- Email: [email protected]
Record smart card revenues in Q2
www.compseconline.com
September 2005
ISSN 0965-2590
contents
Record smart card revenues in Q2 Three of the top four smart card manufacturers have released their financial results for the second quarter of 2004, with revenues hitting record levels (see Table 1). Gemplus led the group with revenues of Euro 236.2 million for the quarter, while a little way behind at Euro 211.1 million came Axalto. Giesecke & Devrient – traditionally the third place vendor – does not release quarterly results, but Oberthur Card Systems posted a revenue of Euro 121.1 million. Axalto, formerly Schlumberger Smart Cards and Terminals, performed strongly in the area of mobile communications, with a rise of almost 20% in revenue compared with the second quarter of 2004 (see Figure 2). This rise, according to the company, was despite lower activity in China, as this was offset by successes in the Americas, Eastern Europe and Africa. Gemplus also performed well in the telecoms market (up 6%), especially in the wireless market where shipments were up 44% year-on-year to a record 85.8 million units. This growth was
tempered by a 32% fall in the sales of pre-paid phone cards and scratch cards. Gemplus reported that the product mix in the wireless market continued to improve: with the share of high-end card shipments accounting for 48% of the total in the second quarter 2005, compared with 33% in the second quarter 2004 and 44% in the first quarter 2005. Wireless average selling price (ASP), however, was down 20.6% year-on-year and 10.9% quarter-onquarter (currency adjusted). Oberthur also made strong shipment gains, up 29.5% compared with the same quarter in 2004. This growth according to the company was driven by new contracts in the US, Mexico, Brazil and the Middle East. On the financial services front, Gemplus said it witnessed strong growth in the bank card sector, driven by broad activity in EMV deployment across all regions, particularly in the UK and Turkey. In total Gemplus shipped 16.8 million
Continued on page 3...
Company
Q2 2005
Q2 2004
% change
Gemplus
236.2
210.5
12.2
Axalto
211.1a
183.6a
15
Oberthur Card Systems
121.1
108
12.1
Notes: a – these figures are converted into Euros from US dollars at the mid-market rate on 16 August 2005
NEWS HIGHLIGHTS UK pre-paid card launch........................3 Multos under new ownership................4 Mass order for Oslo underground .........5 9 out 10 UK cardholders have chip and PIN..........................................6
BIOMETRIC BYTES Breaking news from the biometics industry ................................................6
CHIP TALK Jon Cairns of Smart Technology Solutions, speaks to CTT about the rise and rise of pre-paid gift cards in the smart card market.................................9
FEATURES The ‘contactless’ opportunity A look at how the industry has progressed, and what highlights and challenges are faced with this technology ............................................................10 The socially aware smart card Can smart cards be the next step for the fraud-free distribution of benefits? .........................................12
SURVEY Why make a meal of customer payments? A look at the opportunities facing the hospitality industry .............................14
VIEWPOINT
Figure 1. Second quarter performance of three leading smart card manufacturers (Euros million)
Q2 2005
Q2 2004
% change
Telecoms
163.2
154.0
6
Financial Services
50.3
44.7
12.4
Identity and Security
22.7
11.8
92.1
Total Revenue
236.2
210.5
12.2
David Jones looks at recent developments in the UK ID card debate and changes to the Nectar scheme......16
REGULAR ITEMS News Comment.....................................2 News in Brief .....................................3–7 Events Calendar ....................................7
Figure 2. A breakdown of Gemplus 2nd quarter performance by sector in (Euros millions).
ISSN 0965-2590/05 © 2005 Elsevier Ltd. All rights reserved This journal and the individual contributions contained in it are protected under copyright by Elsevier Ltd, and the following terms and conditions apply to their use: Photocopying Single photocopies of single articles may be made for personal use as allowed by national copyright laws. Permission of the publisher and payment of a fee is required for all other photocopying, including multiple or systematic copying, copying for advertising or promotional purposes, resale, and all forms of document delivery. Special rates are available for educational institutions that wish to make photocopies for non-profit educational classroom use.
news Q2 2005
Q2 2004
% change
in brief
Cards Mobile Communications
160.4
134.0
19.7
Financial Cards
54.6
48.0
13.75
Public Sector, Access and Others
17.6
18.1
(2.8)
Prepaid Phonecards
10.5
10.1
4
Total Cards
243.1
210.2
15.65
Point-of-Sale Terminals
17.7
16.7
6
Total Revenue
260.9
226.9
15
Figure 3. A breakdown of Axalto’s 2nd quarter performance by sector in US dollars (millions).
