Firms join forces to expand in prepaid cards.

Two companies from either side of the Atlantic are merging in hopes of becoming a stronger force in the development of prepaid card systems.

The companies, GiroVend of London and Debitek Inc. of Chattanooga, Tenn., have done most of their work in internal, closed-payment systems. For example, Debitek was a supplier to pilot projects at Chemical Bank in New York and CoreStates Bank in Philadelphia, in which employees were given cards for use in cafeterias and vending machines.

Such prepaid cards typically have value stored in their magnetic stripes, or in the internal computer chips of smart cards. The amount is debited with each transaction - usually no more than a few dollars - and can be replenished at automated tellers or similar machines.

With banks, telecommunications companies, transit system operators, and others increasingly looking into larger-scale prepaid programs that allow the card to be used in many locations, GiroVend and Debitek view the business as an international growth opportunity.

60% of Market

Together they have more than 3,000 installed sites, or 60% of the market, according to GiroVend chairman and chief executive Richard Smart. But he sees the existing market as only 1% of the potential for such in-house installations.

GiroVend's clients include the British House of Commons, the European Commission headquarters, Lloyds Bank of London, and the British retailer Marks & Spencer.

The company is also in discussions with a venture of National Westminster Bank of London to play a role in Mondex, a proposed "electronic purse" substitute for cash.

In the transaction announced last week, GiroVend will take a 59% interest in the merged company, which will continue to use the Debitek name in North America and GiroVend in Europe and elsewhere.

Debitek had been controlled by Coca-Cola Enterprises Inc., as a result of its acquisition of Johnson Coca-Cola Bottling Group Inc. in 1985.

Parallel Research

"GiroVend and Debitek have been investing a high share of their revenues in parallel reseach and development efforts," Mr. Smart said. "By joining forces and sharing technologies, both companies will be better positioned to grow within their current markets and together on a joint, global-project basis."

Systems installed by the two companies are handling about 22 million card transactions a day, with estimated payment volume for 1994 exceeding $2.5 billion. GiroVend projects this volume will at least triple within three years as multiapplication smart cards are introduced and linked with ATM systems.

GiroVend's system revenues are running about $14.5 million a year and growing at a 30% rate.

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