deduct the exact amount from the consumer account and credit the merchant for the day's business.

"Visa Roskart is perfect for our market because it is simple for consumers to use, easy and inexpensive for merchants to install and guards banks against the risk of fraud." said Anatoly Makaev, Inkombank's vice president.

Although the Roskart is designed for the Russian market, Visa says that the technology can be applied to 50 other countries in areas such as the eastern bloc, Middle East, Africa and parts of Asia where the public electronic communication services are often not as highly developed as in the west.

Visa intends to make the card available worldwide to its banking members in 1998.

The pre-authorized function will also be made as a standard feature of the multi-application smart card which is just beginning to appear.

In the future, these intelligent little credit card size devices will be able to carry out cash/credit/debit transactions, and will also store a person's credit line, shopping coupons, loyalty schemes, frequent flyer mileage and even his or her medical record.

There are about 290 million people living in Russia today and because of recent economic reforms, there are enough well to do citizens to generate a burgeoning market for products of the materialistic West: super-size screen TVs, VCRs, microwaves, cars, home furnishings, etc.

Though many Russians have day jobs as government employees, school teachers, health care professionals or factory workers, they also like to supplement their income by peddling on the street or starting a side business in their spare time.

The younger generation can be described as very open-minded and receptive to new ideas. But with increasing Americanization, some Russian scholars are concerned that the Slavic language and indeed the Russia culture itself will be weakened as many western words are beginning to enter everyday vocabulary for the first time.

Many business travelers have also discovered that Moscow is an expensive city to do business in, even more so than Tokyo or New York.

Recently, in a move to stabilize the Russian rubble against the U.S. Dollar, the Central Bank is banning the use of hard currency for cash and credit card payments starting in November this year. The rubble is trading at about 5.85 rubbles per dollar on 09/23/97.