HONG KONG is on the short list of Asian markets to be selected for a pilot project by Visa on cashless shopping with so-called smart cards. The global card company is believed to be evaluating the targetting of Hong Kong, Malaysia and Thailand as the leading candidates for the first trials of its stored value card (SVC) in Asia. A decision is expected within two weeks, according to sources inside the card group. This will be one small step in what some industry experts predict will be a long path towards a world where cash becomes an outmoded way of paying for even the smallest items and is replaced by cards with computer chips, which are used in conjunction with special terminals in shops, restaurants and other consumer outlets. If Hong Kong is chosen, it will put the Visa group toe-to-toe with Hongkong Bank's own alternative to cash, the Mondex Card, which is expected to appear in the fourth quarter. Visa has launched its SVC card in Australia. The group's head of chip cards in the country, Bruce Mansfield, yesterday said 350-400 terminals had been installed on the Gold Coast, and about 20,000 cards had been issued. When the Australian pilot scheme was unveiled last year, the company said it expected to involve more than 1,000 merchants and send out 150,000 cards. With all major card companies now developing smart cards, the take-up rate in new schemes is being closely watched. Mr Mansfield said the new system was very much a chicken-and-egg situation. 'You have got to have enough terminals, it's got to be everywhere, it's got to be as convenient as cash, but until you get that number of terminals the consumers are not going to get excited about the technology,' he said. 'Then again if you go to the merchants, they will say they will have a terminal only if there are enough people out there to use it.' The cards contain a computer chip, making them much more powerful than existing products. They eventually will offer a vast number of functions, but early applications are expected to be stored-value and 'loyalty' cards, issued by stores or airlines and offering customers special services. Gaylon Howe, Visa's senior vice-president for stored-value cards, said there was a lot of interest in chip technology among the banks who subscribe to the Visa system. 'Stored value is the first of many applications; merchants are getting excited about loyalty cards,' he said. The cards are intended as cash substitutes for relatively small purchases, and can either be bought as disposable units, with limited amounts of cash available on the cards, which are thrown away when used up, rather like a telephone card, or as reloadable cards. These will be reusable, and can be 'filled up' with cash through automatic teller machines, and can also be linked to credit and charge-card systems. Visa executives, who attended Cards Asia '96 in Singapore, said banks were interested in the card because of its potential to reduce cash handling costs dramatically. The big question over stored-value cards is whether they offer enough convenience in paying for small purchases, or services such as parking meters, to wean users off cash and notes. With US$8.1 trillion of cash transactions every year, the road to a cashless society remains long, the card issuers admit.