Executive Director's Letter

Dear members and friends of the Alliance,

The phrase "tipping point" is an overused term these days when talking about market shifts and technology adoption, much like "paradigm shift" was overused a few years ago.  I've tried to avoid these terms when talking about smart card technology in the past because it tended to raise expectations that something radically different was about to happen when experience proved otherwise.  I feel much more positive about contactless payment for a number of reasons.  The first difference is that the "chicken and egg" issue is not the same.  Previous smart card efforts had millions of cards being issued to the public in the hope that retailers would follow with upgrades to their point-of-sale (POS) systems, which didn't happen.   For the contactless movement that's happening now, merchants are already engaged and are equipping their stores and drive-through windows with payment terminals even before the cards are in consumers' hands.  And we're not talking about just any retailers.  The five major chains who have signed onto these programs - McDonald's, 7-Eleven, CVS, Ritz Camera, and Sheetz - are all recognized leaders in their markets.  
 
On the issuer side of the chicken and egg analogy, two market leaders are also leading by example, announcing that millions of "Blink" and "Blue" cards will be issued soon.  JP Morgan Chase (using the Blink brand) is the nation's largest Visa and MasterCard issuer by card volume, with over 90 million credit cards in circulation.  American Express is the largest issuer by charge volume and maintains the largest active smart card payment program in the United States, the American Express Blue Card, that will incorporate contactless technology starting in June.  Agreements among MasterCard, Visa, and American Express to work out compatibility issues around each organization's implementation have smoothed the way for retailers to only have to purchase one POS terminal.  Both issuers have solid field trial experience under their belts and have the business clout and marketing power to pull this off.  Contactless payment could be the fastest technology shift in the history of the payments industry.  Does that qualify last week's announcement as a tipping point for the smart card industry?  I will let you decide.

Member Profile

This month Smart Card Talk spoke with Philippe Tartavull, President and CEO of Oberthur Card System's operations in North and Central America.  After 15 years of leadership in the high technology industries, Mr. Tartavull took on his current role in 1998 and places emphasis on the development of smart card issuance and personalization services in key market segments (mobile telephony, financial services and identification). Mr. Tartavull started his career as VP of Sales at Compagnie Internationale des Services Informatiques (a software engineering company) and later joined Thales/Syseca (a systems integration company) to become Chief Executive Officer for their North American Operations. He is a graduate of CESTI in Mechanical Engineering, the Ecole Nationale Supérieure des Pétroles et des Moteurs, the Sorbonne University of Paris, and the University of California at Los Angeles (UCLA) Anderson School of Management. Mr. Tartavull has served on the board of directors and advisors of several high-tech companies and is an active member of the Young President's Organization (YPO).

1. What are Oberthur's main business profile and offerings?

With sales of 450.8 million Euros in 2004, Oberthur Card Systems is one of the world's leading providers of card-based solutions, software and applications including SIM and multi-application smart cards. Listed on the Euronext Stock Exchange (ISIN: FR0000124133) since July 2000, Oberthur Card Systems is a subsidiary of the François-Charles Oberthur Group. We have three personalization and two manufacturing sites in the US enabling us to offer a complete range of services to assist customers in the deployment of card solutions, including card manufacturing, smart card production and personalization services, project management, consultancy, training, logistics and technical support.   Oberthur's innovative products as well as its security expertise and reputation for delivering high quality services give us a leading position in the market.

Feature of the Month

Smart Cards and Biometrics in Privacy-Sensitive Secure ID Systems

Identity management applications are increasingly requiring one or more biometrics to provide increased assurance that an individual presenting an identity credential has the right to use that credential.  

Biometric technologies are defined as automated methods of identifying or authenticating the identity of a living person based on unique physiological or behavioral characteristics. Biometrics can provide secure and convenient authentication of an individual's identity since they cannot be stolen or forgotten and are very difficult to forge.  

A physiological characteristic is a relatively stable physical characteristic, such as an individual's fingerprint, hand geometry, iris pattern, or blood vessel pattern on the back of the eye. This type of biometric measurement is usually unchanging and unalterable without significant duress to the individual.

A behavioral characteristic is more a reflection of an individual's psychological makeup. A signature is the most common behavioral biometric used for identification. Because most behavioral characteristics vary over time, an identification system using these must allow updates to enrolled biometric references.

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