Visa, MasterCard, and two New York banks have put in place a pilot project that could enable secure transactions over the Internet.
The project involves stored-value transactions, which enable buyers to make small purchases by having a cash value that they have taken from their bank accounts removed from a smart card.
The system uses smart cards with built-in electronic chips instead of magnetic stripes. Because the cards use electronic chips, they can store more information than credit cards and automated teller machine cards.
A smart card could also include an automated security scheme with which users could send authenticated cash transfers across the Internet.
Cards could send "microcash," or small increments of cash, for pay-per-use services on the network.
Key to the trial is that these banks and credit card companies have made agreements to handle how cash moves on networks and how it is accounted for between banks, says Tom Horan, programme manager at SRI International Inc., in Menlo Park, Calif.
"The technology is in front of the institutional infrastructure," Horan says.