Q2 2005
Q2 2004
% change
Payment
35.8
28.2
26.9
Mobile Communications
35.2
31.6
11.3
Identity and Security
8.2
7.6
8.6
Microprocessor Cards
Total
79.2
67.4
17.5
Other Cards
18.5
17.1
8.1
Services and Solutions
23.4
23.5
(0.3)
Total Revenue
121.1
108.0
12.1
Figure 4. A breakdown of Oberthur Card Systems’ 2nd quarter performance by sector in Euros miillions.
Continued from front page.... payment microprocessor cards, up 30% year-onyear, and this led to a corresponding revenue rise of 31%. At Oberthur, payment card sales were up 38.5% year-on-year, reflecting strong sales in the UK and France, as well as the first deliveries of contactless cards in the US and EMV cards in Italy. The company said the payment market was likely to remain its primary engine for growth in years to come as a result of EMV migration. Axalto also posted solid growth in the payment card area with revenue up 14% at close to US$55 million, with all regions progressing. In terms of volumes of microprocessor cards the company saw a steep rise of 17%, with over 20 million cards sold in the quarter. In the public sector, Axalto recorded healthy growth despite delays in some national programs to deploy electronic passports and ID cards, and to modernise public administration systems. Gemplus, meanwhile, saw revenue almost double in this sector, led by shipments of ID cards to the United Arab Emirates and the acquisition of Setec, which is consolidated starting June 1st, 2005.
cards
UK sees pre-paid payment card launch A new chip and PIN-based pre-paid card is about to be launched in the UK by
Card Technology Today September 2005
London-based start up Advanced Payment Solutions (APS). The MasterCard-branded card is targeting people in the UK that don’t have bank accounts. According to the supplier, recent research suggests that two million people in the UK have no bank accounts and 7.3 million do not qualify for debit cards, perhaps because of a poor credit history. This card would offer these people a secure payment mechanism anywhere where MasterCard is accepted and could also save the cardholder from having to pay traditionally high fees at cheque cashing locations. Rich Wagner, CEO of APS told CTT that the cashplus cards will be made available to customers through selected chain stores, initially at pilot locations in London and Birmingham. Customers will receive a magnetic stripe-based ‘Cirrus’ card along with a PIN, which they can load up immediately in-store with cash. Seven to 10 days later they will receive their personalised chip-based cashplus card (being sourced and personalised by Thames Cards Technology). Unlike traditional e-purse schemes, the balance of the card is recorded on a central host system. Because prepaid cards are not linked to a bank account, and because the funds are paid in advance, credit checks are not required. This will be of great benefit to many sectors of society, especially to immigrants, who find it difficult to open a bank account, Wagner claims. The cards will offer services such as cash withdrawals at ATMs, point-of-sale payments and
• An ATM card-skimming gang operating in Cardiff, Wales, have been jailed for four years. The men, all from Eastern Europe, are believed to have stolen approximately £200,000 (US$360,000) by putting fake fascias onto ATMs and filming as cardholders entered their PINs. The thefts boost the case for introducing chip and PIN cards, which are much harder to replicate compared with cards relying on magnetic stripe technology. In this instance data was transmitted and downloaded to a nearby laptop using a wireless link. When the gang were caught investigators found electronic equipment including computers, cameras, tape recorders, radio transmitters and a false fascia of a cash machine in their hotel room and car. Police also recovered the card details of 129 accounts. • Organizers of the 2006 football world cup have estimated that they will issue more than three million contactless tickets for the tournament next spring. The event, to be held in Germany, will have 12 venues, and some have already started rolling out the new system, which is designed to thwart potential ticket counterfeiters. Fans entering the venues will be required to wave or hold their tickets in front of contactless readers. Whilst paper contactless tickets will be issued for the world cup, which occurs every four years, more permanent contactless cards will be issued to season ticket holders where the system is already in place. • SCM Microsystems has announced financial results for its second quarter ended 30 June 2005. Total revenues hit US$10.2 million, including US$3.6 million from sales of smart card readers and other products for PC and network security. This compares with revenues of US$11.5 million in the second quarter of 2004. Operating expenses were reported as US$7.3 million during this quarter compared with US$8.9 million in 2004. For the third quarter of 2005, the company estimates that revenues will be in the range of US$8 million to US$12 million, reflecting continued pressure on sales of digital TV products in Europe and a lack of clarity into the timing of anticipated digital security projects in the US and Europe.
