Your Business Online | Professional Jeweler

February 28, 2001
Smarter Cards
Credit card technology is ready to take a giant leap forward

For years, most credit cards were the same. Sure, some offered airline miles or other rewards, but they all worked the same way. Times are changing in the credit card world though. In the not-too-distant past, Visa and American Express began offering "smart" cards in the U.S., credit cards with an embedded computer chip designed to make online shopping more secure. That, however, was just the beginning of smart card technology. Soon, consumers and retailers will be able to benefit from new smart cards.

In the next step of credit card evolution, retailers will team up with credit card companies to offer customer loyalty programs through smart cards. It's expected American Express, Visa and MasterCard will begin offering these programs in the U.S. this year. Here's how the new program could work: Your store has a special program – if customers purchase a certain number of items, they get one at half price. Instead of issuing paper punch cards to customers to track their progress, you can partner with a smart card provider to store each customer's progress in the computer chip in the customer's smart card. Then each time that customer makes a purchase from you, it will update the progress and alert you when the customer has reached the specified goal. This means no more annoying paper punch cards and happier customers. The technology would even work if customers were shopping at your online store.

Smart cards will also help retailers track their customers' purchasing habits and preferences with more detail. This makes it possible to tailor discounts to customers' specific needs and interests. New smart card technology also opens the door for cross-marketing through the cards. For example, jewelry stores could partner with other retailers, such as flower stores, to offer discounts to the other store's customers. When customers purchase flowers with their smart cards, they would be offered instant discounts on jewelry from the partnered store. The customers wouldn't need to hold on to a coupon, just use their smart cards to get the discount next time they make jewelry purchases at the specified store.

Overall, evolving credit card technology can help retailers use one-to-one marketing to encourage and entice customers to spend more, while making customers happier and more impressed with the store's service. Don't worry about customers not having smart cards; according to ActivMedia Research, smart card and e-wallet transactions are expected to grow to $5.7 billion this year and increase to $20 billion in 2002.

For more information on what specific card companies offer now, visit them online at, and

- by Julia M. Duncan