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| Subject: Re: CSI Pacific IBM 1997 | |
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Author: joint marketing agreement |
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Date Posted: 09:58:28 02/01/03 Sat In reply to: FRIDAY MAY 19,2000 's message, "Re: CSI Pacific" on 09:49:59 02/01/03 Sat Smart Card Industry Review 1997 by Jack Smith. Editor, Smart Card News This article was first published in our Monthly Newsletter, January 1998. Full SCN Subscribers can download the complete issue from our Newsletter Archive section. If you wish to become a Full SCN Subscriber please complete our on-line order form. -------------------------------------------------------------------------------- The year was notable for the number of takeovers, joint ventures, alliances, agreements, memorandums of understanding and co-operations as players in the Smart Card industry further strengthened their positions in specific markets or moved to offer turnkey solutions. French-based specialists in EFT terminals, Groupe INGENICO turned its attention to the Americas in an alliance with International Verifact Inc (IVI) of Toronto, Canada, to offer a range of products including Smart Card technology. IVI is a developer of electronic payments solutions with products including point of sale terminals and Smart Card readers. In addition, a new joint venture owned by IVI (51 per cent) and Groupe INGENICO (49 per cent) will be the exclusive distributor for both companies' products in Latin America while INGENICO will have the right to distribute selected IVI products in all countries outside the Americas. DataCard Corporation entered an alliance with Smart Card production systems company Meinen, Ziegel & Co. GmbH of Germany. Under the agreement, DataCard acquired a majority equity in the Munich-based company taking responsibility for global marketing and product distribution. Meinen, Ziegel & Co manufactures contact and contactless Smart Card production systems while US-based DataCard specialises in card personalisation systems. Australian company Intellect signed an OEM agreement with NCR, enabling NCR to sell and support a range of Intellect electronic payment devices in the US markets. A number of Intellect products will appear with the NCR logo giving NCR a broader range of products to create total banking and finance solutions. MasterCard International completed its 51 per cent acquisition of Mondex International in February. Gemplus acquired Austrian company Skidata which specialises in access control systems for ski lifts and car parks, including contactless applications. According to Skidata their ski lift system is used in over 80 per cent of the installed base of access control equipment in Europe. In addition to contactless cards, the company also packages access control into wristwatches. Giesecke & Devrient GmbH of Munich, Germany, announced a co-operation agreement with Kaba Holding AG of Rümlang in Switzerland to combine the production of contactless cards by G&D with technology developed by Kaba for identification and access control applications. G&D also set up a joint venture with the Russian companies Znak/Perm and Znak/Moscow to provide services for Smart Card projects in Russia. The new enterprise, called G&D-ZnakCard ZAO, is based in Perm and will benefit from the Znak companies' branch infrastructure throughout Russia and G&D's broad range of products. Mondex UK acquired a 10 per cent share in GiroVend Cashless Systems, Europe's leading supplier of cashless vending, giving Mondex a solid base into which it can integrate its Smart Card expertise. Dassault Automatismes et Télécommunications signed a co-operation agreement with IPC Corporation of Singapore for the distribution of Dassault electronic payment products, equipment and software in Asia by IPC. Pretty Good Privacy, Inc. (PGP), provider of digital privacy software and Schlumberger Electronic Transactions, supplier of Smart Cards and systems, announced an alliance for the development and marketing of integrated network security products. PGP's encryption technology will be integrated with cryptographic Smart Cards from Schlumberger to provide communications security across corporate intranets and the Internet. Hewlett-Packard Company, the second largest computer supplier in the United States, acquired VeriFone, provider of electronic transaction systems, with plans to accelerate Internet-based commerce and Smart Card applications. VeriFone continues to operate independently as a wholly-owned subsidiary of HP. De La Rue acquired for ,54.2 million the Smart Card business of Philips which now trades under the name De La Rue Card Systems. De La Rue Fortronic, which specialises in electronic transactions and is based in Fife, Scotland, also had its name changed to De La Rue Card Systems as part of a worldwide strategy to take advantage of the De La Rue brand name. ICL Retail Systems agreed to collaborate with VeriFone to use VeriFone's card payment solutions in its EPOS system, GlobalSTORE, and also act as a reseller of VeriFone devices. IBM and Card Services International (CSI) announced a joint marketing agreement giving IBM the rights