Prism became involved with the supply of magnetic stripe and smartcard readers in 1994 in order to fulfil its own needs for reliable reader technology and to satisfy the requirements of other local companies in this market. The initial agency acquired was that of American Magnetics Corporation (AMC) who, by the way, own the trademark, Magstripe. Recognising that such representation could be seen as a conflict of interest with its other business interests and clients, the company appointed Nigel Green in 1995.
Green was tasked with setting up an autonomous business unit that could supply other companies active in the same market space and address any competitive concerns. Prism Distribution proved highly successful and was a strong revenue earner for the holding company (there are currently more than 80 000 AMC devices in operation nationwide), however the listing of Prism Holdings in 1999 resulted in the need for the group to ensure a coherent focus for its stakeholders and the financial community. Under these conditions the distribution business was something of an anomaly and, given the fact that one of Prism's core areas is the provision of transaction and vending solutions where it competes aggressively in the local marketplace, distribution finally started to be perceived as part of the competition rather than a supplier and partner.
In the longer term these perceptions would have impacted negatively on the bottom line of the distribution business and the logical move, and one readily accepted by Prism, was a management buyout which allowed the distribution business to be established as a privately owned entity in its own right. Green together with his three partners reached an agreement on the buyout in late 1999 and the new company, christened 'Quatro Kinetics' has operated totally independently since 1 July 2000.
The name of the new company is certainly unique and might have been expected from a person like Green who had come up with the renowned distribution advertisement where 'nothing is impossible' and 'even pigs can fly'. However there is a lot of logic behind the choice, not least that quatro (from the Latin for four) symbolised the four partners and the four key business areas, namely smartcards, magnetic stripe cards, transaction printing and label printing. As for kinetics (from the Greek this time) it represents all the good things about the new company - on the move, dynamic, full of energy etc! The term kinetics is also original in that it avoids the use of the overtraded expressions, trading or technologies, logistics, etc.
In terms of its distribution business the main clients of Quatro Kinetics are OEMs and systems integrators, who in turn manufacture or supply transaction products to a broad market that includes banking, retail, telecommunications, IT, parking, vending and gaming amongst others. In a few instances end users themselves, including large banks and retailers, are supplied directly where they have the in-house capability for systems integration and maintenance. The particular success of Quatro Kinetics in this marketplace is attributed to their intimate knowledge of their extensive product range and their innate ability to match the product performance to the needs of the particular business.
While the card transaction business is highly dynamic the largest client of the company is the banking industry, followed by telecommunications. Following on these retail, vending and gaming contribute almost equally to turnover, but the growth in the latter with the opening up of new casinos all over the country is huge. Another growing market is parking, where we are seeing the introduction of more 'pay-on-foot' systems where the initial 'pass' is printed and time-encoded at the entry barrier.
Principals
Quatro Kinetics represents five well-known ISO 9000 certified manufacturers, these being American Magnetics Corporation and Axiohm (both from the USA), ddm Hopt + Schuler (Germany), ACS (Hong Kong) and KD Electronics (Korea). In other global markets some of these companies are considered as competitors and are represented by separate entities. In the case of South Africa, Quatro Kinetics has been so successful in keeping all its principals happy in terms of sales and maintaining their individual confidentiality and brand identity, that it encompasses all. The reason for this success is that through acquired expertise Quatro Kinetics is always able to offer the customer the right [high quality] product for the specific application. The client of course is the major beneficiary in that he gets the solution that he requires and pays a fair price for this. The analogy is that he is not sold a Cadillac when a Hyundai is more than capable of doing the job, but the quality of each (fit for purpose) is unquestionable.
Axiohm Transaction Solutions (which today also owns AMC) is one of the world's largest manufacturers of transaction printers and their products are used by a number of well-known international businesses including Siemens Nixdorf and NCR. As for Hopt + Schuler the ddm which qualifies their company name actually stands for design, development and manufacture, this applying to very high end smartcard acceptors and some of the most highly miniaturised (and motorised) card readers and writers on the market. With few world players in the miniaturised market Quatro Kinetics believes that Hopt + Schuler are by far the most compact and technologically advanced. Because of their advanced security features a major local user of this product is Sun International in their casino operations.
KD Electronics which has been represented by Quatro Kinetics since 1996 is a Korean-based company. It has established a large market share for its Magstripe and smartcard products in the highly competitive Far East market and its range is used to satisfy local requirements in such areas as self-service payment devices such as parking systems. Finally Advanced Card Systems (ACS) is located in Hong Kong and has one of the most extensive ranges of easy-to-integrate equipment for all types of smartcards. The ACS product range includes Windows & PCSC compliant as well as USB 'plug-and-play' options, complemented by versatile toolkit drivers.
Local clients
One of the local companies with whom Quatro Kinetics has a long-standing relationship is Marconi Communications. This Springs-based manufacturer of telephones and exchanges was an early entrant into the card-based payphones for Telkom (it originally produced the cards itself but later sold this part of the business to Prism). About 80% of the card-based phones operating in South Africa have been supplied by Marconi and these all use AMC card readers supplied by Quatro Kinetics.
The other major launch customer for Quatro Kinetics was Nedcor. This major local banking group is renowned for its technological innovation and was the first bank to be able to issue house ATM and other magnetic stripe cards in-house on the spot. Quatro Kinetics supplied more than 2500 desktop encoders to Nedcor during this rollout. Natal Building Society has also utilised Quatro Kinetics' expertise and product range with the nationwide introduction of EMV compatible encoding devices. The value for the banks' clients is huge as there is no delay associated with being able to open the account, revalidated cards can be issued immediately, PIN changes can be implemented quickly and securely and there is no fear of the loss of the card in the postal system.
The future
With the growing trend away from the use of cash to smartcards Green believes that Quatro Kinetics will continue to grow its business in both South and southern Africa. Although not deliberate strategy, the rest of the SADC region not only follows the example set in this country, but prefer to source their card technology products from suppliers in South Africa who are closer both geographically and in culture. While Quatro Kinetics has already done direct business with a number of neighbouring countries including Botswana, Zambia, Mozambique and Swaziland, the main driver in terms of regional penetration is the presence of SA industry, banks, gaming and telecommunications in these countries.
Green believes that Quatro Kinetics is the only company is this region with a clear focus on card acceptance, offering full support and maintenance, and with a complete range of suppliers which can meet the needs of any requirement that may arise. He sees a major benefit for South African companies in that all the companies they represent are at the forefront of card acceptance technology and standards. This allows for the rapid deployment of relevant leading edge technology, which when coupled with South Africa's leadership in the implementation of card-based applications ensures that any company or industry needing to perform transactions at the point of customer contact will remain on par or one step ahead of developments in the rest of the world.
For details contact Quatro Kinetics, (011) 466 4008.
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