Federal agencies are considering replacing food stamp coupons and Social Security checks with a new credit card capable of monitoring transactions and providing a merchant or bank with key personal information, officials disclosed today.
The card, developed primarily by the telecommunications arm of the French government, is already being tested by banks and retailers in the United States and France.
Its use in transactions as big as this nation's $11 billion food assistance programs would be a major development in so-called "smart cards," or credit cards capable of recording and storing, on their own, each transaction by their user.
The new card resembles a conventional credit or electronic banking card. But it is "intelligent" in that it contains a microcomputer chip capable of storing or recording 100 or more transactions without having to connect with a computer bank, a requirement of the widely used bank cards.
The Agriculture Department, which runs the food assistance programs, or the Social Security Administration would credit the account of a recipient with the amount of his monthly allocation. Each time the recipient used the card, it would record the transaction and show the user and merchant how much was remaining in the account.
USDA could begin testing the program as soon as this spring, and the Social Security Administration is in the midst of a "technical assessment" of the card, according to John R. Wicklein, associate commissioner for systems of SSA.
The Social Security system issues 40 million checks a month and the card could be used in that process, he said, noting that the agency's study will be completed next month. Defense Department officials are also looking at the card as a means for monitoring PX transactions and as a substitute for military "dog tags."
Use of the cards on an experimental basis at USDA is designed to cut fraud and waste, an effort that could begin as soon as next year. The department also will study use of more conventional debit cards, which are used as checks to withdraw money and pay bills.
A request for bids from computer concerns could come from the Agriculture Department within weeks, according to G. William Hoagland, special assistant to the secretary of agriculture.
"We are definitely putting out a request and will be starting demonstrations," Hoagland said today. "We're not backing off this. Depending on how the project goes, if the technology and acceptance are there, we could modify the delivery system within three or four years. We have to bring the program into the 21st century."
In a statement to a conference on the card this month, Agriculture Secretary John R. Block said his agency was "vitally interested in applying new technologies to replace food stamps and other pieces of paper" associated with assistance programs.
Block, through a representative, told the conference of federal and business officials in Scottsdale, Ariz., that the department would seek proposals "by late spring to set up electronic transactional systems in a number of carefully selected states."
A member of an Agriculture Department task force on the issue, Richard Sprague, a New York consultant, said the biggest problem facing the food stamp program in instituting the system is the relatively high cost of installing machines to read the cards, particularly in small food markets.
"The main question from the department's point of view and from my point of view is whether food retailers will participate," Sprague said. About 230,000 retail outlets are eligible to accept food stamps, he added, and although the cost of the equipment is declining, the card reader costs about $2,000.
The proponents of "smart cards," such as Roy D. Bright, managing director of Intelmatique, the French agency which developed the system, argue that the new card is foolproof.
"At every stage of use of the smart card, throughout its life, there is a built-in integrity," Bright said in an interview. "It is a self-contained transaction mechanism."
Arlen Lessin, chairman of Communications Consulting Corp., a consultant widely considered the foremost authority on the card's capabilities, said he did not believe the public should have personal security or "big brother" concerns about the card.
"Access to the information is at the command of the bearer," Lessin said. "It protects the public better than any technology that exists today."
The "smart card" equipment is being manufactured by three concerns--Flonic Schlumberger, a Belgian technology company; Philips Data Systems, a Dutch firm, and Citi Honeywell-Bull, a joint venture involving the U.S. company Honeywell Inc.
The French are on the verge of beginning the most significant trials of the card, involving as many as 50,000 cards and 250 point-of-sale terminals. A smaller trial is also planned by First Bank Systems, a $15 billion Minneapolis bank holding company.