The 'smart card': revolution in the way you pay bills?

Now they're trying to put ''intelligence'' in your wallet and purse. No, this is not another story about a computer the size of a Crackerjack box. Not exactly. Instead, it is about embedding microprocessors and memory devices in plastic cards - in effect, turning your credit card into a limited-purpose personal computer.

Depending on who you believe, these ''smart cards'' now beginning to appear are either going to revolutionize the way people bank, pay bills, and store records - including replacing your checkbook. Or they are going to be little technological marvels that will find limited use - the Concordes of the credit-card world.

The new entrants take electronic card technology a step beyond the familiar magnetic strip. With the strip, information is stored in an iron-laden piece of tape on the back of the card. By slipping it in a self-service machine, a person gets cash advances or airline tickets.

But the strips have their drawbacks: They can be easily counterfeited and don't hold much information. Most of the data is stored in a central computer, which the consumer taps into by using an automatic teller machine (ATM). This raises another snag: Thieves can eavesdrop on the telephone lines linking the ATM with a bank's computer and manipulate accounts.

Enter the smart card. It, in essence, shifts the processing and storage tasks from the computer to the card in your pocket. The microcircuit can store enough data to keep a tally of shopping or banking transactions. If you want to buy a dishwasher, leave the cash and checkbook at home. You hand the chip card to the store clerk, who would run it through a card-reading machine. The sum would be deducted from a tab contained in the chip. No need for the clerk to check out your credit rating - the chip holds that information, too. In theory, the smart cards are virtually fraudproof: A person's password is stored in the tiny circuit, making it tough to copy.

The French were the first to move the smart card out of the idea shop. They developed it as a replacement for the checkbook.

Yet the smart card isn't the only technology jostling for a place in people's wallets. Another type - this one buries a chip but not a microprocessor in wafers of plastic - is being developed by Datakey Inc., a Minnesota firm. And a California company is putting mass-memory optical devices on standard-size credit cards. (Neither is considered a smart card since a microprocessor is not built in.) In all, about a dozen US, European, and Japanese firms are gearing up or producing memory cards of one kind or another.

Just where - and if - the new generation of memory cards will be used remains uncertain. The biggest potential, at first glance, would seem to be in banking and shopping. The high-tech-minded French have pilot projects in three cities involving 120,000 cards and 650 card-reading terminals.

But experts doubt the cards will replace checkbooks and conventional credit cards any time soon. For one thing, the banking industry already has a hefty investment in magnetic strip technology. The banks aren't about to issue new cards and thousands of reading machines.

Instead, smart cards are more likely to pop up where they don't bump into competition. One example: ID cards. The Army is testing an electronic dog tag - a chip-bearing wafer that holds everything from a GI's medical history to disciplinary records.

Similar cards could be issued to workers at nuclear power plants and other high-security areas. For record-keeping, federal and state governments are interested in them to cut down on fraud in welfare and medicaid programs. Another bet: inventory control. A car's maintenance record, for instance, could be lodged on a chip.

Still, Richard Rosen, a scientist at Battelle Labs who has studied the cards, says their reliability, cost, and security need to be proven before they become anything close to ubiquitous. Technologically, the smart cards may be ahead of their time. ''They're a solution for a problem yet to be defined,'' says Thomas Wood, vice-president of financial services, planning, and research for the Bank of America.