Pocket Vault replaces the cards in your wallet

From...

By Emelie Rutherford

(IDG) -- Before the dotcom bubble burst, new software emerged almost every day to satisfy our every need, wish and whim. But now most surviving startups are doing things we never see -- such as connecting guts of the Internet and producing chips that are so small you need a microscope to see them.

Waltham, Mass.-based Chameleon Network, however, creates something that affects just about everyone whose wallet bulges with ID cards, ATM cards, subway passes and supermarket cards -- a wallet-sized device called Pocket Vault that substitutes for all those cards.

After consumers use Chameleon Network's software to "load" the data from their existing cards onto the Pocket Vault, they never have to rely on the individual pieces of plastic laminate again. When they want to use one of the cards programmed on the Pocket Vault, they select the icon for the card on the Pocket Vault's touch screen, and the device ejects a Chameleon Card that is temporarily programmed to act as the card of choice, whether it is a Visa card, BART pass, New York Public Library card or Kroger discount card.

The Chameleon Card will erase itself after 15 minutes and will remain blank until the user reuses it as another card. The Pocket Vault can be turned on only with its user's fingerprint, so thieves cannot turn the device on.

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"This is not just an additional device," says Todd Burger, the president and CEO of the year-old company. "It replaces all the other devices and other clutter. The typical wallet carrier has 25 to 40 pieces of wallet media."

The Pocket Vault system comes with a docking port for users to connect their Pocket Vaults to their computers and then Chameleon's website. They must access the site to load the cards initially, when Chameleon's servers contact the financial card issuers' computers to okay the transfer of data onto the Pocket Vault. Users must then connect to the site every four weeks to backup the Pocket Vault. If they do not do an update, the Pocket Vault and Chameleon Card will become disabled as a security safeguard.

The Chameleon Card is something in between a regular magnetic stripe card and a smart card. It has a computer chip like a smart cards have, but does not have to be read by a smart card reader. The Chameleon Card has a closed circuit coil that creates a magnetic charge that can be read by a magnetic stripe reader. "We just paint a stripe on the card so consumers know how to orient them," says Burger. "But thereâs not a magnetic stripe there. It's all powered by the chip." Cards with barcodes can be loaded onto the Pocket Vault, which can print the barcode onto the temporary Chameleon Card.

Burger still has some kinks to iron out with Pocket Vault, which is still being prototyped, such as how it will handle picture IDs. "We've set it up so people can choose digital images off their computers," he says. "Hopefully we'll be able to make deals with card issuers that require pictures and get them to share the pictures with us. We've also talked to a company that issues drivers licenses for various states about using drivers license photos for everything."

And, Burger, a 20-year Arthur D. Little consulting veteran, has a lot of work to do with partnerships. Even though he expects to complete the prototype in the fall and the first release in the spring of 2002, Pocket Vault is useless if financial institutions do not sign off on it. "For anything that creates financial liability -- a credit, debit or library card [which can rack up overdue fees] -- we have to have relationships with the issuers," he says. The user can load all other cards with identity and membership information onto Pocket Vault without permission, because they do not carry a financial risk and therefore do not need security protections.

Burger says Chameleon Network has signed one of the top ten banks in North America as a partner (he declined to release its name at press time), and is in talks with "20-plus organizations that are responsible for issuing just shy of 10 percent of all of wallet media out there," he says.

Pocket Vault has a bright future if the success of similar technologies is any indicator. The automatic identification and data capture (AIDC) industry, which includes devices such as smart cards, magnetic stripes, bar codes and radio frequency tags, is heralded as one of the fastest growing. Business Communications Company (BSC), a consultancy based in Norwalk, Conn., says the industry will hit $35.8 billion by 2004, up from $12.9 billion in 1999, the most recent year for which it has figures. Credit and debit card use is on the rise, according to BSC, and will account for $3.9 trillion in transactions in 2005, up from $2.6 trillion last year.

However, David Krebs, an analyst specializing in AIDC at Natick, Mass.-based consultancy Venture Development Corporation, is not convinced Pocket Vault will woo consumers. "They are not getting the size benefit," he says -- the Pocket Vault is roughly the size of a man's billfold. "I don't see why they will pay for this."

But Burger is undaunted. He's also working on convincing banks to issue credit and debit cards electronically over Chameleon's systems, and PDAs and cell phone makers to integrate it into their devices. Such uses may justify Pocket Vault's $180 price tag, provided Burger wins over those partners.