The biggest companies in credit card processing and smart card manufacturing announced a contractual agreement Friday that could be the beginning of a powerful alliance in electronic payments and commerce.
The agreement between units of First Data Corp. and Gemplus of France was relatively narrow-a purchase by First Data of most of a card personalization center in Minnesota.
But officials of the companies said they are likely to develop far- reaching marketing and production synergies.
First Data delivers cards-embossing and encoding them according to industry technical standards-for most of the financial institutions that rely on it for cardholder account processing. Given the anticipated growth in on-line commerce and smart cards, it might benefit from Gemplus' software and system integration expertise.
Gemplus, which produces significant volumes of magnetic stripe cards in addition to the smart cards for which it is better known, regards the older-generation technology as an "entry level into electronic commerce" with which that First Data can help it, said Gemplus Americas president Dominique Trempont.
"Many of our customers are looking for processing solutions, and we see ourselves going in that direction in the future" with First Data as a partner, Mr. Trempont said in an interview Friday.
For an undisclosed sum, Redwood City, Calif.-based Gemplus Americas is selling a majority of the assets of its Shakopee, Minn., card personalization center. Of its 135 employees, 114 will be transferred to First Data Resources Inc.
The rest will continue to work for Gemplus on smart card personalization and product development.
Mr. Trempont said Shakopee, which Gemplus acquired from Data-Card Corp. in 1996 as part of an effort to build North American production capacity, will still serve as a global center of chip-related expertise for Gemplus.
"By combining the two forces, we will have a larger solution offering for banking, retail, health care, and other vertical segments," Mr. Trempont said.
Meanwhile, First Data Resources is gaining capacity to meet growing demand from card-issuing customers, much of it for cards with expiration dates in 2000 and beyond, said Tim Rosenthal, senior vice president of the company's PlastiCard custom services division.
He said the Shakopee facility is "world-class" and "has systems and processes that can benefit the entire FDR plastics division. And we have processes that can strengthen the Shakopee operations."
Mr. Trempont said the deal was in the works about four months and was "carefully analyzed" to determine how the two companies complement each other. Both have global reach. Gemplus produces a lot of nonsecure cards for health care, personal identification, and loyalty, while First Data's PlastiCard personalizes secure credit, debit, and telephone cards.
"A lot of our focus is in markets where Gemplus is not present, and vice versa," Mr. Rosenthal said.