Mondex Gains U.S. Foothold with Smart Card Test at Wells

By Kutler, Jeffrey; Block, Valerie | American Banker, August 3, 1995 | Go to article overview

Mondex Gains U.S. Foothold with Smart Card Test at Wells


Kutler, Jeffrey, Block, Valerie, American Banker


Wells Fargo Bank began testing a Mondex smart card system this week, giving the highly touted "electronic alternative to cash" its first operating foothold in the United States.

Though modest in scale, the entry is a milestone for Mondex's developer, National Westminster Bank of London, which has viewed the United States as crucial to its plans for creating an international network.

Natwest and Wells Fargo publicly played down their system launch, noting that just 90 cards were issued to Wells employees for use at nine locations in and near the headquarters building in San Francisco. But officials of both companies confirmed that the system went live on Monday.

Tim Jones, the London-based chief executive of Mondex, was quick to point out that the two banks have merely entered into a testing agreement. There is still no Mondex franchise in the United States comparable with the United Kingdom organization owned by Natwest and Midland Bank or the Canadian company owned by Royal Bank and Canadian Imperial Bank of Commerce.

Wells, which has quietly been building a reputation as one of the most aggressive U.S. banks in pursuit of electronic service alternatives, seems certain to be one of the U.S. owners of Mondex. Industry observers also expect affiliates of Natwest and Midland Bank - National Westminster Bancorp in New Jersey and Marine Midland Banks Inc. of Buffalo - to be in the group.

Mr. Jones said this week that he is on schedule to officially announce a U.S. ownership consortium before yearend.

Wells' Mondex project had recently become an open secret in bank card industry circles. The companies' shunning of publicity tended to divert attention to other chip card experiments - with cards numbering in the thousands - at a Bank of America building and at Visa International headquarters, both also in the San Francisco area.

None of the U.S. banking efforts yet approaches the magnitude of Mondex's trial in Swindon, England, which started in July on its way to an anticipated 40,000 cardholders.

Electronic Payment Services Inc., operator of the MAC automated teller machine network, is preparing for a large-scale smart card test in Delaware early next year, and Visa expects to have perhaps millions of chip cards in circulation in time for a showcase at the Atlanta Olympics next summer.

Each test is geared to low-dollar-value "electronic purse" transactions. The cards' computer chips generally store a sum comparable to the cash people carry in their wallets - typically $10, $20, or $50 in fixed-value prepaid cards, though Mondex and some other electronic purse schemes can go much higher. …

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