
Oberthur Card Systems are frontrunners in the field of secure technologies and boast a commercial presence across all five continents. After announcing sales of over 700 million euros last year, The Company confirmed its progression with good performances across the marker and innovative solutions. Oberthur is leading the way in introducing unique methods of mobile payment and the further implementation of NFC. I spoke to the company to find out how they were intending to build on their success in 2008.
It was a strong year for Oberthur with a 14% increase in sales. To what do you attribute this growth?
In 2007, Oberthur Technologies broke new records in terms of volumes and revenue. Sales grew 14% on 2006 to €733.4 million. Former Oberthur Card Systems reported €591.4 million of sales. This card activity outperformed the market reporting a 13% increase in revenue. Microprocessor card sales volumes grew 45% with 385 million units delivered. Given a slightly easier competitive environment, the decrease in sales prices slowed throughout the year. Microprocessor card 2007 revenue grew 22% to €411 million.
In particular, how did the banking and SIM markets fare ?
The banking segment benefited from a pick-up in France and the United Kingdom, two of its key markets. Revenue in personalization services is stable. The company has continued to expand geographically with 6 new personalization centres that will pay off in 2008. As a whole this segment contributed €286.7 million or 49% of Card Systems’ total revenue in 2007.
In mobile communications, SIM card revenue grew 22% to €223 million in 2007, with 248 million units sold, or a 48% increase in volume terms. Integration of I’M Technologies products bolstered growth in emerging countries. Furthermore, the product mix continued to improve boosted by migrations to higher-end products in both Europe and emerging countries. As a result of this improved product mix and less pressure on prices, the decrease in the average sales price has stabilized.
The mobile communications segment as a whole (SIM cards, Scratch cards, Services & packaging) generated revenue of €243 million, contributing 41% of Card Systems’ total revenue in 2007. Like the rest of the industry, sales in Identity & Security were slower than expected, with almost stable revenue up just 2%. Demand in pay-TV was sustained but several identity programs have been delayed.
Also, I would like to add Fiduciary & Cash Protection. These two recently contributed businesses have reported a 17% increase in 2007 revenue. Oberthur Cash Protection revenue is still small and was stable this year. It was generated by existing contracts in France and Belgium. Fiduciary reported a remarkable 21% increase in 2007 revenue, boosted by production from a new banknote printing line set up in 2006.
The combination of Oberthur and XPonCard will create a highly competitive player in the ongoing industry consolidation. How will the two companies complement one another?
The combination of Oberthur and XPonCard will create the second largest player in the global smart card industry with sales in the order of 735 million Euros and a highly competitive player in the ongoing industry consolidation.
Geographically, Oberthur and XPonCard complement each other in Europe in the banking and loyalty card segment. As the regional market leader XPonCard provides an outstanding sales, service and personalisation infrastructure in the Nordics, the Baltic’s and Poland to complement Oberthur’s extensive network throughout the rest of Europe. Outside of Europe, the combined resources will add scale and critical mass.
The transaction will specifically enable XPonCard to successfully face the ongoing globalisation of both its customers (financial institutions and mobile operators) and their markets that require a global presence, and take advantage of Oberthur’s product portfolio, and important Research & Development resources
Oberthur has developed proprietary solutions and is considered to be among the technology leaders in the industry. The opportunity for XPonCard to leverage of Oberthur’s technology will result in significant savings in technology and product costs. Further synergies are expected within purchasing, manufacturing, financial resources and administrative costs. The combined entity will have a strong position to better serve both existing and new customers.
The NFC mobile kiosk is the first fully integrated NFC multiplications service. How much of a substantial breakthrough is this for the NFC market?
Our NFC mobile kiosk allows customers to select their purchases in a menu displayed on their mobile phone and order them directly by waving the mobile in front of the reader linked to a cashbox. Still using NFC, they can also get a coupon, for a free item and pay their purchases. Thus, it shows how much convenience NFC will bring in our every day life with a multiple of possible applications and very limited actions required from the customer. Moreover, our demonstrator, because it embeds multiple applications in an integrated way, is also the proof that NFC is now a mature technology ready to be deployed for customers all over the world”.
FlyBuy duo won a Sesame award at the Cartes show 2007. What are the benefits of the application to banks and mobile operators?
FlyBuy Duo is a very innovative solution for NFC: two chips, a SIM chip and a payment chip, are linked together and embedded in a standard SIM plug-in. Moreover, it is in accordance with all NFC standards.
From the beginning, FlyBuy Duo was designed to meet at the same time banks’ and operators’ needs for NFC Mobile Payment. On the one hand, banks have in their market strong requirements on certification. That’s why FlyBuy Duo is the only NFC SIM that can pass the most restricting certification schemes of the banking market. On the other hand, operators need their fast-changing environment to preserve flexibility and short Time-To-Market. Thanks to its unique architecture, FlyBuy Duo is the only existing solution able to answer simultaneously those expectations and banks certification requirements.