3
September 2005
ISSN 0965-2590
contents
Record smart card revenues in Q2 Three of the top four smart card manufacturers have released their financial results for the second quarter of 2004, with revenues hitting record levels (see Table 1). Gemplus led the group with revenues of Euro 236.2 million for the quarter, while a little way behind at Euro 211.1 million came Axalto. Giesecke & Devrient – traditionally the third place vendor – does not release quarterly results, but Oberthur Card Systems posted a revenue of Euro 121.1 million. Axalto, formerly Schlumberger Smart Cards and Terminals, performed strongly in the area of mobile communications, with a rise of almost 20% in revenue compared with the second quarter of 2004 (see Figure 2). This rise, according to the company, was despite lower activity in China, as this was offset by successes in the Americas, Eastern Europe and Africa. Gemplus also performed well in the telecoms market (up 6%), especially in the wireless market where shipments were up 44% year-on-year to a record 85.8 million units. This growth was
tempered by a 32% fall in the sales of pre-paid phone cards and scratch cards. Gemplus reported that the product mix in the wireless market continued to improve: with the share of high-end card shipments accounting for 48% of the total in the second quarter 2005, compared with 33% in the second quarter 2004 and 44% in the first quarter 2005. Wireless average selling price (ASP), however, was down 20.6% year-on-year and 10.9% quarter-onquarter (currency adjusted). Oberthur also made strong shipment gains, up 29.5% compared with the same quarter in 2004. This growth according to the company was driven by new contracts in the US, Mexico, Brazil and the Middle East. On the financial services front, Gemplus said it witnessed strong growth in the bank card sector, driven by broad activity in EMV deployment across all regions, particularly in the UK and Turkey. In total Gemplus shipped 16.8 million
Continued on page 3...
Company
Q2 2005
Q2 2004
% change
Gemplus
236.2
210.5
12.2
Axalto
211.1a
183.6a
15
Oberthur Card Systems
121.1
108
12.1
Notes: a – these figures are converted into Euros from US dollars at the mid-market rate on 16 August 2005
NEWS HIGHLIGHTS UK pre-paid card launch........................3 Multos under new ownership................4 Mass order for Oslo underground .........5 9 out 10 UK cardholders have chip and PIN..........................................6
BIOMETRIC BYTES Breaking news from the biometics industry ................................................6
CHIP TALK Jon Cairns of Smart Technology Solutions, speaks to CTT about the rise and rise of pre-paid gift cards in the smart card market.................................9
FEATURES The ‘contactless’ opportunity A look at how the industry has progressed, and what highlights and challenges are faced with this technology ............................................................10 The socially aware smart card Can smart cards be the next step for the fraud-free distribution of benefits? .........................................12
SURVEY Why make a meal of customer payments? A look at the opportunities facing the hospitality industry .............................14
VIEWPOINT
Figure 1. Second quarter performance of three leading smart card manufacturers (Euros million)
Q2 2005
Q2 2004
% change
Telecoms
163.2
154.0
6
Financial Services
50.3
44.7
12.4
Identity and Security
22.7
11.8
92.1
Total Revenue
236.2
210.5
12.2
David Jones looks at recent developments in the UK ID card debate and changes to the Nectar scheme......16
REGULAR ITEMS News Comment.....................................2 News in Brief .....................................3–7 Events Calendar ....................................7
Figure 2. A breakdown of Gemplus 2nd quarter performance by sector in (Euros millions).
ISSN 0965-2590/05 © 2005 Elsevier Ltd. All rights reserved This journal and the individual contributions contained in it are protected under copyright by Elsevier Ltd, and the following terms and conditions apply to their use: Photocopying Single photocopies of single articles may be made for personal use as allowed by national copyright laws. Permission of the publisher and payment of a fee is required for all other photocopying, including multiple or systematic copying, copying for advertising or promotional purposes, resale, and all forms of document delivery. Special rates are available for educational institutions that wish to make photocopies for non-profit educational classroom use.
news Q2 2005
Q2 2004
% change
in brief
Cards Mobile Communications
160.4
134.0
19.7
Financial Cards
54.6
48.0
13.75
Public Sector, Access and Others
17.6
18.1
(2.8)
Prepaid Phonecards
10.5
10.1
4
Total Cards
243.1
210.2
15.65
Point-of-Sale Terminals
17.7
16.7
6
Total Revenue
260.9
226.9
15
Figure 3. A breakdown of Axalto’s 2nd quarter performance by sector in US dollars (millions).
