AHOLD'S ALBERT HEIJN UNITS TO START USING SMART CARDS

DENISE ZIMMERMAN

ZAANDAM, Netherlands -- Smart cards called "chipknips," with stored cash value and debit capability, will be accepted as a form of payment early next year at Albert Heijn food stores operated by Ahold here.

The chain expects front-end productivity gains, especially on smaller orders, a spokesman told SN, because smart card transactions are processed off-line in three seconds -- far quicker than cash, checks and on-line debit and credit card orders.

The rollout of smart card terminals to Albert Heijn stores next year represents the second phase of electronic payments upgrades at Ahold. This week, the company's Specialty Stores division will begin installations at its wine and liquor stores, drug stores, candy shops and natural food products stores, said Rob van Straten, corporate communications manager at Ahold.

All 960 retailers in Ahold's Specialty Stores division will be equipped to accept the new cards by November, he added.

The rollout to Albert Heijn food stores was scheduled later because the chain is still working on a way to piggyback its own customer card applications, and eventually loyalty card features, onto the same card.

Straten said he was confident of shopper acceptance of the new cards but was unable to predict how frequently they would be used initially because banks in the Netherlands are only now beginning to issue new cards with the technology. Shoppers are most likely to use the cards for smaller orders, he noted.

"It's very difficult to predict usage. For the relatively small purchases, the chip card will be used very frequently, but for big purchases of more than 20 guilders [$12 U.S.], we expect people will prefer the debit system," he told SN.

Smart card terminals that accept the chip cards and debit cards will be provided by Rabobank, Utrecht, which shares in the cost of the equipment. Rabobank and other banking institutions in the Netherlands are beginning to issue the smart cards this month following a collaborative test launched last fall in Arnhem.

The "chipknip" smart cards are embedded with computer chips that store cash value uploaded by consumers from their bank accounts. (The "knip" part of the name, pronounced "KUH-nip," refers to the Dutch slang word for "wallet.") Consumers can load value onto their cards from automated teller machines, public payphones and from telephones in their homes.

Consumers can choose what amount of money they want to put on the card. Rabobank, however, has established some preliminary parameters.

"Clients can designate any amount of value on their card; however, we started with a limit of 500 Dutch [guilders], which is approximately $300 U.S.," said Bob Goulooze, spokesman for Rabobank.

Straten noted that the reduced cash flow in the store is a key benefit. "The amount of money in the till and in the store will decrease significantly, which makes the stores much safer," he said.