Creative Star began introducing personalized Octopus cards this year. These cards hold user IDs, which the memory capacity of the Sony chip allowed. Although it has issued only 440,000 personalized cards, the step is important. In a deal with Dah Sing Bank, the cards can be automatically refilled to a level specified by the consumer each time the amount falls near zero. These personalized cards are being closely watched by bankers, savvy CFOs, and government authorities worldwide.

With personal IDs and bank account information, the card then becomes a trackable data tag. Customer loyalty programs can be implemented, and every detail of the transaction can be gleaned, packaged, or sold. The cards can also be used as staff, government, or bank ID cards. "Hong Kong's retailers," says Greg Pote, head of the Asia Pacific Smart Card Association, "are now pursuing Creative Star to be signed up as Octopus merchants so they can accept Octopus at the retail point of sale."

The success of Creative Star has almost embarrassed the company. Says Rob Noble, "We have more potential applications than we can explore."

Buy One, Get One Free
He'll have to act fast, because Helen Li wants to take his business away. "From the CFO's point of view," says Li, "smart-card technology offers far more than speeding payment and enhancing customer loyalty. Stored-value technology allows for much more efficient management of customer resource data, a better grip on the supply chain, and helps cash management enormously." With characteristic moxie, while others are getting in line to be accepted by the Octopus card, she says she's contemplating working a deal with Creative Star where a Café de Coral card could be used on the public transport system. For now, the real appeal of a smart card is logistics. Café de Coral's goal is to maintain two days of supplies on hand in each of its outlets. "Tracking smart-card sales would automatically update our system and we'd be able to fine-tune our deliveries," she says. It will also improve its purchasing, which currently amounts to HK$600 million (US$77 million) a year.

She plans to dovetail the smart-card data with the company's ERP system. "We'll be able to make an estimation of consumption patterns, and manage the menu in ways we've never done before," she says, adding that "the system will be able to alert us when the price is going up."

Since the size of the order affects the size of the discount, a better handle on demand would arm her with a better view of when to buy. Since the price on some of the perishables on Café de Coral's menu fluctuates from month to month, proper timing of the orders can significantly control costs.

The company already offers electronic coupons through its Internet service. Li wants to extend the coupon plan to smart cards, in a bid to create customer loyalty and improve cross-selling opportunities. Installation costs for the entire project, including the ERP link-up, the smart card "readers," and the smart cards themselves, is not punishing. Li estimates it will cost about HK$600 million, which she plans to finance with Café de Coral's current cash flow. Rollout will begin next year.

This is no Mondex — many of these ideas have been tested at a pilot smart-card program at Hong Kong Polytechnic, where Li is polishing off her doctorate in CRM. Café de Coral issued smart cards to students, who used them at venues throughout the school. The application for the pilot, and the programming development for the eventual Café de Coral card, will be done by an in-house programmer. This is in keeping with a Café de Coral tradition. The company's founder, trained as an urban planner, designed Café de Coral's shops himself. It might be hard to make the connection between Redmond, Washington, and Fo Tan, Hong Kong, but Microsoft and Café de Coral have something in common. Both see the traditional limits of business vanishing in the world of digital information. And both see no reason why commercial companies can't harness the power of electronic money.

"The whole point is to earn more from your existing market and sustain growth," says Li. "Having that kind of control over money gives us the power to do that."

Tom Leander (TomLeander@economist.com) is the deputy editor of CFO Asia, based in Hong Kong. For more articles on finance and technology in Asia, see www.cfoasia.com.

Drivin' That Train

Following the runaway success of Octopus, public transportation systems throughout Asia are eager to latch on to the Hong Kong model. Taiwan is developing an EasyCard, Singapore and Malaysia have their versions, and South Korea has no fewer than four different forms of electronic cash. The most successful example is the MyBi card.

Developed by the Pusan Metropolitan City Government, MyBi integrates two smart-card programs, the local bank e-purse program, and a transportation card. Since customers would use the card for banking, for stored-value transactions, and as an ID, it required both contact and contactless smart-card capabilities in the same package. A joint-venture company was set up, with partners that included the Pusan Metropolitan City, KPMG, Microsoft, and Korean IT Ventures, a technology consultant.

• « previous
• 1
• 2
• 3
• 4
• next »