Mondex has planted its flag in continental Europe for the first time.
The electronic cash venture, which is 51% owned by MasterCard International, announced last week that Posten SDS and Telenor Conax had acquired franchise rights for Norway.
"We can color in another space on the map, which is always pleasing," said Michael Keegan, chief executive officer of London-based Mondex International Ltd.
But the significance could be far greater, he said, because the deal "opens up a potential market of 15 million cards across the whole Nordic region," which may be moving en masse toward Mondex and its close relative, the Multos operating system.
To take advantage of the multiple-application capability of the operating system, Posten SDS is eyeing an electronic identification system. Its partner Telenor, part of the state telecommunications apparatus, wants to use smart cards and Multos for pay television.
The Mondex Norway owners, meanwhile, expect to bring in financial institution participants for electronic cash and other banking applications, said Posten SDS chief executive officer Per Andersen. The signing "represents a major step for Mondex in Northern Europe," Mr. Keegan said. Mr. Andersen called it "a breakthrough for e-commerce in the Nordic region."
Mondex had suffered in a public relations sense from being only on the edges of Europe. By contrast, Visa International has garnered support on the continent for its Visa Cash program and an approach to standardization it champions called the Common Electronic Purse Specifications.
Two years since the inventing bank, National Westminster of London, spun off Mondex to a global banking consortium, its only major European representation had been Natwest's joint venture with Midland Bank in the United Kingdom. It also has an Israeli franchise.
Mondex was more successful-at least in establishing footholds, because its smart card numbers still trail Visa's-in the United States and Canada, Central and South America, Asia, and Australia. It also entered Africa via a group of South African banks.
Norway begins to fill the big European gap. Japan remains a question mark, though the rest of Asia is well covered by a Mondex company co-owned by MasterCard International and Hongkong & Shanghai Banking Corp., which, like Midland Bank, is part of HSBC Holdings.
Posten SDS, the majority owner of Mondex Norway, is the high-technology arm of Norway Post Group, charged with preparing for the trend away from conventional mail and toward electronic messaging. It has close ties to the other Scandinavian postal and telecommunications agencies, which are deep in discussions to jointly adopt the Multos operating system.
The Nordic countries are laying the groundwork for an electronic identification system, relying on data in a card's computer chip for individual authentication, Mr. Andersen said in a telephone interview. "That will be of strategic importance as the Post fulfills its role in electronic commerce and interchange of documents over open networks."
He said his board of directors made its Mondex decision in June. Then the group began to explore such issues as whether it will set up an originating company, responsible for management of the cash-issuing function, by itself or with banks. He said the regulatory approval processes related to cash originating would take three to six months.
"We are in discussions for several pilots that we hope to start in the autumn so that we can have results in the spring," Mr. Andersen said. "We are talking to potential partners."
Mr. Keegan said the two Norwegian owners, their backgrounds, and government connections are important portents, as Mondex is becoming "a piece of national infrastructure in Norway, linked to wider Multos applications across Scandinavia."
"With such a high use of the Internet and virtual shopping already a way of life in the Nordic region, Mondex is a natural fit," said MasterCard executive vice president G. Henry Mundt 3d.
Posten SDS, with 1,000 employees, was the government computing center before it was taken over by the postal service. Telenor Conax already has extensive experience in smart cards and cryptography.
"The combination of unique functionality and security offered by Mondex and Multos gives us exactly what we need," said the Telenor unit's chief executive, Oystein Larsen. "Quite simply, Mondex electronic cash is the most attractive product available to create e-commerce solutions for our clients."