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| Subject: October 2001, ERG bought out Banksys, Interpay, Visa and AmEx to acquire loss-making Proton World, | |
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Author: In October 2001 |
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Date Posted: 12:57:59 01/12/03 Sun Posted by: Walt Jan 12 2003 10:41:58:500AM Reply to post #3565 by Walt Go to Post # Previous Respond Message List Next Network externalities by Leo Van Hove. www.firstmonday.dk/issues/issue4_4/vanhove/index.html Also regarding Visa. Currently 1.2 billion Visa magnetic stripe card holders worldwide. By 2005 Visa expects 10% to have migrated to scard. Asia-Pacific to migrate by 2006. Europe(total migration) by 2005 is on target. Europe is the powerhouse for ERG. That is why in the overall scheme of things Sydney really is not important. But given the market conditions Sydney will provide a lift in morale. God knows we need it!!! The Australian ERG Group, which provides automated fare collection systems for public transport systems (e.g. Hong Kong Octopus), has acquired Belgium's Proton World, tradi-tionally renowned for its electronic purse and more recently for its Global Platform-based smart card components. This article reviews some of the plans ERG has with its partners in the transport, telecommunications and banking industries, and asks what this acquisi-tion means for inter-operable payment and transport applications in Europe. ERG's main business is to build, own or operate card-based, automated fare collection systems for public transport system world-wide. In ePSO-N 5&6 we reported on Hong Kong's contactless smart card based Octopus fare collection system, which appears to be one of the few broadly successful electronic purse schemes operational today. The ERG Group was the primary contractor to the Hong Kong operators. As we wrote, the closed nature of the Hong Kong public transport systems, using gates, the lack of alternative means of payments, and the inconvenience of alternative means of transport (traffic congestion, etc.), lead to high acceptance by commuters, and thus also high transaction numbers. Thus, the operators achieve significant cost reductions compared to cash. Some telling ERG activities in Europe In Europe, similar success stories involving electronic purses are rare. In October 2001, ERG bought out Banksys, Interpay, Visa and AmEx to acquire loss-making Proton World, known for their purse, EMV and PKI solutions, as well as their Global Platform based Prisma cards. One immediately wonders whether ERG and their customers and partners will aim at repeating the success from Hong Kong elsewhere, using Proton technology. In 1999, ERG had already bought rights to the Proton technology for the United King-dom, Italy and other countries. In the UK, they founded Prepayment Cards Limited (PCL), together with major transport operators including Stagecoach, FirstGroup and National Express. PCL will provide a smart card issuing and ticket clearing system. Their partners aim at offering an integrated system, allowing for use of the same ticket for journeys throughout the country. The UK Post Office will provide a card issuing and recharging service for Prepayment Cards. The cards are already in use in South Wales (South Wales Integrated Fast Transit - SWIFT), but the first major test of the new system will be in Manchester where 650,000 cards are to be issued during 2002. A National Express spokesman said: "We will be able to see where and how people travel at what times. It will be a bit like a supermarket club card, which tells the supermarkets what sort of peo-ple are buying each product" (cf. Murray-West 2000). ERG is also active in Germany. In public transport in Berlin and the state of Branden-burg the "tick.et" trial took place in which a card was loaded with value and then the fare was deducted depending on the distance travelled (with the help of check-in and check-out terminals). Users were offered small smart card readers to check their balance ("tick.et checks"). The intention is to rollout such a system in the Berlin/Brandenburg area, with the involvement of Deutsche Bahn. ERG also partners with Card.etc, with the support of VDV (Verband Deutscher Verkehrsbetriebe), the Association of German Trans-port Companies. Card.etc will use PayCard technology, which was formerly owned by Deutsche Telekom. Card.etc announced that two regional transport operators, Verkehrsverbund Rhein-Ruhr and the one from the Rhein-Sieg area, would deploy 1.6 -------------------------------------------------------------------------------- Page 13 -------------- ePSO-Newsletter No. 13 April 2002 -------------- [ - 13 - ] million smart cards. As season tickets, their area and time range of validity will be printed onto them. The cards will contain a purse, which can be reloaded at Deutsche Telekom phone booths. They will have a dual interface (contact and contactless). Card.etc has applied for a bank license. ERG is also active in Rome, where stations, buses and trams are already being equipped, and cards are being issued, as well as in Gothenburg and elsewhere outside Europe. Making sense of the Proton deal With the acquisition of Proton World, ERG intends to acquire more expertise in financial areas. They say: "The acquisition positions ERG as a "one stop shop" for all smart card systems and application requirements for the combined groups' collective customers. The transaction significantly expands our customer base throughout the banking and financial services sectors and gives us access to the fast growing security and identity markets. We welcome more than 500 banking customers that have deployed the Proton technol-ogy to add to our world-wide transit client base." Their objectives also become visible in ERG's plans to continue the Proton business with American Express, Banksys and Inter-pay Nederland, each of whom have service contracts with Proton. In this context it should be noted that ERG, in their home country, partners with the telecommunication carrier Telstra and with ANZ Bank in the "Ecard" venture for process-ing multi-application smart card transactions. As an observer, I wonder about two things: 1. Will the transition to regular check-ins and check-outs be accepted by customers? In several schemes in which the contactless cards are to be deployed, there are no barri-ers today. Requesting customers to check in, or even to check out, may have several advantages: "Slippage", i.e. the user not paying, can be reduced. Prices can precisely reflect the distance travelled. Even "best-price" fares can be offered, meaning that a customer paying for single trips will not pay more than a season ticket would have cost. However, it may be difficult to teach customers to change rules. In the "get-in" trial by Rhein-Main Verkehrsverbund, operating in the area of Frankfurt, Germany, the problem will be addressed by encouraging the use of the new check-in and out terminals by providing bonus-points. Here it is envisaged that people will even check in and out when changing trains. But will holders of season tickets be prepared to do it? In schemes with flat fees, the problem will be smaller, as a check-in will be sufficient. 2. Will the ERG-Proton deal bring about the cross-border electronic Euro and door-to-door usable transport tickets (Voluntary Disclosure:No Position Short Term rating: Long Term Rating:) OZeStock Advertisment:"Get yourself an institutional advantage!" Previous Respond Message List Next Bookmark Member Ignore Member Bookmark Board Terms Of Use Violation -------------------------------------------------------------------------------- Neither OZeStock nor the persons making the postings are licensed investment advisers. 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