Oberthur also received a Sesame award for ‘Cardblade’. How far do these accolades confirm your leadership in the market?
We invest in Research and Development to improve our technologies and enhance the solutions proposed to our customers. We want to be at the cutting edge of innovation and anticipate the future demands of our customers.
With advanced technology and a strong expertise in security, Oberthur Technologies is always at the forefront of the industry, providing the best of technology and services.
We are always searching for excellence, efficiency and local relationships to design new products, to develop pilots and to be close to our clients. We constantly find new resources to improve process and product quality. We are continually developing our presence around the world, working as a team in each project to meet our customers' requirements and expectations, to support them and to implement pilots.
We are committed to deliver solutions that fully address customers' needs, and offer a wide range of custom services based on leading edge products as complete solutions, combining functionality and usability. With teams around the world working to maintain a high-end positioning and provide customized solutions on a daily basis, Oberthur Technologies shapes the future.
Oberthur has been selected as one of the companies to introduce NFC to France. What role will your company play in the project?
Oberthur is one of the world’s leading suppliers of payment cards and personalization services for banks and financial institutions. In the mobile sector, we offer USIM cards as well as a comprehensive solution to personalize and manage these cards. Oberthur has been a pioneer in the creation of integrated and converged technologies. The development of SIM cards with in-built payment applications, and the fusion of personalization services with an OTA solution are just two of our current initiatives to fully enable secure mobile banking technology as it launches globally. The Oberthur SIM cards supplied today are among the most advanced mobile payment applications on the market, and allow secure storage and personalization of payment applications.
The mobile payment personalization solution is based on Oberthur’s proven card payment personalization solution - already used by thousands of banks around the world. Our TSM offer is based on this new OTA system. As a total package, Oberthur supplies both the hardware - the SIM complete with secure elements and applications – as well as providing the payment infrastructure – to enable issuance and management of the payment application. We also help both banks and mobile operators refine their specifications with the overall objective being to define an overall standard for NFC mobile payment.
Tell us about Payez Mobile and what it offers?
For instance, in the “Payez Mobile” pilot, it is the first time that operators and banks along with key industrial players gather with the purpose to define a standard as global as possible for NFC payment. In this context, it was very important for Oberthur Technologies to play a major role in the project and bring all our know-how acquired in both mobile and banking domains.
In “Payez Mobile”, we offered three key deliverables. We designed NFC SIM especially for the needs of the project: based on our standard SIM, their architecture has been enriched with features dedicated to NFC such as application selection and user interface. Then, our OTA (Over-The-Air) platform manages the content of SIMs to install or to block banking applications for example. Finally, Oberthur Technologies also provides banks with personalization services: banks send us customers’ data that we process and encrypt, then, send to the OTA platform to install securely the right banking application with the right data in the right SIM”.
Identity fraud and computer security breaches are on the rise. Is this a problem area that Oberthur are paying particular attention too?
Yes, our Identity Product Line addresses these two issues. Fighting the “traditional” identity fraud - based on faked or tempered physical ID documents - is of course the historical activity of the company. And for several years now, we have been working at transferring all physical security features used on paper-based ID documents into every plastic support we use for smart card manufacturing.
Now, let’s consider your question only from a digital world perspective. If you look closer at these two issues, most of the time you will find out that they share the same root cause: weak authentication procedures based solely on user names and passwords. We offer hardware and software solutions to make the presence of a smart card or of a smart USB device mandatory when authentication of a user occurs. For the vast majority of applications, this added layer of security is sufficient to eradicate these frauds and attacks. And for securing access to mission critical applications or extremely sensitive data, our fingerprint match-on-card solution can offer a third layer of security.
Oberthur has been successful across Europe and Asia. Geographically, are there particular markets that interest you in 2008?
Historically, Oberthur is particularly strong in Europe and North America. Recently we have strengthened our position in Asia commercially and industrially in China & India. Last year we acquired I’M Technologies, a Singaporean company.
Oberthur is interested in all countries where secure technologies are spreading. Our strategy is to grow faster than the market. And that is what we have achieved in 2007.
Oberthur is the largest producer of contactless cards in the USA. Do you predict that microprocessor chip cards will take off in the near future?
The microprocessor chip is already taking hold in the United States. In fact, according to a July 2007 Jupiter Research report, microprocessor chip cards are likely to be in more than 75 million American wallets or cell phones before the end of 2008 and more than 128 million will be in circulation by 2009. Our customers using the contactless cards and those in pilot programs have really solidified our commitment to contactless. Based on projected orders with our clients, we anticipate double-digit growth in the next six to nine months for our payment markets”.
(Smartcard News Ltd, 2008)