Q2 2005
Q2 2004
% change
Payment
35.8
28.2
26.9
Mobile Communications
35.2
31.6
11.3
Identity and Security
8.2
7.6
8.6
Microprocessor Cards
Total
79.2
67.4
17.5
Other Cards
18.5
17.1
8.1
Services and Solutions
23.4
23.5
(0.3)
Total Revenue
121.1
108.0
12.1
Figure 4. A breakdown of Oberthur Card Systems’ 2nd quarter performance by sector in Euros miillions.
Continued from front page.... payment microprocessor cards, up 30% year-onyear, and this led to a corresponding revenue rise of 31%. At Oberthur, payment card sales were up 38.5% year-on-year, reflecting strong sales in the UK and France, as well as the first deliveries of contactless cards in the US and EMV cards in Italy. The company said the payment market was likely to remain its primary engine for growth in years to come as a result of EMV migration. Axalto also posted solid growth in the payment card area with revenue up 14% at close to US$55 million, with all regions progressing. In terms of volumes of microprocessor cards the company saw a steep rise of 17%, with over 20 million cards sold in the quarter. In the public sector, Axalto recorded healthy growth despite delays in some national programs to deploy electronic passports and ID cards, and to modernise public administration systems. Gemplus, meanwhile, saw revenue almost double in this sector, led by shipments of ID cards to the United Arab Emirates and the acquisition of Setec, which is consolidated starting June 1st, 2005.
cards
UK sees pre-paid payment card launch A new chip and PIN-based pre-paid card is about to be launched in the UK by
Card Technology Today September 2005
London-based start up Advanced Payment Solutions (APS). The MasterCard-branded card is targeting people in the UK that don’t have bank accounts. According to the supplier, recent research suggests that two million people in the UK have no bank accounts and 7.3 million do not qualify for debit cards, perhaps because of a poor credit history. This card would offer these people a secure payment mechanism anywhere where MasterCard is accepted and could also save the cardholder from having to pay traditionally high fees at cheque cashing locations. Rich Wagner, CEO of APS told CTT that the cashplus cards will be made available to customers through selected chain stores, initially at pilot locations in London and Birmingham. Customers will receive a magnetic stripe-based ‘Cirrus’ card along with a PIN, which they can load up immediately in-store with cash. Seven to 10 days later they will receive their personalised chip-based cashplus card (being sourced and personalised by Thames Cards Technology). Unlike traditional e-purse schemes, the balance of the card is recorded on a central host system. Because prepaid cards are not linked to a bank account, and because the funds are paid in advance, credit checks are not required. This will be of great benefit to many sectors of society, especially to immigrants, who find it difficult to open a bank account, Wagner claims. The cards will offer services such as cash withdrawals at ATMs, point-of-sale payments and
• An ATM card-skimming gang operating in Cardiff, Wales, have been jailed for four years. The men, all from Eastern Europe, are believed to have stolen approximately £200,000 (US$360,000) by putting fake fascias onto ATMs and filming as cardholders entered their PINs. The thefts boost the case for introducing chip and PIN cards, which are much harder to replicate compared with cards relying on magnetic stripe technology. In this instance data was transmitted and downloaded to a nearby laptop using a wireless link. When the gang were caught investigators found electronic equipment including computers, cameras, tape recorders, radio transmitters and a false fascia of a cash machine in their hotel room and car. Police also recovered the card details of 129 accounts. • Organizers of the 2006 football world cup have estimated that they will issue more than three million contactless tickets for the tournament next spring. The event, to be held in Germany, will have 12 venues, and some have already started rolling out the new system, which is designed to thwart potential ticket counterfeiters. Fans entering the venues will be required to wave or hold their tickets in front of contactless readers. Whilst paper contactless tickets will be issued for the world cup, which occurs every four years, more permanent contactless cards will be issued to season ticket holders where the system is already in place. • SCM Microsystems has announced financial results for its second quarter ended 30 June 2005. Total revenues hit US$10.2 million, including US$3.6 million from sales of smart card readers and other products for PC and network security. This compares with revenues of US$11.5 million in the second quarter of 2004. Operating expenses were reported as US$7.3 million during this quarter compared with US$8.9 million in 2004. For the third quarter of 2005, the company estimates that revenues will be in the range of US$8 million to US$12 million, reflecting continued pressure on sales of digital TV products in Europe and a lack of clarity into the timing of anticipated digital security projects in the US and Europe.
3