After a few years on the alert for a smart card market to materialize, Verifone Inc. is ready to pounce.
The company, best known for creating a mass market in credit card authorization terminals, has put its imprimatur on the new technology by establishing a high-visibility business unit under vice president Michael J. Shade.
It is the latest of several recent indications of a pickup in smart card activity. Just last week, 11 major banks joined SmartCash, a stored-value card venture that includes MasterCard International, the French card manufacturer Gemplus, and Verifone as "founding owners."
Mr. Shade was quick to point out his team of 10 to 15 people will not be a full-fledged division like that for Internet commerce (see article below). Verifone said it does expect chip cards to link to the Internet in order to facilitate personal identification and authentication.
The chip card group has a highly specific, perhaps even temporary, mission: to define chip-related strategies and ensure that they permeate Verifone's global organization in time to capitalize on the anticipated explosive growth in the more advanced types of cards.
Mr. Shade described his group as an "enabler" for the Redwood City, Calif.-based company and its 2,000-plus people.
"We never had a magnetic stripe division, so why should we have a chip card division?" Mr. Shade said. "If we do our job, our team may not even exist in two or three years. By then, the rest of the sales and marketing and technical organizations should be self-sufficient in their understanding and support of chip solutions."
Verifone, which Mr. Shade said is already involved in almost 100 smart card initiatives worldwide, is not alone in moving to embrace chip technology. Hypercom Inc., its smaller, Phoenix-based rival, recently created a smart card strategic planning position and appointed electronic banking veteran Howard Mandelbaum to run it.
Ironically, both transaction system vendors turned the responsibilities for new-wave card strategies over to people with two to three decades of industry experience. A former New York banker, Mr. Mandelbaum worked on some of the early credit authorization and automated teller machine systems. Mr. Shade, who joined Verifone in 1991, developed one of the pioneering debit card systems for a Long Island bank more than 20 years ago.
Mr. Shade is surrounding himself with other known quantities. Wayne B. Lewin, a former banker, Bank Administration Institute official, and consultant, joined Verifone this month as a global marketing manager.
Mr. Lewin will have account management responsibilities and will be the liaison to MasterCard and its various chip card efforts. Another global marketing manager, Mike Matte, who has extensive card industry experience, will be managing the Visa relationship.
Mr. Shade said he is also relying on Alan Gural to help identify and focus the unit's efforts in "vertical markets" such as convenience stores or petroleum retailing. Mr. Gural, another ex-banker and consultant, is a veteran of the Verifone-Gemplus joint venture, VeriGem, which helped Verifone get its introduction to smart cards and their French roots.
"We have a strong core of people, experts in security and in chip cards in general," Mr. Shade said in an interview last week. "As a result of our early efforts in France, we have put our chip card 'center for excellence' in Paris and manage development from there."
Verifone chairman Hatim Tyabji "asked me, given the dramatic rise in interest in chip card programs this year, to take responsibility for driving chip card strategies," Mr. Shade added. "We have tried to up the tempo in terms of resources and attention focused on this area ... We need to make sure we and our resellers and their customers understand these markets and the opportunities they present."
Mr. Lewin said his tasks could range from sitting in on sales calls, to helping field-support teams fill special needs, to posting pertinent information on Verifone's global communications network.
"If you look around the world, smart cards are not brand new," Mr. Lewin said. "Visa has over 80 people worldwide essentially devoted to chip card applications. And the resources in our company are substantially greater than just this team. Eventually, everybody in marketing and sales will be as conversant as they are today in magnetic stripe cards."