to sell CSI-developed CardBASE2000 on a worldwide basis, strengthening IBM's Smart Card solutions, particularly in the area of implementation of multiple electronic purse schemes such as Proton, Visa Cash, Mondex and CLIP. A group of Smart Card technology vendors - CyberMark LLC, Debitek Inc., Gemplus Corporation, Product Technologies Inc., VeriFone Inc., V-ONE Corporation and 3G International - formed an alliance to produce and market multi-application platforms for university and college campuses, stadiums, resorts and other "closed" sites across the US. American Express and ERG of Australia formed an alliance for the development of multi-purpose Smart Cards. The agreement enables Amex to issue cards, including the Banksys Proton electronic purse technology, and to utilise what will become the Proton network in Australia and New Zealand. ERG also formed a marketing alliance with Motorola's Smartcard Systems Business (SSB), in the USA to pursue global opportunities in transit fare collection and multi-application Smart Card system technologies. NBS Technologies and Bull announced they will jointly develop terminals for the Smart Card and electronic purse market in the US and Canada with the first product scheduled for early 1998. Landis & Gyr Communications and Tianjin Telephone Equipment Factory formed a joint venture to manufacture chip card payphones for the Chinese market. Called Tianjin Landis & Gyr Communications Co. Ltd., the new company is based in Tianjin City. The European Commission approved the takeover of the Swiss Electrowatt Group by the Siemens Group in Germany on condition that Electrowatt sold the payphone activities of its subsidiary Landis & Gyr Communications to prevent a near monopoly situation, particularly in Germany where both companies compete. Emerging markets Where are the emerging markets for Smart Cards outside of Europe which is currently well served? Despite the numerous predictions in market surveys, the most reliable guide is to look at where the manufacturers are putting their resources. During 1997 card production started at the Tianjin Gemplus Smart Cards Company in Tianjin in China. The plant, a partnership between Gemplus and Tianjin Telephone Equipment Factory, is producing Smart Cards for payphones to be followed later with microprocessor cards. Output is given as over 10 million cards during the first year and over 100 million by the year 2000. Also in China, ORGA Kartensysteme GmbH, of Germany, announced that it would start producing Smart Cards with Chinese partners at a new plant being built in Shenzhen in the south-west of China on the Hong Kong border. The joint venture company, called the Shenzhen ORGA Smart Cards & Systems Co., was formed by ORGA, Shenzhen Honbo Communications Investment & Develop-ment Co-operation, Shenzhen Post Telecom Co and Shenzhen International Commerce Machine Co. Schlumberger opened a new Smart Card manufacturing plant in the Aberdeen district of Hong Kong. Called the Hong Kong Cards Industrial Centre (HKCIC), the facility has an initial capacity to manufacture up to 6 million cards a year and has room for expansion. Gemplus took a 51 per cent equity stake in Secur-Card Technology Pte Ltd., a leading manufacturer of financial cards, with plans to extend output to Smart Cards for the Asia-Pacific region. Secur-Card Technology, based in Singapore, manufactures cards for most of the leading banks in Asia at its two plants - one in Singapore and the other in Zhuhai, China, which have a combined capacity to produce 100 million cards annually. IRIS Technologies completed a new headquarters and Smart Card manufacturing facility in the National Technology Park in Kuala Lumpur, Malaysia, which will have an initial production capacity of 60 million contact Smart Cards and between 5 and 10 million contactless cards per year. Motorola, the biggest supplier and manufacturer of Smart Card IC chips, announced plans to also manufacture Smart Cards and offer total solutions in the global market. The new business unit called the Smartcard Systems Business (SSB) is headquartered in Schaumburg, Illinois, USA, and plans to concentrate on the production of contactless cards and combined contact and contactless cards with the first cards expected to come off the production line at a Motorola factory in Indala, California, USA. Future plans are to manufacture in major market areas using its worldwide facilities, but in some cases in partnerships with key industry players. Motorola said the first cards would have 32K bytes of memory and forecast 100K bytes by year 2000. Giesecke & Devrient GmbH of Germany, bought Cardtech Inc., based near Cleveland, Ohio, USA, which produces 50 million high-security cards a year. G&D said a new production line would have an initial annual capacity of 7.5 million cards. American Microdevice Manufacturing, Inc., (AMMI) launched into the Smart Card industry with a claimed 1997 production capacity of 30 million cards from its San Jose, California, USA plant. Schlumberger opened its Smart Card plant in Mexico City to serve markets in Mexico and Latin America. Schlumberger said it was investing US $40 million and manufacturing would grow from 20 million to 50 million