Two banks and a credit union are formally introducing Mondex in Canada today.

Royal Bank of Canada and Canadian Imperial Bank of Commerce, founding members of Mondex International, are being joined by Credit Union Central of Canada in a pilot of the smart card technology in Guelph, Ontario.

Mondex was spun off by its inventor, National Westminster Bank of London, last July to 17 owner-banks around the world. In November, MasterCard International said it would buy 51% of the shares.

The two Canadian banks have not yet signed off on the deal. "We didn't feel we were being adequately compensated for the investment we made and recognition that we were among the first institutions" to become franchisees, said a spokesman for Mondex in Canada. He said the difficulties should be overcome.

Michael Keegan, Mondex International's chief executive officer, is in Guelph as part of the launch celebration, complete with opening ceremonies, media advertising, and a direct mail promotion.

Credit Union Central, which represents 900 credit unions across Canada, announced its participation in the Canadian trial last week. Guelph & Wellington Credit Union, with two branches and 9,000 customers, is the only credit union taking part in the test. It expects to issue 3,000 of the planned 10,000 cards for the trial.

"By being a full participant we'll be able to build a knowledge base to see if it's the direction we want for our entire system," said William Knight, president and chief executive officer of Credit Union Central.

Joe Clark, the Canadian Mondex spokesman, said Royal Bank and Canadian Imperial are "really pleased having someone else participate." He called the credit union, which counts nearly 10% of Guelph's population as customers, "a fairly significant financial institution in the community."

Mondex said about 90% of the 10,000, mostly cash-oriented merchants in the test will be wired in the next few weeks as cards are issued.

Bell Canada will install Mondex readers in 250 pay phones around Guelph. Telephones that can read Mondex cards will also be supplied to 2,500 homes.

All of Royal Bank and Canadian Imperial's 36 automated teller machines in Guelph will accept the cards for downloading of value, transferring funds, and checking balances. Consumers will be able to scroll through 10 prior transactions, lock and unlock their cards, or check balances on a "card tracker," a sleeve that fits over the Mondex card.

Mondex transactions actually began in Guelph last September, among 50 staff members and 12 merchants. As of this week, 1,500 employees and 200 merchants had been added.

The pilot has been in the planning stages since Royal Bank and Canadian Imperial committed to Mondex in November 1995. A national rollout is now anticipated in 1998.

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