E-purse body pushes toward global specification

E-purse body pushes toward global specification
MANHASSET, N.Y. — Cepsco LLC, the Common Electronic Purse Specification body founded in 1999 to champion a global standard for e-purse platforms, has launched a partners group to promote acceptance of its Common E-Purse Specification (CEPS).

Cepsco announced the group at the recent CardTech/SecurTech trade show in Las Vegas. Member companies include smart-card manufacturer Schlumberger Ltd. (Montrouge, France), semiconductor supplier Infineon Technologies (Munich, Germany), card system provider Cubic Transportation Systems (San Diego), chip provider Philips Semiconductors (Eindhoven, Netherlands), card provider JCB International Ltd. (Tokyo), financial services company Citigroup Inc. (New York), electronic-payment terminal manufacturer Ingenico Group (Puteaux Cedex, France) and the Electronic Commerce Security Technology Research Association (Ecsec; Tokyo).

The formation of the Cepsco Partners Group is a step forward for the e-purse, an electronic stored-value application for chip (smart) cards in which prepaid funds are stored on the card for use in purchasing goods and services. There are 100 million e-purse cards circulating in Europe, where one in three people now carries an e-purse card.

Local efforts to date

To date, however, e-purse efforts have been "very local and proprietary," said Kaye Burns, senior vice president of consumer-product-platform development at Visa International (San Francisco) and a member of Cepsco's steering committee.

To make e-purses easier to use and increase their worldwide acceptance, the CEPS standard looks to enable technically compatible e-purse systems that can be used anywhere in the world. That should lower implementation costs for e-purses, since developers will not need to juggle fast-evolving proprietary chip card technologies and platforms. The standard also moves e-purses to robust RSA public-key encryption and away from the more vulnerable DES encryption now used to secure e-purse applications.

Cepsco expects availability of the first production-ready CEPS-compliant e-purse smart cards by spring 2002. In the meantime, the first pilot tests of CEPS-compliant schemes are under way in the Netherlands, Belgium, France and Spain. This so-called Ducato project involves smart-card system provider Proton World (Brussels) and several European banks and payment companies, including Europay International (Waterloo, Belgium) and Visa International. The pilot program seeks to validate interoperability in a real-world international environment.

Members of the new Cepsco Partners Group will have access to Web-based services through which they can share information on e-purse technologies as well as receive prereleases on spec enhancements and discounts on Cepsco events. Herve Kergoat, chairman of the Cepsco steering committee and head of prepaid products for Europay International, Europe's leading payments organization, said the group will help card manufacturers, chip companies and other members determine in which e-purse technologies they should invest.

In two years, Kergoat predicted, "all debit and credit cards in Europe will migrate to chip cards with e-purse applications."

Creation of an international e-purse standard and applications is predicted to drive growth of the worldwide market for microprocessor-based smart cards at a 33.1 percent compound annual rate through 2003, when unit shipments could total 1.2 billion, according to Gartner Dataquest.

It is believed that the standard will drive growth because an e-purse card under CEPS requires a security co-processor or microprocessor capable of performing RSA public-key encryption.

Most of the chips currently used for smart cards are not powerful enough to perform RSA processing and require a separate co-processor to perform the RSA algorithms. But most major smart-card chip providers plan to introduce 32-bit processors that will accommodate RSA processing, along with other functions.

Cepsco LLC's plan is for CEPS to go beyond the reaches of the European continent toward worldwide acceptance. CEPS is already on its way, with over 350 licensees in Europe and Africa and growing interest in Asia-Pacific nations. But e-purse applications are not common in the United States, where it has been tough to make a business case for the technology, said Europay International's Kergoat.

E-purse cards generally provide an advantage in situations where merchants can't afford to take the risks involved with a credit card, the telecommunications infrastructure is expensive or unreliable, and consumers prefer to put limits on their spending. Those situations don't widely exist in the United States, and since e-purse cards — like any new card products — require a long-term investment, U.S. banks have proved reluctant to commit.

Thus far, Cepsco's executives are not aware of any plans to launch a large-scale CEPS-based e-purse program in the U.S. market. Visa International has an e-purse product called Visa Cash, available in U.S dollars as well as in euros, that it plans to submit to Cepsco for certification. But Visa's Burns said there are no plans yet for a broad U.S. rollout.

The company claims there are 7.5 million Visa Cash cards in use worldwide. But it does not break out numbers for the United States, where Visa Cash cards have been issued in such closed communities as military bases and college campuses.