Security and loyalty were recurring themes last week in the heavy flow of product announcements from Cartes '98, the annual smart card trade show in Paris.
That pretty much conformed to what experts in the industry have been saying about the need for "value added." If money can't be made on plain- vanilla cash replacement services-a lesson repeated in Tuesday's announcement of the Dec. 31 closing of the Mondex-Visa Cash trial in New York City-then there have to be some more compelling propositions.
Several vendors have taken major strides in the security direction, trying to deliver on the promise of storing cryptographic codes in computer chips and enabling cards to be read by any number of computing devices.
Loyalty programs, chip-card equivalents of frequent-flier or shopper points, have already been deemed a killer app in some Asian and European trials. Gemplus, which is the top smart card producer and has focused heavily on security implementations in recent months, made clear last week that loyalty is also one of its priorities.
Marc Lassus, the 10-year-old company's co-founder and chairman of Gemplus International, predicted that "loyalty cards and couponing will open the American market to smart cards and become the largest application there."
Gemplus introduced GemClub-Memo, a loyalty and electronic purse system geared for retailers. Also, with Product Technologies Inc. of Middletown, Conn., it announced development of a gift certificate system for SouthPark Mall in Charlotte, N.C.
Bill Mangino, vice president of ICL, the parent of Product Technologies, called the potential 100,000-card system on the SmartCity operating platform "a significant industry milestone."
"Smart-card-based gift certificates are an excellent first step for any retail organization considering investing in smart cards," said Donna Jeker, vice president of strategic marketing and partnerships, Gemplus Americas. "Down the road, electronic purse and loyalty applications can easily be added to the same card."
Interactive Loyalty, an application that Mondex International began selling some months ago, had its official unveiling at Cartes '98. The smart card venture, 51% owned by MasterCard International, said it set out to address shortcomings in existing loyalty systems that, according to market research, leave both merchants and consumers dissatisfied.
Mondex claimed it can have a system up and running within six weeks, with licenses costing $40,000 and up. The Multos operating system is well suited for cobranding and combining of multiple services. Product upgrades and functions can be added "on the fly," without reissuing cards, and awards and incentives can be tailored down to the individual.
Mondex assembled a "partner network": Amdahl Corp., which makes smart card host systems; Dunn Humby Associates, a data base marketing consultancy; Dione PLC, a terminal supplier; and DataCard Corp., a specialist in card personalization.
An unidentified customer is supposed to adopt Interactive Loyalty next year.
Gemplus and the longer-established manufacturers that were involved in the early flowering of chip technology in France-Bull and Schlumberger-did not, for once, dominate the Cartes exposition.
They almost got drowned out by Microsoft Corp., which chose Cartes '98 to inaugurate Smart Card for Windows, an extension of Microsoft's ubiquitous computer operating system.
The feedback was more or less positive from both Visa International, which supports the Java Card applications programming interface, and Maosco Ltd., the consortium that oversees Mondex's competing Multos. That suggested Microsoft will gain some traction, though it may be more difficult to establish Windows as the standard for smart cards.
Gemplus, Schlumberger, and ICL were quick to jump on the Windows bandwagon-not with exclusive endorsements, but weighty-enough commitments. GemClub-Memo, for example, would be Windows-compatible, and ICL said it is looking at doing Windows Card SmartCity pilots at a U.S. university and a European corporate site.
Microsoft got right into the swing of the security conversation, suggesting that smart-card-based authentication would likely be its first application.
Schlumberger Smart Cards and Terminals, which has long emphasized security in its Cryptoflex product line, weighed in with a couple of extra measures, including one designed to literally shield silicon chips from attack.
It said a new manufacturing technology, SiShell, would protect against hacking, physical probing, and other tampering.
Like many vendors, Schlumberger expects that as smart cards become more functional and valuable, they will provoke increasingly sophisticated fraud attempts. SiShell is seen as a significant, proactive ratcheting up of defenses, likely to be deployed on banking, health care, pay television, and corporate identification cards.
"Smart cards offer today the most cost-effective, convenient and private, secure portable medium," said Olivier Piou, vice president and general manager, smart cards. "Security is only as good as the weakest link in the chain, and SiShell adds a new level of protection" to the hardware.
Schlumberger launched the Cryptoflex Security Kit, which provides everything necessary for smart-card-based authentication with digital certificates in a corporate network, e-mail, or intranet system. Schlumberger offers its Reflex family of readers for hooking into personal computers, which plays into the Microsoft strategy through compatibility with the Windows, NT, Internet Explorer, and Outlook platforms.
Schlumberger also introduced Cryptoflex 8K, another component in network security. The 8 kilobytes of programmable memory double a previous version's capacity. The card is capable of completing a standard RSA 1,024- bit digital signature operation in less than 0.5 second.
After the close of Cartes, the Schlumberger Danyl unit in Anaheim, Calif., announced an expansion of its Open Architecture Purse System-OPUS- for campus cards. Combining it with systems from DataCard Corp. and Touch Technology International, Schlumberger can play a "general contractor" role.
The offering now includes smart cards, various types of terminals and unattended readers, value-loading stations, data collection, project management, and installation, said Schlumberger Danyl product marketing director Randy Vanderhoof.
Motorola Inc. and Gemplus joined in separate alliances to provide financial and commercial services via cellular telephones. Alcatel and Mondex were in the Gemplus group; De La Rue Card Systems and Logica are working with Motorola. Both trios agreed that Europe is especially ready for "mobile commerce," given the popularity of phones that carry smart cards in compliance with the GSM standard.
Separately, Motorola announced M-Smart, a range of systems designed to meet any demands from banking, telecommunications, government, transit, health care, or any other sector.
In ascending order of capability, Motorola named its three M-Smart tiers Mercury, Venus, and Jupiter. Mercury can handle a closed campus system, Venus multiple applications such as voice communications and cash downloading. Jupiter is essentially a computer, with a 32-bit RISC processor. A card originally issued for banking can be upgraded for transit and loyalty.
The platform options and "consulting, integration, and support expertise (provide) a turnkey solution that meets customers' needs from beginning to end," said Francois Dutray, vice president and general manager of the worldwide smart card solutions division.
Bull sounded several familiar notes: "turnkey" with its SmartPurse "all- in-one solution," enterprise security with SmartSite, PC connectivity with the mouse-size SafePad reader, and interoperability with CC EMV, "the only smart card on the market to combine the Proton electronic purse with debit and credit" according to the Europay-MasterCard-Visa standards agreement.
There were two other new card releases: SmartEMV UKIS for the United Kingdom's national move to smart cards-National Westminster Bank chose Bull as its pilot supplier-and Smart EMV Off-the-shelf, which complies with Europay International specifications.
"Bull has concentrated all the know-how it has built up in security over more than 20 years" in the EMV products, said David Levy, chief executive officer, Bull Smart Cards and Terminals.
Bull also tried to send some favorable messages about smart card economics: A SmartPurse system with 200 terminals and 20,000 cards costs $473,000 ($24 per person); SafePad unit price in quantity, $90; a 1,000- employee, 500-PC SmartSite configuration, $273,000.