cards in 1997, with Smart Cards accounting for most of the production. Electronic Commerce on the Internet Perhaps the vision of global electronic commerce on the Internet caused the most excitement in the industry, focusing minds on the need for a high level of security to satisfy financial institutions and consumers alike. A standard for Secure Electronic Commerce (SET) was developed by Visa and MasterCard with assistance from Microsoft, IBM, NetScape, SAIC, GTE, Terisa Systems and VeriSign. Based on encryption technology developed br RSA Data Security, SET enables cardholders and merchants to exchange digital certificates to authenticate each other and allow cardholders to safely send card details over the Internet. Towards the end of 1997, American Express and JCB Company joined with Visa and MasterCard to lead the introduction of SET under the name SETCo. Interestingly, the European Commission chose C-SET technology in preparation for drawing up Community norms for electronic commerce on the Internet. Banksys, the Belgian interbank payment system organisation and Groupement des Cartes Bancaires representing the French bank card issuers, jointly submitted proposals for the use of C-SET (Chip-Secured Electronic Transaction) architecture and related security features. C-SET uses the SET standard but stores sensitive data in the Smart Card instead of in the customer's PC. Global interoperability is made possible by the use of a network server that enables the C-SET and SET protocols to communicate with each other on a standardised, worldwide basis. Numerous trials have taken place in many countries to test the SET protocols and now the first real- world applications are starting. In Belgium, the Proton electronic purse developed by Banksys will be used for purchases on the Internet and cardholders will be able to charge Proton cards at a Banksys Internet site. In The Netherlands, the Chipper multi-application Smart Card developed by ING/Postbank and KPN/PTT Telecom will enable shopping and reloading of the purse on the Internet. Bank payment cards UK banks started trials with Smart Card chips on payment cards in October in two cities and it is expected that the new cards will be progressively introduced from mid-1998. Magnetic stripe technology has been retained on the chip cards to ensure that they can continue to be used globally. Visa Sweden announced that is member banks would start to issue multi-function payment cards using chip technology. In the first step towards the introduction of a multi-function card, Sweden's electronic purse, called Cash, will be added to Visa cards in early 1998. Electronic purses Chase Manhattan and Citibank are piloting Visa Cash stored value cards and Mondex electronic cash cards in New York in the first joint venture between MasterCard-owned Mondex and Visa to test interoperability between the two competing brands. Proton took the world lead in the electronic purse market as the most widely used worldwide with over 20 million Proton Smart Cards issued in nine countries. It also formed Proton World to promote global implementation of the Proton system. Visa International issued some 4 million cards in programmes in nine countries, including the UK where some 70,000 cards are being issued in a 12-month pilot in the city of Leeds. In this trial, the Visa Cash electronic purse can be added to a debit or credit card or can be issued as a separate card. Mondex is currently being used in 16 implementations around the world including Australia, Canada, Hong Kong, New Zealand, Philippines, UK and USA. By the end of 1997, Mondex International said it would have produced in excess of one million reloadable Mondex cards - a figure expected to rise to five million reloadable cards by the end of 1998. Geld Karte became the largest national electronic purse scheme in the world with around 40 million cards in circulation. Contact/contactless cards Positive moves towards implementing combined contact and contactless Smart Cards particularly for use in both banking and public transport - applications previously considered to require different technologies - have been made by major players in the industry. Chip manufacturer Motorola, which announced its intention to enter the Smart Card production market, said it was specifically targeting transportation and banking as its initial markets and concentrating on combination and contactless cards. Banksys, the Belgian developer of the Proton electronic purse, and ERG, the Australian leader in automatic fare collection in public transport, formed a joint company with plans to develop, with card manufacturers, a multi-purpose Smart Card capable of providing both contact and contactless functionality. Public transport operators have long favoured contactless cards because there is no need to insert the card in a reader, leading to quicker boarding. Banks, concerned about security, have adopted the contact Smart Card for secure storage of information and protection with encryption algorithms such as DES and public key cryptography. As the trend towards multi-function cards continues, there is a growing demand for a hybrid card which, for example, can be used in contact mode for