Smart Card Application At Work
Florida integrator finds a profitable, untapped, present-day niche for smart cards in the U.S. - laundry facilities.
Business Solutions, January 1998
Finding A Niche For Smart Cards
Urquhart, a retired IBM employee, had headed an IBM business unit in France. The unit's purpose was to sell systems to European telephone companies. This included studying smart cards in France and other European countries for possible IBM implementation in the U.S. (The French use over 100 million smart cards annually, according to InteleCard News.) Therefore, Urquhart had firm knowledge of and appreciation for the potential of smart cards.
In 1994, Urquhart and his wife had dinner with some old friends who owned an apartment building. During the conversation, the friend complained about the vandalism which he encountered regularly with the washers and dryers in the building. Thieves, using tire irons and crowbars, would attempt to steal the coins from washing and drying machines, and, in so doing, destroy the machines. Urquhart quickly recognized that these apartment building laundry facilities would be an excellent application for smart cards.
Accordingly, he decided to research these laundry facilities. He learned that there are over two and a half million laundry machines in apartment buildings in the United States. However, almost no apartment building owners own and service the washers and dryers. That function is accomplished by route operators, who buy washers and dryers from manufacturers, then install and service the machines themselves. He also learned that the biggest problem for the route operators is vandalism/theft. And, since the commercial washers and dryers cost from $500 to $700 each, replacement costs are high. In addition, the route operators must pay independent bonded collectors to regularly pick up the coins from the apartment buildings. Finally, banks often have a surcharge for converting large quantities of coins to paper money.
Applying A Smart Solution To The Problem
Urquhart realized that smart cards could effectively solve all these problems simultaneously. Therefore, he started his firm, Intellicard Systems, Inc., to manage smart card systems for washers and dryers in large apartment buildings. He then contracted with Bull Information Systems, of Billerica, Massachusetts, to provide smart cards for Intellicard. Bull is a manufacturer of smart cards and owner of more than 1,200 patents in the smart card area. At the same time, he developed software for use on PCs for back office operations. (Route operators use the PC and software to keep track of their machines. They also use them to determine how much they earn on each machine.) Urquhart then presented his idea to a major vendor of laundry equipment, but was turned down because the vendor felt "the market wasn't ready" for smart cards.
In 1995, however, according to Urquhart, Whirlpool recognized the future potential for smart cards and became the first washer and dryer manufacturer to adopt the technology. Intellicard designed the electronics, including smart card capability, into the machines. Other manufacturers' add-on smart card readers cost from $100 to $150 each, but the cost is simply added to the price of the machines. Route operators are willing to pay the addition because the potential savings far outweigh the cost. (Since Whirlpool first added smart card readers to its machines, many other major washer and dryer vendors have followed suit.) Urquhart then began working with route operators around the country to sell his system for managing the Intellicard-equipped machines.
How The Smart Solution Works
With the Intellicard solution, washers and dryers in apartment buildings do not have coin slots; instead, they have card readers. When customers wish to use a machine, they simply insert their smart card in the reader. The cost of the wash or dry is automatically removed from the existing cash value of the card. The card reader on the machine then transfers this information to a PC in the back office of the apartment building.
The cards can be bought from dispensers (built by and supplied by Intellicard) on the wall of the laundry. They can also be purchased from the apartment building's office. Some dispensers accept cash and others accept credit cards. The dispensers are built to be very secure. Urquhart explains that they are built into walls, using 14-gauge, double-plated stainless steel and are virtually theft-proof.
As a result of this innovation, customers are happier because they don't have to worry about correct change. Route operators are happier because, since they don't have to deal with coins, the problems associated with the coins disappear. Bonded collectors are no longer needed, as the route operators simply collect money from the dispensers at will. Vandalism/theft, the bank surcharges all cease to exist - and profits grow accordingly.
Although Intellicard is not the only systems integrator dealing with this niche, the company is doing well. Intellicard has sold its system for use in over 6,000 machines. And with over two and a half million machines in the United States, the company has barely scratched the surface. Real applications for smart cards are taking place in this country. In so doing, they are offering a proving ground for the technology.