A chip card system that several baseball teams tested for ticketing and loyalty programs has been replaced by a magnetic-stripe system, but smart cards still may have a future in the major leagues.
  Smart cards have struck out after two seasons in the major leagues. Despite success in limited trials with the San Diego Padres, Los Angeles Dodgers and Saint Louis Cardinals, only the Cardinals chose to renew the SmartFan ticketing and loyalty program.
  New York-based Smartix International Corp., a smart card technology provider contracted by MasterCard International to create services to support its sponsorship of Major League Baseball, developed the SmartFan program of electronic ticketing, loyalty and electric-purse services for purchases.
  Initially relying on smart cards, the system now uses a format based on conventional magnetic-stripe technology in St. Louis and also in Boston with a new participant, the Red Sox.
  The system works like this: SmartFan members log into the SmartFan Web site and choose the "Buy Tickets" option. The system accepts all the major credit cards for paper tickets, using the typical Secure Socket Layer transaction security technology. Users must order a minimum of seven days in advance to accommodate printing and shipping the tickets.
  Or, the purchaser can use a MasterCard to order a paperless ticket through SmartFan's eTicket system only 24 hours before a game. The buyer or person to whom the ticket has been transferred uses a credit card at a SmartFan kiosk in the stadium to retrieve a paper ticket for seating at the game.
  All of the teams reported that their smart card test groups of 500 to 1,000 season ticket holders highly valued the program's benefits. Key features included the ability to transfer, upgrade and buy additional tickets or sell unused seats from the SmartFan Web site. Also, managers of team loyalty programs appreciated SmartFan's marketing tools, such as ticket usage information, data tracking, upgrades, and the ability to offer discounts from team partners and merchants.
  The user data obtained when a SmartFan member or guest inserted his smart card at a turnstile was one of the main benefits for teams, says Kris Rone, executive vice president and chief marketing officer of the Dodgers.
  Yet, according to Jeff Doyle, director of sales and marketing at Smartix, the benefits were not enough to overcome two major roadblocks-the expense of supplying smart cards to SmartFan members, and the difficulties in outfitting stadium gates with smart card turnstiles. Sources would not disclose specific per-card costs, though they were in the $1 to $5 range. But another downside was that the program also charged SmartFan users $10 for a smart card-reading device to attach to their personal computers.
  "We could not offer (cards) to the masses," says Doyle. "And from an infrastructure standpoint, outfitting the turnstiles on a large scale was difficult and expensive."
  The same problems prevented Smartix from installing point-of-sale card readers that could have taken advantage of the smart card's e-purse capabilities at stadium concessionaires.
  The original paperless ticket concept for transfers or sales meant swiping a smart card to enter the stadium at designated SmartFan entrances. Thus, the smart card-based program relied on card readers built into turnstiles.
  Wiring the turnstiles in the entrances of older stadiums was complicated because they are concrete affairs. Also, turnstile equipment is not standardized. At some stadiums, gate personnel still collect tickets by hand and rip them. At others, turnstiles are equipped to read bar codes.
  In Los Angeles, where the smart card test involved only a few hundred season ticket holders, the Dodgers added a hand-held card reader to one older turnstile.
  Infrastructure issues weren't the only concern for Brook Govan, manager of the Compadres Awards Club and new technology for the Padres. The Padres will move to a new stadium in 2004, and wired turnstiles are a given. Govan says season ticket holders were enthusiastic about using SmartFan, and he regrets having to end the program. But for the team's management, the slow pace of efforts to integrate SmartFan with the overall ticketing system was the deciding factor.
  "SmartFan was a great system and did what we wanted it to do," says Govan. "But the integration with our ticketing system was not automatic, and they did not move forward in talks with Paciolan, our ticketing company."
  As it turns out, Paciolan Inc. recently acquired the means to pick up where SmartFan left off. Last March, Irvine, Calif.-based Paciolan, which describes itself as a "digital ticketing enabler," purchased Season Tickets, a ticket-management technology developer. Season Tickets provided systems for managing and reselling season tickets, suites and group packages online. Paciolan's new ticketing and managing program will use either a mag-stripe card or the bar-code card currently used by the Padres' fan loyalty program.
