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Setbacks for Multos come on top of disappointing results for Mondex electronic purse cards. But Mondex has a plan.
Forget the traditional view of Mondex as an electronic purse smart card that consumers use to pay for small ases at shops. Neither Mondex nor competing e-purse cards have taken off, and Mondex International executives now see bigger short-- term opportunities in such electronic channels as interactive television, mobile commerce and lotteries.
At the same time, Mondex is using the expertise developed over the past decade, including its development of the Multos chip card operating system, to help member banks of parent company MasterCard International make the transition from magneticstripe cards to smart cards.
Both facets of the Mondex strategy offer potentially big opportunities. Providing remote services to consumers is a boom industry. If Mondex can show it has a better way to collect money securely from consumers, the world might well beat a path to its London headquarters.
Meanwhile, a growing number of financial institutions, telephone companies, universities, government agencies and others are dabbling in multiapplication smart cards, creating a demand for expertise that Mondex could fill. One of Mondex's leading competitors, Brussels-based Proton World International, has shifted its focus from the Proton electronic purse to its multiapplication smart card platform.
However, Mondex also faces formidable obstacles. The Mondex technology, which replaces monetary value with an electronic equivalent that is as anonymous as a bill or coin, requires more sophisticated security than a technology like Proton that keeps track of each transaction. Doubts remain that central bankers would allow widespread use of Mondex e-cash, as well as about the complexity of Mondex.
Says one executive at a North American bank that has invested in Mondex, "It's totally not viable. The technology is antiquated, the security is overdesigned, the cost is astronomical. There's just no future in it."
Consultant Duncan Brown of London-based Ovum Ltd. is pessimistic, as well. He argues that audited epurse cards like Proton and Visa Cash will become the standard, and that Mondex has missed its Internet opening. "They've been talking about an Internet strategy for three years and basically did nothing," Brown says. Now there are many software-based products, such as beenz and flooz, for making small purchases on...