Telecom, Telstra work on sophisticated smartcard systems

Telstra and Telecom are working on a reciprocal agreement which would allow them to use each others' payphone networks as the basis of sophisticated new multi-application smartcard systems. The discussions could see the two telcos become key players in the region's emerging electronic economy. Telstra last week announced a multi-application smartcard system in which payphones will be used to make transactions and reload value on to cards for use elsewhere, and Telecom has plans for a similar system.

Telstra and Telecom are working on a reciprocal agreement which would allow them to use each others’ payphone networks as the basis of sophisticated new multi-application smartcard systems.

The discussions could see the two telcos become key players in the region’s emerging electronic economy. Telstra last week announced a multi-application smartcard system in which payphones will be used to make transactions and reload value on to cards for use elsewhere, and Telecom has plans for a similar system.

Telstra’s head of card services, Grant Burtenshaw, told a conference last week that “Telstra is not trialling the Telstra Smart Phonecard, we are moving quickly and systematically to broad national introduction.”

Telstra New Zealand general manager Peter Williamson says there is “every likelihood” of Telstra’s scheme being extended to New Zealand within the next 12 months.

“My understanding is that Telstra has had some fruitful discussions with Telecom New Zealand, in respect of [the companies’ respective payphone networks],” says Williamson. “We’re trying to open up markets and I think that would include some sort of reciprocal agreement with Telecom in Australia.”

Telecom spokesman Quentin Bright has confirmed that Telecom “is working closely with New Zealand banks and other interested parties in the development of multi-application smartcards. This would ultimately involve the Telecom payphone network.

“At this stage the time-frame is open,” says Bright. “The development work is underway, but there are all sorts of things like business cases which need to be put up and approved. Obviously we’d be interested in seeing it sooner rather than later - so watch this space.”

Telecom will presumably do as Telstra is doing and initially replace its mag-stripe phonecards with disposable chip-based stored-value cards (SVCs), and then seek to migrate its customer base to a reloadable multi-application card.

Where the two telcos’ strategies diverge is that Telstra has decided to go out on its own as the issuer of cards and owner of terminals - assuming a role akin to that of a bank. Telecom, on the other hand, has been discussing SVC issues with local banks, and directly with representatives of rival issuers Visa and Mondex.

Telstra has bypassed both Mondex and Visa’s offerings in favour of Chipper, a system developed for use in the Netherlands by that country’s Postbank, which brought the national PTT Telecom into the project in December 1995 and launched in October last year.

Proprietary chip-card schemes (including Chipper local rival, ABN Amro Bank’s Chip Knip card) have caught on quickly in several European countries, and Postbank is said to be issuing 100,000 cards a week in the Netherlands. PTT Telecom’s 18,000 payphones are among the places where holders can reload value to their cards.

Chipper’s Dutch backers are now concentrating on the home market, where card readers are now available for use with telephones and other devices for applications such as ticketing (with the card itself being loaded with a “ticket” which is discharged at the point of use) and shopping.

Telstra will be using smartcard-capable Amper phones sourced from Spain, where they are part of a national network. The phones are already Visa Cash-compliant, and Visa has been negotiating with Telstra to make them available for Visa Cash transactions says Visa spokesman Daniel Jeffares.

“We’re still working very closely with Telstra here to negotiate acceptance of Visa Cash cards at telephone acceptance points and other merchant points that emerge, with a view to providing an acceptance platform for the banks to leverage in the event that they want to issue a large-scale Visa Cash programme,” says Jeffares.

“It’s in Telstra’s interest to acquire as many transactions as possible, because ultimately their core objective, certainly in relation to the payphones area, is network usage as opposed to transcation processing.”

Visa’s chip-card manager Bruce Mansfield says equipping Telstra’s phones to accept Visa Cash will not be difficult.

“The Amper phone is already Visa Cash-compliant. In Spain, all 58,000 of them already accept Visa Cash. There are some modifications which have to be done for the Australian version of Visa cash, but we know the phone works, we know it has enough SAM slots to have. It’s really just a commercial discussion between outselves the banks and Telstra.”

Any early rollout would be with the existing Visa Cash system, which has had a mixed record in trials, but Mansfield says Visa International’s Java team will be speaking to Australian banks this week and Java-based cards will br ready for mass production early next year.

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