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Morpho Buys ABnote European Operations to Build Card, TSM Business

Smart card and ID security company Morpho hopes to increase its EMV bank card business, as well as expand its trusted service management unit, with its acquisition of the European personalization and card manufacturing operations of American Banknote Corp.

Morpho, which is part of France-based Safran Group, announced the acquisition Wednesday of ABnote’s card personalization business in France, CPS Technologies; along with ABnote Czech sro, a card manufacturer and personalization center in the Czech Republic. Together, the operations have 210 employees.

“The logic behind it, we are increasing our footprint to be closer to our customers to deliver banking cards,” Philippe d’Andréa, executive vice president for Morpho's e-documents division, told NFC Times.

He declined to release the price Morpho paid for the ABnote European units, though said it was not the first time Morpho had tried to acquire them.

Morpho, the No. 4 smart card vendor worldwide, hopes the acquisition will increase its market share of EMV cards to banks in France and Eastern Europe.

While Morpho claims a 25% share of the French EMV card market, it does not currently personalize the cards it produces for French banks. Without a personalization center, its banking customers either personalize the cards in-house or send them out to personalization bureaus, such as CPS Technologies.

This held back the amount of cards Morpho could sell to such major French banks as BNP Paribas and Société Générale, which have their cards personalized by CPS, d’Andréa said.

“Some customers were reluctant to buy from us through CPS,” d’Andréa said. “By acquiring CPS, we have the full chain. We are going to get one third of the whole French market.”

The acquisition includes ABnote’s trusted service management unit in France, which is not believed to have won any TSM business.

With the personalization center in France, plus personalization and manufacturing in the Czech Republic, Morpho hopes to win more business serving as TSMs for banks in France and Eastern Europe.

TSMs on the service provider side provision, personalize and manage payment applications over the air on secure elements in NFC phones.

Morpho last summer acquired Singapore-based TSM Cassis International. In addition to Cassis’ global TSM operation, Morpho got a personalization center in Malaysia.

“(Service provider) TSM–it’s a personalization center–you need a data center, collecting credentials and storing them on secure elements,” d’ Andréa told NFC Times. “The personalization centers are important for (card) market access and TSM.”

Morpho is serving as TSM for up to five banks in Poland that late last month commercially launched MasterCard PayPass on SIM cards issued by T-Mobile.

The contract is through MasterCard as part of the payment network's MOTAPS mobile provisioning service, which has been a service the payment network has offered to banks globally at low cost to streamline the delivery of PayPass applications to NFC phones from various issuers. Morpho got the MasterCard deal and contacts through its acquisition of Cassis.

The provisioning system sets up a standardized way to gather customer payment account data to be delivered directly over the air to secure elements in NFC phones.

But MasterCard told NFC Times it will discontinue the MOTAPS provisioning service.

D’Andréa said, however, Morpho’s services to banks via MasterCard would continue.

“MasterCard is there to make a new solution emerge,” he said. “MasterCard is the enabler. We have been helping MasterCard along the way. We are still having the relationship.”

MasterCard indicated it would continue to try to speed the provisioning and adoption of NFC PayPass applications for issuers, probably through more specifications. And in Poland it acquired Trevica, a processor and service aggregator, which allows it to quickly add more banks to the NFC rollout. A deal like it in other countries is not out of the question.

Morpho competes for TSM business mainly with other large smart card vendors, Gemalto, Oberthur Technologies and Giesecke & Devrient.

The three companies have been winning contracts with banks for initial NFC rollouts largely on the strength of their business personalizing cards for the banks. The three vendors have more personalization centers than Morpho.

All four smart card vendors also offer TSM services managing secure elements for mobile operators and other owners of secure elements.

Morpho has company-owned personalization centers in Germany, Russia, Brazil, Colombia, Mexico and India, along with Malaysia from the Cassis acquisition and soon France and the Czech Republic that will come with the purchase of the ABnote European operations. Morpho also works with personalization partners in Spain, Portugal, Italy and the UK.

The operation in the Czech Republic also produces EMV cards, embedding smart card chip modules it buys from other smart card vendors. Morpho is to supply its own modules for the plant after it closes the acquisition, expected before the end of the year.

ABnote, a printer of security documents, as well as plastic cards, did not sell its personalization centers and other business units in North America and Asia-Pacific. That includes its TSM serving one or both regions. ABnote serves as TSM for New Zealand contactless fare-collection and payment scheme Snapper.

 

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