NovaCard stakes on the banking sector (“Plus” No 2, March 2006)

The end of the year 2005 was marked for the NovaCard company by two significant events at a time: obtaining accreditation from MasterCard International for the compliance with the requirements of this payment system to the quality management system under production and personalization of its chip-cards, and as well as by successful completion of certification for personalization of Visa International chip-cards. Vladimir Krupnov, director of NovaCard, tells in his interview to a correspondent of the “Plus” magazine about the company’s present market position, its plans and perspectives.

“Plus”: How keen is, in your opinion, a competitive environment in today’s national market of the banking smart-cards in connection with the appearance of, at the same time, several Russian manufactures certified for the production and personalization of Visa  and MasterCard International chip cards?

Vladimir Krupnov: As for today, a level of competition between the Russian manufactures is not yet very high – for the time being there are only three Russian companies, including NovaCard, which have been certified for the production and personalization of Visa and MasterCard chip cards. That is why, in general, the competition is going on nowadays for the market share that belongs to the Western manufacturers. Today we produce and personalize Visa and MasterCard payment cards together with the EMV-cards in full compliance with the requirements of these payment systems and conformable to all the quality standards. Thus advantages of a national producer are evident: we pursuer a flexible pricing policy and offer precise card supply schemes within the tight time-limits. It is more difficult for a foreign company to offer equally advantageous conditions because of the complicated logistics and customs procedures. Apart from that NovaCard, as distinguished from the Western companies, can also personalize cards of the international payment systems for the Russian banks.

“Plus”: General directions of NovaCard business development found its reflection both in diversification of the product range and in extending of the geographical presence of the company. What foreground directions are there in the field of plastic cards production (banking, transit, identity, loyalty and etc.), markets, and responsibility regions? What new directions are planned to be sat up in production?

V. K.: At present NovaCard is a unique Russian company in this branch, we produce practically the whole range of plastic cards, which differ both in its purpose (banking, telecommunication, ID, loyalty, discount, insurance and etc.) and technologies – from magnetic stripe-cards to dual interface smart-cards (both in contact and contactless formats). Besides NovaCard is a complete cycle enterprise:  we perform any card project as a complex solution starting from card design and printing to chip implantation, personalization and packaging of the ready-made products. Geography of our supplies is not limited to the European part of Russia only; we work for the clients from all the regions of the country delivering cards to Moscow, Siberia or to the Far East. Along with that, as the market evolves, we intend to concentrate our general efforts on the banking cards. It is worth to be mentioned here that possession of all the Visa and MasterCard certificates for production and personalization of the full spectrum of smart card products offered by these payment systems adds a serious advantage to NovaCard. More over in March 2005, in order to provide more convenience to our Moscow clients we opened our company’s representation office in Moscow. NovaCard quickly responds to the new market demands: within the limited time-schedule we passed re-certification for the production and personalization of the Visa renovated design cards (“New Visa Brand”) and launched production of these products. Presently we study requirements to the new MasterCard card design in order to be ready to start production of payment cards of the new design as soon as they are required by the issuers.

“Plus”: What are the perspectives of the NovaCard activities as an independent personalization bureau, offering to the Russian banks services for the personalization of the EMV-cards of both payment systems?

V. K.: NovaCard has already acquired a unique experience in smart card personalization – since the moments of its foundation in 1994 we began to personalize cards of the “Golden Crown” payment system. After receiving a certificate in January 2004 for production and personalization of Visa and MasterCard  magnetic stripe-cards we accomplished a large number of such projects for the Russian banks. It is worth to be noted here, as applicable to the EMV-cards, that personalization carried out by the manufacturer itself is especially expedient and efficient, as it spares financial institutions from making significant investments into arrangement of its own personalization bureau and its certification compliant with the stringent security management requirements of the international payment systems. Certification of Visa International and MasterCard International obtained by NovaCard in 2005 has confirmed that our equipment, cryptographic means, software solutions and personalization procedures are fully compliant with the most stringent payment systems requirements. More over in December last year NovaCard received MasterCard accreditation for compliance with the card quality management requirements to production and personalization of chip-cards (CQM – Card Quality Management).

“Plus”: What banking projects, accomplished by NovaCard during the 2005, are, in your opinion, the most significant?

V. K.: One of the largest recent projects is the release of more than a million of card-carrier’s packages for the Home Credit and Finance Bank. The peculiarity of this project is, firstly, in its complex solution - NovaCard accomplished for the bank a full scope job: production, personalization, building up of a documents package for the card holder and its packing. The bank received a finished, ready for the delivery product. Secondly, it is a dead-line driven production and personalization of a large circulation within a tightly-squeezed time limit. Nowadays we extend our co-operation with Home Credit and Finance Bank and also schedule to issue for it during 2006 not less than a million of client’s packages.

“Plus”: What are the NovaCard today’s plans to enter a smart-card, in particular an EMV-card, production segment? Does the company make plans to participate in the multi-application smart-card production projects?

V. K.: Players in the Russian card market more often start paying attention to implementation of the EMV-based solutions. And at present our mission as of a manufacture is to prove to the banks that an EMV-card migration is not only expenses but the means to gain profit. We are ready to accompany banks on every stage of the EMV-project incorporation – from consultation services up to the production and personalization of any type of the EMV-cards. NovaCard regularly holds seminars for the banks, acquainting them with the new opportunities of the banking business optimization based on microprocessor cards. Nowadays one of the most perspective trends of the EMV-card development deems to be seen in developing solutions based on the open platforms:  JavaCard and Global Platform. Solutions, based on the open platforms allow our clients to develop card applications compliant with the latest requirements to the provision of business and security as well as easily develop and promote new services creating added value.