  Meanwhile, Smartix is making the most of its ongoing relationship with the Cardinals, foregoing limited test groups in favor of enrolling all season ticket holders (about 7,000) in the SmartFan program-free of charge.
  The same plan applies to this season's debut of SmartFan in Boston, where the Red Sox also have about 7,000 season ticket holders. The team's fan loyalty program director, Chuck Steedman, expects them to be pleased with SmartFan's benefits, especially the ticket sales feature.
  "There is a very active illegal resale market here," says Steedman. "SmartFan provides a legal way for season ticket holders to resell their tickets without having to meet somebody in a dark corner somewhere." In Massachusetts, state law stipulates that tickets must be resold at face value.
  There are no seller fees on paper or e-tickets for season ticket holders, and SmartFan's eTicketing option is free for the first five tickets transferred. A fee of $1.50 is applied to each additional transfer, and a MasterCard must be used for identification and payment.
  Red Sox fans who aren't season ticket holders can join SmartFan for a membership fee of $49.95 (Cardinals fans: $44.95). Buying a ticket from a season ticket holder incurs a transaction service charge equal to 20% of the ticket price plus a $3.00 per-ticket delivery fee. As an incentive, SmartFan is offering two free tickets valued at $54.00 with membership.
  The Red Sox spent one year in due diligence before signing on with SmartFan. The team also reviewed systems from Ticketmaster, Liquid Seats and Tickets.com.
  To overcome the turnstile problem, Smartix decided to bypass them.
  "Instead of trying to change the footprint of the stadium by using different turnstiles, we decided to go with the airline model, which utilizes a kiosk-based system manufactured by Kinetics Inc.," says William Henneberry, chief executive of Smartix. "It can actually print a baseball ticket and it also has a thermal printer to make coupons on the spot. So that will help with the sponsorship and promotional activities."
  Steedman of the Red Sox especially likes the concept of SmartFan's kiosk delivery system for printing out e-tickets at the stadium.
  "They use the same manufacturer as 85% of the airline industry and the kiosks operate with touch screens," he says.
  Shorter Wait Times
  According to Doyle, the kiosks performed well as the Cardinals' season began. More than 800 tickets were printed at the opening home game, and waiting times never exceeded five minutes at the three kiosks. Those times were much shorter than the waits at the stadium's will-call window, Doyle notes.
  "We re-engineered the program so that we could make it work on any mag-stripe product, and that allows us to talk to the entire MasterCard card base and the entire MLB base, especially the team affinity members," says Henneberry.
  According to Henneberry, the theory is proving itself. With no advertising other than a Web-site link on the Cardinals' and Red Sox's home pages, almost 3,000 non-season ticket holders have forked over the $45 to $50 to join the program.
  "We're very pleased with the results to date," he says. "We are well ahead of our business plan."
  A MasterCard-branded smart card was part of the original idea, says Henneberry, but the main goal was to enhance MasterCard's baseball sponsorship through a loyalty program. He thinks it's succeeding, and the door is still open for smart cards in the future.
  "I believe that with MasterCard, we can bring the chip applications back when we overcome some of the infrastructure and other things," he says. "They were pleased that we were able to re-engineer MasterCard to make it the best way to pay in sports, especially with the teams they sponsor. In terms of that sponsorship, about 63% of the people signing up to the program are using MasterCard, so we are more than doubling (MasterCard's) market share."
  MasterCard did not provide anyone to comment on the program.
  For now, smart cards and chip-reading turnstiles are out, and magnetic-stripe kiosks are in. But, as noted, chips could be back.
  "In many ways we may want to go back to smart cards eventually," says Doyle. "We were tasked to build a smart card product for MasterCard because they were looking for applications for their smart card chips. But until more people have smart cards in their wallets, it's hard to make it happen."
 

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