The British smart card technology firm Aconite Technology Ltd. announced Thursday that is had acquired a rival, Smart Commerce Inc. of New York.
Mike J. Woods, Aconite’s chief executive and founder, said in an interview Thursday that the acquisition would help the London company establish itself in North America, especially Canada, which is moving from magnetic stripe cards to smart cards that use the Europay, MasterCard, Visa standard (EMV).
On Wednesday, Gemplus International SA and Axalto Holding NV, the world’s two largest smart card makers, agreed to combine in a $1.1 billion stock swap, with Gemplus to own 55.4% of the merged company.
Mr. Woods said it was just a coincidence that Aconite’s announcement came a day after the Gemplus-Axalto deal was announced.
Aconite, which did not say what it paid for Smart Commerce, does not compete directly with Gemplus and Axalto; those companies sell smart cards to banks to issue to customers, and Aconite and Smart Commerce help banks upgrade their systems to accept smart card transactions. Mr. Woods said his company has a referral partnership with Gemplus in the United Kingdom.
Mr. Woods said Aconite is helping Canadian banks implement EMV. The Canadian banking system is expected to convert to the format by 2010.
He also said that buying Smart Commerce would give Aconite easier access to the U.S. card market. U.S. banks and card companies have dabbled in smart cards, but the cards have not been popular with consumers here.
Aaron McPherson, the research director for payments at the Financial Insights Inc. unit of the technology publisher International Data Group Inc., called Aconite’s buying Smart Commerce “a symptom of a market that’s growing more slowly than you like, which would definitely describe the North American market.”
After discussing it for years, Canadian banks are upgrading to EMV smart cards. “That’s a long process for small companies that are undercapitalized,” Mr. McPherson said. “They can’t wait that long. They have to sell out to the stronger company. That doesn’t contradict the claim that the markets are going to get better in the future.”
