The "smart card," a money card embedded with a microprocessor, is scheduled to make its American debut late this summer in pilot programs initiated by MasterCard International.

The test will influence not only whether the card with the silicon chip can be a winner in the United States but also, to some degree, which country's technology will set the rules in the global arena of electronic funds transfer.

In Columbia, Md., 50,000 participants in a smart card experiment will receive plastic cards made by the French computer group Bull and marketed by its Dallas subsidiary, Micro Card Technologies Inc. In Palm Beach, Fla., a similar number will receive cards provided by Casio Microcard Corp. of Japan. Customers will be able to use the cards to pay for goods and services at selected retail locations.

The smart cards, to be issued by Maryland National Bank, First National Bank of Maryland and the Bank of Virginia, also can be used as credit cards in regular outlets.

What makes the smart cards different is their microchip memory. Each card will have a predetermined amount of credit stored in the chip. The cards are designed for one year's use or up to 150 transactions.

In one experiment, according to MasterCard's project director John Elliott, the credit total stored on the microchip will be reduced with each transaction until it is exhausted, like a Metro farecard. In the other test, the customer's individual credit line will be updated to record both purchases and repayments by the customer. Both cards are French designed.

The cost of the program, to be borne by MasterCard, is estimated at $400,000 to $500,000. Smart cards are expensive to produce; in quantities of a million, they cost $5 to $8 each. Card terminals that "read" the information on the microchip, and in some instances keep it current, cost $1,000 each and up.

Bankers and retailers, having spent millions of dollars on magnetic stripe technology used on credit and bank cards, are reluctant to invest in the smart card.

Proponents of the smart card predict that in time, retailers and bankers will be won over by the expected savings from the smart card system, because the terminal will not have to be continually on line to a large computer, as is the case with today's bank cards. Instead, the smart card terminals exchange information periodically with central computers to keep customers' accounts up-to-date.

More important, proponents of the smart cards claim the encoded chip will prevent unauthorized use, counterfeit and credit abuse.

Both the French and the Japanese versions of the card have encoded chips with a customer's password or secret number built in, permitting cheap, quick off-line verification of the holder's identity and balance. The chips also have the capability of storing other means of identification, such as the user's signature or fingerprint.

Experts agree that one version of the card will have to become the accepted standard if the as yet expensive and experimental technology is to succeed as an international payment mechanism. "We can't have a European card that will be used in Europe, a Japanese one for Japan and an American card for the United States," Russell Hogg, president of MasterCard, said a few months ago.

At this time, the Japanese appear to have an edge over the French, who invented the smart card. Last month, a New York working group of the International Organization for Standardization, a United Nations group composed of 90 countries that sets many commercial product standards, voted 4 to 2 in favor of the Japanese version while accepting the French version on an interim basis.

Another obstacle to an international system is the process for clearing financial transactions, or reconciliation. Differing national laws governing such areas as consumer information disclosure, transborder data flow and currency exchange pose substantial challenges for software developers.

How soon will there be a truly international electronic payment system?

Colin Reeve is vice president for interactive services and international systems for American Express Travel-Related Services, a company whose green card has become the symbol of universally accepted credit. As such, he is more hopeful than most about eventual internationalization, predicting that within three years consumers will have the ability to draw cash from machines in all developed countries.

If successful, smart cards eventually could take the place of the plastic cards now used in the approximately 40,000 automatic teller machines (ATMs) and an estimated 1,100 point-of-sale (POS) machines capable of directly debiting a customer's account. ATMs became popular when banks found they were an artful dodge around restrictions against interstate banking. Soon they became almost a necessity in the highly competitive environment of American banking.

American merchants, with the exception of service stations, remain unconvinced of the utility of debit cards used in point-of-sale transactions, given the start-up costs involved for hardware. There are about 1,100 direct debit terminals in the United States, according to Bank Network News. Home banking and videotex still are in embryonic stages, with approximately 38,000 users. Last week, a new joint venture was announced that will offer subscribers computerized banking, discount stock brokerage and merchandise shopping. It is impossible to tell if or when these services will become popular and profitable.