CardLogix Corp.’s smart cards have to be smarter than the rest.
The Irvine-based maker of smart cards and software used by businesses and governments faces tough competition from European companies that dominate the market.
“We have to figure out how to produce product in a way that’s competitive,” said Chief Executive Bruce Ross. “We have to be quicker, better, smarter.”
CardLogix’s cards contain a “solid state” chip, housed within a credit card-like plastic case. The chips can store just about anything,money, points, store credit, documents, access to buildings and even a person’s fingerprint. Some use an embedded antenna or radio frequencies to communicate to servers on a network. Others have a tiny computer inside.
The company’s big-gest challenge is getting a fair shake among smart card buyers, according to Ross.
Companies such as France’s Oberthur Card Systems SA, Amsterdam’s Gemalto NV and Germany’s Sagem-Orga GMBH all do billions in yearly sales and make millions of cards.
Making and selling smart cards in bulk gives these companies an edge. They buy chips and other materials cheaper, Ross said. It’s a common gripe among U.S. makers, he said.
European companies also get help from governments that subsidize equipment costs, according to Ross.
Privately held CardLogix is small with about 15 local workers. It does automated manufacturing and testing at its office in Irvine.
The company, which started in 1994, doesn’t disclose sales. The Business Journal estimates yearly revenue at $20 million to $30 million.
CardLogix offers kits that bundle software, smart cards and other gear to help businesses develop their own networks and systems. The kits work with card readers from other companies, which can package all the equipment and sell it to other businesses as a complete product.
The company has been working to capture federal money given toward 2005’s National and Real ID Act, which mandates state governments make certain standards for driver’s licenses and identification cards.
Ross estimates the federal government is set to buy about 18 million cards next year as part of a separate push for its workers to have smart cards that work as IDs, keys to buildings and access to networks.
“The U.S. government hasn’t bought much yet, but they’ve mandated it, so we expect a lot more sales next year,” Ross said. “We’ve spent a large amount of research dollars to build new operating systems and do testing. The government has a lot of hurdles to jump through, so we have been doing all the hurdle jumping.”
Shipments of smart cards are expected to be about 3 billion worldwide this year, according to trade group Eurosmart. Government IDs account for about 140 million cards globally.
Government Uses
Nearly 5 million cards already are being used by the U.S. government,a small number compared to the European Union, which already has smart cards for driver’s licenses.
Various branches of the military use them for records management and to replace traditional “dog tags” for soldiers in the field, among other things.
They also are used to help speed up travel through security lines as part of the Transportation Security Administration’s new Registered Traveler program.
Local governments use them for voter ID cards, parking meters,instead of coins,and for public transportation such as bus cards.
Other uses for smart cards vary.
CardLogix’s cards are used at about 70% of Las Vegas hotels, according to Ross. Hotel workers use them as time cards to enter and exit a room.
The biggest use in the U.S. is one people almost never notice,cell phone SIM, or subscriber identity module, cards.
SIM cards in cell phones track calls and numbers as well as verify the phone to the network.
“Loyalty cards” are another popular form.
Auto dealerships use them to track a customer’s car service and give them points for their loyalty toward future repairs.
Retailers use them to track purchases and give repeat customers discounts and other incentives.
Outside the U.S., the cards have a variety of tasks,from movie theater loyalty credits to national healthcare IDs.
Up-and-coming uses likely to boost smart card sales include medical devices (dialysis machines and at-home blood pressure monitors) and the growing field of biometrics, which uses facial geometry, fingerprints or even a heartbeat to verify identity, Ross said.
“We are really in the security business in that respect,” he said.
Another big opportunity for CardLogix: “contactless” cards that hook up to a bank account or credit card.
Soon, a swipe of a cell phone will be all it takes to pay for a purchase. Ross said he’s even designed and shipped a card for the Vatican, but didn’t elaborate.
“We are the component guy in the back, quietly producing lots of cards,” he said.
