An empirical study of smart card technology

Abstract

Smart card technology remains novel for consumers and merchants, in spite of several attempts by financial institutions and other interested parties to deploy the technology on wide scale bases. After Citibank, Chase, VISA and MasterCard launched a smart card trial in New York city, the trial was deemed a failure and was subsequently cancelled. Drawing from innovation and critical mass theories, and using merchant and consumer data, we provide explanations for the trial’s failure. Despite the fact that the technology’s relative advantages were significantly related to consumers’ and merchants’ acceptance, we found consumers and merchants disposed against acceptance of this smart card technology. We found no evidence for critical mass effects as a predictor of either consumers’ or merchants’ acceptance.