Catuity to move toward magnetic stripe cards

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By: Wise Marketer Staff |

Posted on April 20, 2004

Catuity to move toward magnetic stripe cards

Catuity Inc., a provider of loyalty software for transaction processors, card issuers and merchants, has announced that it anticipates its efforts in 2004 will be directed more toward magnetic stripe cards than smart cards.

"In North America, Western Europe and Australia, we believe that magnetic stripe cards - with loyalty rewards stored not on the card (as in the case of smart cards) but on a host server - will be preferred," explained CEO, Michael Howe.

"The discussions that we have had with [channel partners] Maritz, Certegy and others, indicate that this appears to be the preference. We are also able to utilise our system with smart cards as EMV mandates are accomplished in various regions of the world," added Howe.

Target disappointment Although Howe expressed disappointment with the decision by the US retailer, Target, to phase out its use of smart chip technology, he said that Catuity remains optimistic about its business opportunities, and continues to work to bring about profitability and long-term value for its shareholders.

For the quarter ending March 31st, 2004, the company expects total revenues of approximately US$470,000, most of which is attributable to its work for Target and Visa. This compares to last year's first quarter revenue of US$1,475,000 (of which approximately US$1.1 million was license revenues, recorded as deferred revenue in 2002). Software development and services revenue for the first quarter of 2004 are however expected to be approximately US$460,000 compared to approximately US$400,000 in the first quarter of 2003.

Future forecast "Although it is difficult to predict the amount and timing of future revenue, we currently believe our 2004 revenue will be significantly less than that recorded for 2003 as a result of the phasing out of the Target Visa smart card programme," said Howe. "As a result of the revenue loss, we will incur a loss in 2004, as compared to our close-to-break-even 2003 results."

"During the past three years, while our resources have been directed primarily to the Visa/Target initiative, information technology has continued to advance significantly. Our product development team is now able to add new technological improvements to our proprietary system to keep Catuity competitive. These changes will allow us to integrate our system with more databases, making our software easier for our customers to use for highly targeted offers based on more customer data, and make it much easier to integrate the Catuity system to their various POS environments," concluded Howe.

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