financial transactions and in contactless mode for public transport requirements. All the major card fabricators are now offering contactless cards in their range of products and many have, or are developing, cards combining the two technologies. In Spain, Visa Espańa member banks announced plans to pioneer a contact/contactless Smart Card with a Motorola chip with the Madrid Transport consortium by adding a contactless option to the Visa Cash card. Cardholders will use it as a contact card for purchases at retail outlets and for loading the card with value at cash machines, and also use it as a contactless travel card. Telecommunications While telecommunications remains by far the largest market with orders for payphone cards from individual telephone companies running into the millions, GSM (the Global System for Mobile Communications) accounts for over 70 million Smart SIM (Subscriber Identity Module) cards. An interesting development has been the rise of prepaid cards as operators target the mass consumer market. Prepaid systems attract consumers who do not want to be tied into long service contracts and gives the less credit worthy the opportunity to use a mobile phone. The no subscription, no bill schemes helps to reduce the fraud risks and bad debt associated with subscriptions. Cellnet, the UK GSM mobile phone network and Mondex International signed an agreement to jointly develop solutions to allow electronic cash to be transferred via digital mobile phones. Cellnet intends to enable customers to use mobile phones to withdraw and deposit cash to their bank account using their Smart Card. It will also be possible to transfer cash to other mobile phones. The first e-Commerce pilot on a GSM network started in the US at Florida State University where students are testing their Smart campus cards for electronic commerce using a mobile phone on Powertel's GSM network. Schlumberger released the first Java-based SIM (Subscriber Identity Module) for mobile phones for beta-testing by leading telecommunications companies. Based on its Cyberflex product, it conforms to the Java Card Forum-endorsed API standard developed for Smart Cards. Java or MULTOS? Two French Smart Card manufacturers, Schlumberger and Gemplus, who together claim 70 per cent of the market, announced compatible Java Card platforms and the formation of the Java Card Forum, with the active support of Sun Microsystems to promote the Java Card API (Application Programming Interface) as an industry standard platform for Smart Cards and exchange technical information between participants. Other Java Card Forum members are Bull, De La Rue, Giesecke & Devrient, Hitachi. IBM, Keycorp and Toshiba. At the same time, MULTOS is being introduced by an international group of eight leading silicon manufacturers and Smart Card companies, led by Mondex International. A new "open" high security, multi-application operating system, it is being promoted by Dai Nippon Printing, Gemplus, Hitachi, Keycorp, MasterCard International, Mondex International, Motorola and Siemens who have formed a consortium, called MAOSCO, to drive the adoption of MULTOS as an industry standard and to manage its on-going development. Application licences are available at low cost to card issuers and the first MULTOS cards are expected to be commercially available in the first Quarter 1998. The aim is to bring together a number of separate services on a single card, for example, a loyalty program, electronic ticketing, and a credit, debit or electronic cash product. A major debate in the industry has been whether Java or MULTOS will be the driving force to speed the roll-out of Smart Card technology. To explain the difference simply, MULTOS is a card operating system while Java is a computer software language and an operating environment in that the language is used to implement an application in the card - but it is not an operating system. Developing the operating system and the card application are two different tasks. Perhaps Visa and MasterCard will eventually agree a common chip card platform for the replacement of magnetic stripe bank payment cards with chip cards, but at the moment this apparently is not a subject even under discussion. Visa is using Sun's Java Card API, while MasterCard has chosen MULTOS, the multi-application operating system. Visa has opted for Java largely because of its potential for use in electronic commerce applications on the Internet and with Personal Computers while MasterCard is concerned that the Java language does not have the same level of security as MULTOS which has been specifically developed for Smart Cards. While the two major card issuers agree to differ on this subject, it could mean higher costs for non-member banks and other card issuers in having to write cards for each platform. Industry opinion is that there will eventually be interoperability, probably with Java Cards sitting on top of the MULTOS operating system. Biometrics The use of biometrics - physical characteristics unique to an individual - for positive verification also progressed during the year, spurred on by the growth in markets such as electronic commerce, corporate intranets and physical access. ORGA Card