Privately owned Irish software company, Trintech, is at the leading edge of new technology which will enable financial transactions to be carried out via the Internet. Ground-breaking software developed by the Bray-based firm - and successfully tested last week - has already received the endorsement of Visa and is expected to win the support of other major card companies.
The project's success has rapidly advanced the international profile of Trintech which is heading for revenues of £12 million this year. It is increasingly likely to seek a potentially lucrative listing on the US Nasdaq next year.
Trintech's expertise is in the development, marketing and production of computer software for the electronic finance industry. It has created an infrastructure to enable electronic credit card payments to be made securely via the Internet in accordance with the Secure Electronic Transaction (SET) standard.
In conjunction with Visa and several other leading technology suppliers, Trintech last week performed the world's first secure Internet purchase using its 1.0 version of the SET standard. The SET is widely accepted in the industry as the basis of all future credit and debit electronic commerce payment systems.
The online purchase took place at Visa's regional member meeting in Puerto Rico where the president of Visa Argentina bought a bottle of wine from an Argentinian chain over the Internet.
Visa is the first credit card company to take this application of the electronic commerce standard on board but the Trintech software will allow all card trans actions online. It should permit cardholders to shop on the Internet with the same confidence as they can in the physical world.
Trintech's clients include Visa, MasterCard, Bank of Ireland, Lufthansa, AIB and Oracle and it has also moved into far-flung markets with a view to targeting Fortune 500 companies.
It has achieved a 50 per cent increase in growth and profits each year for the past three years.
Based in Bray, the company was founded in 1986 by two brothers, John and Cyril McGuire, who now act as joint managing directors. Cyril (36) was working for an Irish merchant bank, when John (35) was doing a dissertation in electronic engineering at Trinity.
The younger McGuire went on to win the Hewlett Packard award for Innovation in Electronics for his work on reducing fraud through stolen card numbers. Ironically, Hewlett Packard recently purchased US company Verifone, Trintech's biggest competitor, for $1.29 billion.
After drawing up a business plan and approaching Forbairt, the State body charged with fostering the development of Irish industry, the McGuires managed to secure a £150,000 grant. Along with several trade board grants, and venture capital amounting to about £350,000, Trintech was established with a workforce of less than five.
Today the company employs more than 125 people, with operations in Germany (which account for 55 per cent of its business), Britain, the US and Singapore. Taking on 10 new people every year - mainly from Ireland - the company operates a share option plan for its workforce. "It is very important to us that all the workers are rewarded, this goes to the very core of the company," says Mr Cyril McGuire.
The company's operations are divided between banking and retail software systems units. On the banking end, the company's software enables secure online and offline card transactions. It also manages card-holder, merchant and terminal bases. The retail division focuses on the needs of retailers and sales organisations for credit, debit and smart card acceptance solutions.
Trintech's business model has had to adapt rapidly to change in the industry. Mr Cyril McGuire is acutely aware of the changing climate: "The pace of the Internet is surpassing everyone's expectations, and we see the whole electronic commerce end being a three to five-year play. We consider ourselves to be putting in the plumbing today for the electronic shopping of the future."
He says Internet commerce will comprise 50 per cent of Trintech's business within five years.
Trintech has formed strategic alliances with computer giants Netscape and Microsoft. It supplies them with software packages (PayWare and PayGate) supporting the sales and payment cycle from setting up shop, to displaying and advertising products or services, to sales order processing, and clearing and settlement of payment transactions.
As a result of the rapidly changing software environment, Trintech places major emphasis on research and development, with 50 people in the Irish operation employed in this area, and 15 per cent of revenues devoted solely to it. The company also avails of the 10 per cent manufacturing tax rate available in Ireland and this is further enhanced by patent arrangements which leave the final tax rate at 5 per cent.
According to Mr McGuire, Forbairt retains a 10 per cent interest in the firm. Mr Dan Flinter, chief executive of Forbairt, describes Trintech as a creative company "driven by an ethos of continuous innovation, allied to smart strategic positioning". He also recognises its potential to become an international player within the next three to five years.
Is Trintech going to take the plunge and join the software leaders as a publicly quoted company? The indications are that it will.
"We are exploring a number of capital market transactions. The US Nasdaq listing, in terms of valuation, visibility and credibility, would be the more attractive route. We are engaging professional advisers to explore these transactions, and given the right climate we would consider a flotation in 1998," says Mr McGuire.
He acknowledges the experience of similar Irish technology companies which, disillusioned with the valuation Irish investors placed on new technology, sold their operations to bigger multinationals. "In these cases it is important to look at the management's longterm goal. If they want to sell out, that soon becomes evident. In our case we are hungry for global success - be it an IPO [initial public offering of shares] or capital investment that has to get us there," he says.
