The See-It-All Chip

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PHOTO-ILLUSTRATION FOR TIME BY VIKTOR KOEN

KEEPING TRACK: With RFID, the family fridge will tell you when the milk is spoiled or youre out of butter. In the store, your grocer will know all. A tag will help you find Fluffy too

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At burger chain Carl's Jr., which is testing ExpressPay, faster lines at the cashier and reduced backups at the drive-through window have brought in new customers. "It's a no-lose situation," says Jason LeVecke, grandson of the chain's founder. Women seem to grasp the advantages of the new system quicker than men — something Amex learned to its surprise in focus groups. "It sure would be easier than fumbling around in my purse," says Tracey Serenka, who had her two sons — Eric, 1, and Jason, 4--in tow at a Carl's Jr. recently. Another advantage over a credit card: there is no name or signature on the fob, and the account number differs from that on the user's regular card, reducing chances that crooks can steal from the account. If the fob is stolen or lost, American Express eats the liability.

Bonalle says the "light came on" for him nearly three years ago, thanks to his wife, who uses ExxonMobil's RFID-based Speedpass fob to pay for gasoline at the pump. At least 6 million people have used Speedpass since its 1997 introduction. But the technology spread far beyond the pump this year after all three major card companies — Amex, Visa and MasterCard — endorsed interoperability standards for RFID payments. Besides the Amex pilot, there have been trials by MasterCard (for its PayPass card in Orlando, Fla.) and Visa (which plans to use RFID-ready phones in Asia). Someday you will stroll down grocery aisles with a PC tablet that uses RFID technology to find products, place deli orders in advance and automatically ring up sales.

So far, Europeans have made the biggest investments. In England retailer Marks & Spencer has spent the past two years rolling out RFID tracking of its gourmet take-home foods, supplied to 200-plus stores by 300 providers. The RFID tags are embedded in some 3.5 million food trays and dollies, allowing the company to track the trays and reducing employee hands-on time 80%. While setup costs for a large company can run from $100 million to $200 million, the efficiencies can amount to 1% of revenues (that's theoretically around $100 million at M&S), says TI's Slinger, which supplied Marks & Spencer. "Companies are talking about payback for the investment in one to two years, even months," he notes.

Italians have been early adopters too. In 1998 appliance maker Merloni Elettrodomestici started turning out Ariston appliances — washing machines, dishwashers and refrigerators — with RFID readers that will eventually allow them to communicate with products bearing smart tags. Washers, for instance, will be programmed to read clothing labels for cleaning instructions. But that vision had a setback last spring, when Benetton nixed RFID tagging for its Sisley line because privacy groups threatened a boycott. Benetton is still determined to use RFID for inventory, hoping to replicate a system in place at Prada's New York Epicenter store. Sales personnel there can search inventory without leaving clients, thanks to RFID tags. Next year Prada hopes to roll out RFID in its new Beverly Hills store.

While the U.S. and Europe are concentrating on using RFID in logistics, Jun Murai, head of Japan's Auto-ID center at Keio University, says gadget-crazy Asians in Japan, South Korea, Singapore and Hong Kong are more likely to want household items with RFID chips that can communicate with a home network. The Chinese are more pragmatic. Shanghai and 44 other cities already use an RFID payment system for public transportation. In Singapore's library system, all 9 million books, videos and DVDs are embedded with antitheft chips, allowing self-checkout. "With bar codes, you need to precisely align the reader and the tag, but with RFID even old people and young children can use the system," says library-board senior development manager Wong Tack Wai. With costs down to 40 an item, libraries in Australia, South Korea, New Zealand and Macau have adopted the island's patented system.

With Wal-Mart requiring RFID tagging on pallets and cases, the stampede is on for U.S. suppliers to get up to speed. Earlier this month, the Auto-ID Center planned to issue its first RFID privacy guidelines, promising clear notification, choice and confidentiality. Saffo thinks that RFID may save us all some headaches in the future. It certainly might have helped a certain actress caught shoplifting in Beverly Hills, he says. "If only Winona Ryder had waited a couple of years, floor sensors would have detected her purchases as she headed out the door, and just charged her credit card."

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