Systems and Software ABS GmbH developed the VoCard biometric system for chip card voice verification. The user is identified through voice analysis and word comparison. Primarily, VoCard is applicable to physical access control and access to data and equipment. SAC Technologies Inc., announced a fingerprint biometric solution for positive identification which can be stored in a Smart Card or magnetic stripe card. Called SACMan, it uses SAC's Vector Analysis technology and fingerprint imaging to produce a bio-key record by converting the unique aspects of a fingerprint into a "model" which is different from the traditional "minutia" approach used in most fingerprint biometrics. Face recognition technology is being introduced in a new biometrics and Smart Card-based airline passenger and baggage security system at the Langkawi International Airport in Malaysia. Called FacIt, the technology was developed by Visionics Corporation in the United States and is being licensed to TL Technology Research, a Malaysian airport security systems company. The system uses face recognition to ensure that only true passengers can enter departure lounges and subsequently board aircraft and that only luggage from passengers who board is loaded. It automatically matches biometric data captured on a video camera during check in and stored on Smart chips embedded in the boarding cards and luggage tag. Bull CP8 and Keyware Technologies agreed to integrate Keyware's biometric voice verification in Bull Smart Cards. At a later stage the companies plan to introduce facial, fingerprint and other biometric solutions. IriScan, Inc - exclusive owner and developer of iris recognition technology for automated biometric identification - and GTE plan to bring the technology into the world of cyberspace. GTE's proprietary digital biometric certificates will be combined and both sender and receiver will be verified by their IrisCodes before the transaction is completed. Called Iris Certificate Security (ICS), a prototype will be available in first quarter 1998. In the UK, the Nationwide Building Society and NCR will test customer reaction to iris recognition technology in Swindon. Cardholders will look into a camera which will recognise their unique "eye print". The system has been developed by Sensar Inc., an IriScan technology licencee (see above). More powerful chips Early in the year, two chip manufacturers introduced more powerful microcontrollers. Siemens unveiled the SLE 44C160S chip with 16K bytes EEPROM, 15K bytes of ROM and 256 bytes of RAM in a package less than 15mm5. Hitachi extended its H8/310 family of microcontrollers with the H8/3103 with 16K bytes of EEPROM, 20K bytes of ROM and 512 bytes of RAM and a 20mm5 die size. Philips Semiconductors introduced the P83W858 Smart Card crypto controller offering higher levels of security and speed, and Siemens Semiconductors announced the SLE 66CX160S microcontroller offering 32K bytes ROM, 16K bytes EEPROM with around 2K bytes of on-board RAM with a surface size of just 20mm5. Motorola Semiconductor Products and Japan's Matsushita Electronics Corporation teamed up to develop next generation FERAM (Ferroelectric Random Access memory)-based Smart Card chips. The first chips are expected to be shipped by the end of 1999. According to Motorola, the new FERAM chips could have capacities of 64K bytes to 128K bytes compared with the current 8K bytes to 16K bytes using EEPROM technology. Government At the end of the year, the British government formally legalised electronic signatures using a Smart Card and became the first government to accept electronic forms from the public over the Internet. The pilot scheme will enable people to register on-line as self-employed for tax, national insurance and VAT (Value Added Tax). The forms are digitally signed using Smart Card technology provided by NatWest, the inventors of Mondex. The government says it is the start of its commitment for a quarter of its business to be conducted electronically by the year 2002. The Malaysian government launched the Malaysian Multipurpose Card (MPC) project with plans for eight applications to be developed on two separate cards by the year 2000. The Government MPC will combine national ID, driving licence, medical, immigration applications and optional E-cash. A Payment MPC will provide international credit, debit, ATM and E-cash functions. E-cash applications and infrastructure developed for the MPC will be compatible with a disposable E-cash card. Banksys' Proton electronic purse technology, will underpin all of Malaysia's Smart Card system. In the US, the government plans to conduct all government payments and collections electronically. The Treasury is piloting a Smart Card at Fort Knox to replace cash for military personnel. Their pay will be loaded onto the card to pay for purchases and services at troop stores, vending machines, barber shop etc. at the base. The Treasury's Financial Management Service is also piloting a Smart Card-based electronic cheque (e-Check) for secure electronic payments to its suppliers via the Internet. [ Next Thread | Previous Thread | Next Message | Previous Message ] |
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