Sky is opening up the second smart card slot available in the set-top boxes in 7.4 million UK satellite homes, potentially enabling third parties to launch their own loyalty or credit card schemes.

Sky Subscriber Services Limited is notifying broadcasters of the change which is due to take place early in 2005.

The facility to use the second slot has been contractually unavailable to date, although the necessary calls exist in the OpenTV application programming interface. The physical characteristics of the smart card are defined by the ISO 7816 standard and evidently there has always been an option to use the spare reader slot, which has been vacant since the launch of the Sky digital platform.

One possibility would be for Sky, or a third party, to launch a branded credit card. The smart card system is similar to the chip and pin technology being introduced by retailers at point of sale, but there are clearly regulatory, security and data protection issues involved in reading from or writing to a conventional payment card in a set-top box.

An alternative approach would be to develop a loyalty card scheme based on credits that could be accumulated by watching a particular programme, advert or channel. Such cards could be supplied pre-loaded with credits, personalised to individual users, or potentially charged through a kiosk terminal, enabling considerable creative possibilities.

There have been rumours of such a development for many months. At Milia in March, French company TV Card launched their own smart card concepts, identifying opportunities for betting, gaming, user identification, pre-payment and loyalty schemes., a joint venture between interactive television company Mindhouse and Emergent Media Partnerships is aiming to gain first mover advantage to exploit the potential of the second slot and claims it has already secured interest from a number of broadcasters.

MiCard is a hybrid of affinity marketing, sponsorship and loyalty cards that uses smart card technology to reward viewing with value redeemable in the high street or through virtual reward schemes.

Mindhouse has been working on the necessary systems and business models for a considerable time, but according to managing director Steve Scott “It’s really a marketing proposition, not a technology proposition. The key will be to be there first. We don’t imagine that people will want to keep a stack of cards by their set-top box.”

Mindhouse is targeting channels with the possibility of tying up with high street brands to create a ‘virtuous circle’ to maintain viewer loyalty and drive footfall to stores.