Smart Cards: French Card Leader Sees More to Like in U.S.

Gemplus is tilting more toward magnetic stripe cards as it continues to stoke its growth engines in the United States.

The French chip card manufacturer, which had no revenue from magnetic cards until 1995, has come to view them as "an entry level into electronic commerce," said Dominique Trempont, president and general manager of Gemplus Americas, Redwood City, Calif.

That helps explain where Gemplus is going with First Data Corp., the leading credit card account and transaction processor, with which it announced a business alliance Sept. 25.

Gemplus sold to the First Data Resources PlastiCard division most of the assets of a card personalization center in Shakopee, Minn. Gemplus kept the center's smart card personalization portion and will work with First Data to develop business opportunities in banking, retailing, health care, and other markets.

Gemplus realized some $65 million of revenue, 11% of its 1997 total, from magnetic stripe cards. The business became significant after an acquisition of factories from DataCard Corp. of Minneapolis. With smart cards clearly the core business, the deal with First Data "recognizes the importance of conventional cards in emerging electronic commerce applications," Mr. Trempont said.

"E-commerce will evolve to smart cards some day, but applications have to revolve around magnetic stripe cards today."

Mr. Trempont said he is optimistic that Americas region card growth outside of GSM mobile phone chips, where Gemplus is already prospering, will pick up next year. Personal computer vendors are interested in smart- card-based security, which the GemSafe product serves.

As e-commerce grows and security becomes more of an issue, he said, companies will want the benefits of chip cards.

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