New York Times

Visa International said Monday that it planned to introduce a new type of plastic card, embedded with a microchip, that is intended to replace bills and coins for small purchases.

Unlike debit cards, which transfer money electronically from customers' bank accounts, the new ``electronic purse'' cards will have an amount of money stored on them. They are similar to the cards issued for some telephone and mass transit systems, but are designed to be used interchangeably in pay phones, vending machines, taxi cabs and for other small purchases.

``It will be just like cash, but more simple and easier to use for making everyday purchases,'' said Carl Pascarella, president of Visa USA. Every year $1.8 trillion is spent worldwide in amounts of $10 or less, Visa said.

While several such electronic purse systems have been started, the Visa initiative is among the most ambitious.

Three banks in the Southeast, Nationsbank, First Union Bank and Wachovia Bank, said they would begin issuing the Visa cards this year. The first large-scale introduction of the cards will be at the 1996 summer Olympics in Atlanta, where 5,000 food shops, souvenir stands, vending machines and telephones will be equipped to accept the cards.

First Union said it expected to issue a million cards before the Olympics. Nationsbank, which is sponsoring the Olympics and thus has exclusive rights to offer the cards at the games, is more cautious.

``We are excited about the technology, but it is premature to say how many customers and how many merchants we will have,'' said Kevin P. Krest, a vice president for Nationsbank. ``There is no existing pilot up and running with this technology today.''

Visa said some of its member banks in Latin America and Asia would also start issuing versions of electronic purse cards during the next year.

Customers can use electronic purse cards by inserting them into a slot on a vending machine or small terminal. An electronic display will show the amount of money remaining on the card and ask for confirmation for the purchase.

Customers will not need to enter a code number or sign a receipt. The transactions are faster than those with credit or debit cards because there is no need to call the bank for authorization. On the other hand, if a card is lost, there is no refund.

Initially the banks will issue the cards in both single-use and rechargeable versions. As newsstands now sell prepaid telephone cards in various denominations, the Visa banks will be able to issue electronic purse cards with set values, probably $25, $50 and $100.

The banks will also be able to embed microchips in their existing credit cards and automated teller machine cards. Customers will be able to add value to those cards from their bank accounts at an ATM or by using specially equipped telephones.

The computer chip on the new card is designed with extra memory, so a single card can be used to get access to several bank accounts, loans and even investment portfolios.

Eventually the banks hope to offer space on the chip to other businesses, like grocery stores.

``You can put a coupon right on the chip and automatically make them available at the supermarket checkout,'' said Fred Winkler, president of the card products division at First Union.

But before that is possible, consumers, merchants and banks will have to buy the cards and the equipment to read them. And bankers predict that the electronic purse cards at first will be the most popular application of the chip technology.

Banks like the electronic purse cards because of the myriad fees they can charge for using them. Customers will pay a fee to buy the cards and load more cash onto them. Merchants that accept the cards will also pay their banks a percentage of each purchase as they do now with credit and debit card transactions. And as with traveler's checks, the banks will earn interest on the money that is held on cards until it is spent.

Visa, MasterCard, and Europay, a European card organization, are cooperating on developing standards so that all chip cards will use compatible technology and merchants will need to buy only one terminal. MasterCard said it would announce a test of electronic purse cards next week.

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