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April 2007 • Volume 12 Number 4
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Member Profile: INSIDE Contactless
1. What are INSIDE Contactless’ main business profile and offerings? INSIDE is an innovative semiconductor company with a twist – operating with the flexibility of a fabless manufacturing model and with focused business execution in the Payments, Access Control, and NFC markets. More importantly, with over 12 years experience, INSIDE is the only semiconductor provider in the industry which is 100% focused on contactless. With this flexibility and focus, INSIDE is able to rapidly bring to market new chip platforms – some of them bundled with a native operating system and high demand applications. We provide contactless chip platforms for: i) use in access control and simple ID applications (PicoPass®); ii) use in secure bank card applications (MicroPass®); iii) point of acceptance applications in payments, transit, and access control (PicoRead®); and, iv) use at the very high end for NFC implementation within mobile phones and other consumer electronics devices (MicroRead®). INSIDE was founded and is headquartered in the south of France but is truly a global company with a hardware design center in Poland, along with sales and service offices in San Francisco, Boston, Paris, Shanghai, and Singapore. Finally, the INSIDE team is frankly one of the finest I have had the privilege of working with – a very experienced management team and in my view the most innovative engineering and product team within the field. 2. What roles does smart card technology play in supporting INSIDE Contactless’ business? 3. What trends do you see developing in the market that INSIDE Contactless hopes to capitalize on? I see a central trend in the market related to the use of proximity contactless technology (13.56 Mhz) in multiple vertical markets and in multiple forms. Two key areas in particular are strongly driving this direction – contactless payments using an open standard bank card, and NFC adoption in mobile devices for applications such as content exchange, transit, access, service establishment and activation, and also for contactless payment. With more than a billion bank cards in the U.S. and another billion in the rest of the world, there is strong potential for conversion of these cards to either contactless only or dual interface EMV within the coming 5 years - this is a substantial market in which we expect to capitalize. And for good reason, as the propositions are strong within the U.S. market – proven over the past few years – and with an even stronger proposition in the rest of the world where EMV migration mandates have set the stage for an evolution to dual interface bank cards as the de facto standard. But, even more significant is the potential for NFC within mobile handsets – with more than 2 billion handsets deployed in the world today and growing. By enabling a mobile handset with NFC capability, a rich multi-application experience is finally at hand – such handsets then supporting multiple payment applications, transit applications, access control rights, loyalty information, and content. Well – an exciting market situation for INSIDE Contactless! 4. What obstacles to growth do you see that must be overcome to capitalize on these opportunities? In the contactless payments market, the growth of acceptance infrastructure within the retail community is of course essential. A growing infrastructure is essential for both contactless bank card and NFC mobile device based payment transactions to grow. As the core propositions to consumers, merchants, and the issuer/acquiring community are all strong, education and communication into the retailer community and the ISOs servicing them are critical and frankly the way to overcome this obstacle. 5. What do you see are the key factors driving smart card technology in the market? In the U.S. market, most certainly contactless is a key driver to use of smart card technology. With more than 20 million contactless bank cards deployed in the past 18 months and strong growth signals for this year, it does appear that contactless payments – using smart card technology – is on a growth track for main stream adoption in the U.S. 6. How do you see your involvement in the Alliance and the Contactless Payments Council helping INSIDE Contactless? In fact, the Alliance has substantially helped INSIDE and others in the contactless payments market already over the past two years through publication of FAQs and reports on the basics of contactless payments, point of acceptance, transit convergence, and security. The rapid action in clarifying contactless payment security concerns by publishing the facts and communicating effectively to the media was invaluable to INSIDE Contactless and ALL other stakeholders in this field. The decision to expand our involvement in the Alliance this year was particularly driven by the value delivered to INSIDE in this past year. In the coming year, we will actively contribute to Contactless Payments Council and Transportation Council activities – both addressing key topics central to educating organizations in our target markets Simple - to continue educating and communicating related to contactless payments. I do hope that we are able to do more in the areas of retailer outreach as such education can only be helpful in advancing acceptance infrastructure growth. Further, I do see the Alliance as well positioned to educate and communicate related to mobile contactless payments – and the issues, considerations, and business models that bank card issuers, transit agencies, wireless carriers, content providers, and technology providers will grapple with over the coming year. I am certainly hoping to also see a level of growth in participation of interested stakeholders in the work that the Alliance is doing in this field – the ability to come together through this neutral framework is in fact unique and serves the industry very well. 8. How is INSIDE positioned in the contactless payments market today? As a strategic area of focus, INSIDE has been working very closely with many U.S. credit and debit card issuers – to educate and support their planning for contactless bank card deployments. Our direct customers are the major card manufacturers, providing the core technologies necessary to enable the delivery of high performance Visa, MasterCard, and Discover contactless cards. Lastly, we have maintained close working relationships with the bank card associations and brands, to ensure good understanding of requirements and future directions. To date, INSIDE has delivered more than 15 million MicroPass chip platforms – consisting of chip, native operating system, and bank card applications – which we refer to as ‘intelligent hardware.’ This year we are anticipating further demand by retailers and issuers for value-added functions alongside core payment for co-brand cards, student and university cards, and integrated bank/transit card programs. INSIDE is providing additional on-chip capability to support such pilot and large scale roll-outs.
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This month, Smart Card Talk spoke with Charles Walton, EVP Payments, INSIDE Contactless. Charles is responsible for INSIDE’s Payments business, focused upon the global deployment of contactless and dual interface products. He is the Co-Chair of the Smart Card Alliance Contactless Payments Council, a frequent speaker within the industry, and has more than twelve years experience in the smart card sector. Prior to INSIDE Contactless, he was EVP & COO for Diversinet, a Toronto- headquartered mobile security company. As the founder of Caradas, a Boston-based smart card middleware company, he successfully delivered to organizations such as Visa, Target, and Bank of America, prior to the sale of Caradas to Diversinet in 2003. As well, he was the co-founder of the CyberTrust business at GTE and instrumental in capturing key first contract wins with MasterCard and American Express, and in Japan through the CyberTrust Japan joint venture.
