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Five years ago, kibbutznik and electronics engineer Hagai Ben- Gurion approached On Track In- novations, then a 2-year-old Rosh Pina-based high-tech start-up, in the belief that the smartcard they were developing could help the kibbutzim to become post-social- ist, money-based communities. By using such microchip-em- bedded cards, which contain elec- tronically stored bank accounts as well as user information, Ben- Gurion believed OTI's develop- ments could transform kibbutz societies into capitalistic ones. Conversely, the relatively small, organized societies provided an ideal testing ground for the new device. By the end of 1993, OTI had in- stalled smartcard test sites in six kibbutzim. Today, 30 kibbutzim are using the company's products; which are easy enough for 7-year- olds to manipulate. Indeed, ex- plains Ben-Gurion, they have to be. Since communal dining halls were privatized, anyone wanting a meal, including a child down- ing a before-school breakfast, must now pay for it via the smart- cards. For adults, the smartcard, which looks like a credit card and only needs to be waved in front of a reader to operate, is also need- ed for other once-free services, like laundry, electricity, shopping, securing car keys and keeping track of car mileage. OTI, a company of 35 employ- ees that sub-contracts production to three Israeli firms, says that its flagship product, Eyecon, is the "ultimate electronic purse." The Eyecon smartcard can con- tain an electronic bank as well as an array of information, such as medical data. In addition to data encryption, Eyecon boasts a se- curity system that ensures against card forgery. Such features are crucial for end-users who will only trade in their cash and credit cards for se- cure substitutes. But, while se- curity may be a concern for some, insiders say the transition to smartcards is inevitable. "Smartcards are a developing market with the highest current growth rate," says CEO Oded Bashan. Their market is project- ed to treble by 1998 and double again between 1998 and 2000, reaching $15-$20 billion, Mr. Bashan says. With a number of companies scrambling for this gold, OTI de- cided to branch out into a niche area, the contactless smartcard. Battery free, the contactless card transmits information via the electromagnetic field of the read- ing device. This enables data and energy to be transferred without physical contact, in a work space of up to 15 centimeters between card and reader. The device can use preexisting systems with only minor interface and reader unit changes. A 1993 U.S. patent pro- tects the system. Twirl your wallet containing a smartcard in front of a vending machine, and, presto, cash, can- dy or cigarettes will come out, while the cost of the purchase will be deducted from the "purse" electronically stored on the -user's card. A similar motion will allow a child to pay for a dining-hall meal, a customer to pay at the su- permarket checkout line or a dri- ver to enter a parking lot. "Within five to eight years all smartcards will be contactless," predicts VP Marketing for OTI, Ofer Tziperman, adding that in the next few weeks OTI and CSK, a Japanese systems integrating concern whose subsidiaries in- clude multimedia giant Sega, will jointly invest $2 million in setting up On Track Japan, the exclusive local distributor for OTI's con- tactless smartcard. According to Mr. Tziperman, the contactless card can be used by large numbers of people at the same time with no need to wait in line, can be read without be- ing removed from a purse or pocket, can save money by lim- iting the wear and tear for both the card and the electronic read- er and can be manufactured in many guises, from standard credit card designs to key rings and watches. OTI is currently offering Eye- con as a hybrid card with both contact and contactless interface plus a magnetic strip. The mul- tisystem card bridges the gap be- tween banking systems, which want some transactions to re- main on a contact-card basis, and operators of mass transport sys- tems, which need contactless cards (smart tickets for automatic fare collection) to increase com- muter handling capacity.