Another Canada Learning Experience for Mondex

Mondex Canada Association said it has regrouped after its initial 18-month smart card pilot in Guelph, Ontario, and is applying what was learned to a new trial in the Sherbrooke, Quebec, area.

The Sherbrooke pilot -- originally scheduled to begin last year -- was pronounced open last week with much fanfare, but the executives involved offered few projections.

Officials from Mondex and the two financial organizations in the Sherbrooke test -- Royal Bank of Canada and Mouvement des Caisses Desjardins -- declined to discuss how many cards will be issued or how long the trial will run.

Sherbrooke is the first implementation of Mondex electronic cash on Multos, the operating system developed by Mondex International that accommodates multiple applications on a single card. Cards are being issued in six municipalities in and around Sherbrooke and at two colleges.

The pilot's duration and number of cards are "not useful indicators with a brand-new technology," said Mondex Canada president and chief executive officer Joanne De Laurentiis.

"We're convinced that smart cards are going to be the delivery platform for financial services to consumers," said Allan McGale, vice president of smart cards and electronic commerce at Royal Bank in Toronto. "Sherbrooke is the opportunity to continue to learn how to deal with smart cards, how to deal with multi-applications, what consumers like about them, and what merchants like about them."

The cards carry computer chips as well as magnetic stripes. The latter enable the cards to operate in conventional reading devices and give them an elementary multiple-application quality.

Royal Bank has issued about 1,700 cards at the Champlain College campus and plans to issue 2,000 more over the next two weeks. Caisses Desjardins, the Quebec version of credit unions, said it has issued about 2,000 cards so far. The institutions area accepting applications for the cards and report strong interest among customers.

Virtually the entire Canadian financial industry -- including all the national commercial banks -- are member-owners of Mondex Canada.

Mondex International, a 51%-owned subsidiary of MasterCard International, is focusing on the chip cards' stored value function for purchases of less than $20 at retail stores and unattended points of sale such as vending machines, laundries, and parking meters. In the Guelph trial the average purchase price on a card was $6.40, and the 42 vending machines that accepted smart cards there proved popular.

At Guelph "we learned that the unattended sale was an important niche," Ms. De Laurentiis said. "The unattended sale has never really had an alternative to cash and coins. It is a brand-new concept."

In Sherbrooke, 350 parking meters, 300 vending machines, and numerous automated teller machines and laundry machines have been configured to accept smart cards.

More than 600 merchants are participating in the trial and have been outfitted with new card-reading terminals.

Mondex-compatible devices have been developed for Royal Bank's pilot operation by C-MAC Industries of Montreal, Aastra Telecommunications Inc. of Toronto, and Audesi Technologies Inc. of Calgary.

C-MAC is manufacturing a digital wallet that will allow people to transfer money for the first time using the Multos system, according to Royal Bank. Aastra and Audesi developed a smart-card-reading ATM for the home.

In the multiple-application vein, Ms. De Laurentiis and others see the electronic cash function in the future as coexisting with debit and credit on a single card.

"The rollout strategy is that the Mondex application will be added to a multi-application card that would at a minimum have the other payment functions on them," Ms. De Laurentiis said, although further implementations are "five to 10 years" away.

Georges S. Brotman, a Canadian consultant specializing in smart cards and electronic payment systems, said he does not foresee a national rollout of electronic cash in Canada within five years.

Such a rollout would "only make sense when combined with debit, credit, and/or other types of e-payment applications on a single card such as public transit fares," said Mr. Brotman, president of TTI Transaction Technology International Inc. in Toronto.

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