SCM MICROSYSTEMS TO PROVIDE FINREAD COMPLIANT SMART CARD READERS FOR SECURE ONLINE PAYMENT APPLICATIONS.

SCM Microsystems (Nasdaq: SCMM; Neuer Markt), a leading provider of solutions that open the Digital World, announced at the CeBit trade show in Hannover that it will develop and deliver a universal secure smart card reader for consumers in Europe, based on FINREAD specifications to be released in the first part of 2001. FINREAD is a consortium of European banks whose goal it is to create a secure online payment system based on smart cards that is affordable and easy to use, deploy and upgrade.

Through the European Committee for Standardisation (CEN), FINREAD is developing a series of specifications for intelligent smart card readers intended to support electronic commerce, home banking and digital signature applications. SCM's secure readers will be the first to provide support for multiple applications, including credit card, e-purse, loyalty and secure home banking. Readers are expected to be available for deployment in the second half of 2001 with first prototype in June. They will be offered to the market via various distribution channels throughout Europe.

Members of the FINREAD Consortium include Groupement des Cartes Bancaires "CB" (France), Visa EU (United Kingdom), Europay International (Belgium), Banksys (Belgium), Interpay Nederland (the Netherlands), SIZ (German Savings Banks Financial Group, Germany) and Ingenico (France).

SCM Microsystems has a long track record of developing smart card readers and terminals for security applications. SCM's forthcoming generation of FINREAD compliant readers will include strong cryptographic mechanisms that will authenticate smart card users, providing a high level of security to consumers, as well as non-repudiation protection for merchants. In addition, the readers will rely on an open Java-based application interface and a K-Java Virtual Machine to enable total interoperability of applications across different vendors, along with secure download of applets from a trusted server.

The adoption of FINREAD specifications is a key milestone for the smart card reader industry," said Robert Schneider, Chief Executive Officer at SCM Microsystems. "By defining an open standard, FINREAD will dramatically accelerate the deployment of smart card readers to support financial transactions of all sorts. Without interoperability between readers, cards and applications, this technology is simply too expensive. With these common standards and with compelling applications from cash downloads to movie viewing, SCM's potential for reader deployment is tremendous."

European banks will benefit from having standardized and secure smart card readers available for both financial and non-financial transactions. This will allow them to deploy new applications across Europe, quickly and affordably.

Other industries to which SCM is delivering security products also see the adoption of FINREAD standards as an important development as they work to create and deploy new services for customers. For example, forthcoming FINREAD specifications for embedded security will enable digital television broadcasters to offer viewers the ability to pay for premium content through a FINREAD compliant remote control, and allow cell phone users to purchase goods and services using a smart card. SCM will work with its OEM customers to the hardware and software components necessary to enable any device to be FINREAD compliant.

FINREAD specifications will be compliant with other banking standards, such as Secure Electronic Transaction (SET) and the Europay Mastercard Visa (EMV) for smart cards. It is expected that the FINREAD smart card reader initiative will lead to a global standard for secure banking over open networks.

SCM Microsystems is a leading supplier of solutions that open the Digital World by enabling people to conveniently access digital content and services. SCM's advanced silicon solutions, hardware and software enable secure exchange of electronic information for digital applications from e-commerce to broadband content delivery by providing controlled access points to platforms such as PCs, digital cameras and digital television set-top boxes. Known as a premier supplier to OEM companies around the world, SCM also serves the retail market through its Dazzle, Microtech and FAST product brands. Global headquarters are in Fremont, Calif., with European headquarters in Pfaffenhofen, Germany.