Engaging, Enabling and Evolving Commerce in Canada since 1989

July 2006 ACTion Newsletter

IN THIS ISSUE

1. Editorial Comment
2. CUETS & Everlink Announce Alliance To Provide Chip Solutions To Credit Unions and Caisses Populaires
3. Smart Card Group Tackling Contactless EMV
4. Canadian First: First Nations To Receive Social Assistance Benefits On Prepaid Cards
5. New York Subway Smart Card Pilot Begins
6. France Takes Lead In Issuance Of More Secure Payment Cards
7. Giesecke & Devrient And Nokia To Provide Secure Application Management Services For NFC Enabled Mobile Devices
8. MasterCard Releases PayPass Figures
9. Gemalto Selected For E-Passport Roll Out In Slovenia
10. SCM Microsystems' Contactless Readers Among Top Performers At E-Passport Interoperability Test
11. QI Systems Launches QIWave Vending Support For HID's IClass
12. Gemalto To Implement Smart Card-Based Healthcare System In Algeria
13. MasterCard, Coca-Cola Bottling & USA Technologies Introduce Contactless Payment In Vending Machines
14. Datacard Takes Smart Card Production & Personalization To 5,000 Cards Per Hour
15. Giesecke & Devrient Supplies EMV Cards To Italy's Fineco
16. Additional Stories Available In Members Only Section

ACT CANADA THANKS OUR NEW & RENEWING MEMBERS

PRINCIPAL

ATB Financial ~ new member
HSBC ~ new member

GENERAL

Infineon ~ member since 1998
Metaca ~ member since 2005

ASSOCIATE

Lifecycle Integrity ~ member since 2005

COLLIS EMV ACADEMY TRAINING IN TORONTO

Collis EMV Academy announces open training courses in Toronto, Canada on September 21 & 22, 2006.

Collis EMV Introductory Workshop, Toronto, 21 September 2006
The Collis EMV Introductory Workshop is an easy-entry course for everyone looking for instant EMV knowledge. Attend, and find out all about the rationale behind EMV, its business drivers, benefits, costs, opportunities and risks. The Collis EMV Introductory Workshop is a non-technical workshop, aimed at a broad audience from both business and IT background.

Collis EMV Expert Course, Toronto, 22 September 2006
This course is for those who want to know all the details that make EMV work. The Collis EMV Expert Course will cover topics from transaction flow to issuer scripting and from EMV data elements to risk management, PIN handling and security. Practical exercises provide unique hands-on EMV experience. Become an EMV Expert with the Collis EMV Expert Course!

As Collis recently joined ACT Canada, we offer an introductory 20% discount on the training fees for ACT Canada members!

For the training program, location and pricing details, as well as for information about customised in-company training, please contact Mr. Maarten Bron, BU Manager, Collis EMV Competence Center: info@collis.nl.

1. EDITORIAL COMMENT
Source: Catherine Johnston, President & CEO, ACT Canada (07/26)

Communication is the key.

As I sit down monthly to write the editorial, one topic rises to the top of the list to become the subject. This month there are far too many for any one to take precedence, so here are some observations on the Canadian market.

On a positive note, the transit and transportation sector is engaged in a very timely study with support from Transport Canada. ACT Canada, along with Integrated Mobility Systems and Moving the Economy have prepared a report on the Development of Innovative Smart Card Solutions for Canada. As a part of that study we have examined the gap between financial and transit applications and identified steps to be taken to facilitate co-operation between these two sectors.

We were pleased to discover that both groups had common goals and concerns, and although there had been many individual conversations, the two sectors had not found a way to broadly communicate. This is a case where external associations such as ACT Canada and IMS-MTE perform an effective service in facilitating stakeholder communications.

ACT Canada is encouraged to see the market start to respond to the opportunities that are possible now that EMV has been chosen as a credit and debit payment standard in Canada. As the national infrastructure continues to be deployed, other stakeholders will assess their opportunities and the need for stakeholder interaction will grow. We will continue to expand and facilitate that communication for the benefit of our members.

In the financial sector, EMV plans continue to move forward. Currently one of the greatest challenges is in human resources, where the competition to hire qualified staff has been fierce and expensive. ACT is now soliciting content for the financial sector curriculum to help FIs, acquirers and merchants stay ahead of the training curve.

In the public sector, the Canadian government is under pressure to decide how we want to handle cross-border (US) identification. Balancing our desire for privacy and security with that of the United States government requires much more dialogue with stakeholders and the industry. Of particular concern is some of the messaging and terminology being used around proposed technology. ACT Canada is willing to help the Canadian government work through these issues, but deadlines are rapidly approaching and we may find ourselves in the position of having to accept decisions made by other governments.

Stakeholder communication has never been timelier to ensure the success of initiatives in both the public and private sectors.

2. CUETS & EVERLINK ANNOUNCE ALLIANCE TO PROVIDE CHIP SOLUTIONS TO CREDIT UNIONS AND CAISSES POPULAIRES
Source: CUETS (07/06)

CUETS and Everlink are pleased to announce an alliance to develop competitive chip card solutions for the Canadian credit union and caisse populaire system.

"CUETS has partnered with credit unions and caisses populaires to bring advanced payment programs to the marketplace," said Stan Kuss, CUETS' CEO, noting the MasterCard service provider first announced its intention to implement and support chip technology in October of 2005.

"Aligning with Everlink - the provider of electronic transaction switching services for the national credit union system - to develop chip solutions just made sense," said Kuss. "CUETS and Everlink understand the unique needs of the co-operative system and their members. By building on the core strengths of both our organizations, we will offer an innovative program that will enable credit unions and caisses populaires to quickly move to market with chip-enabled products and services."

CUETS and Everlink's chip solutions provide a comprehensive and effective approach to member-focused processes, such as PIN management, cardholder support and communications. The alliance is an opportunity for Canada's leading suppliers to the co-operative system to leverage their expertise and deliver solutions to mitigate operating and fraud costs, simplify network requirements and reduce the need for banking system upgrades.

CUETS is a member of ACT Canada; please visit http://www.cuets.ca.

3. SMART CARD GROUP TACKLING CONTACTLESS EMV
Source: CardTechnology (07/13)

The effort to make contactless payments work better with EMV, the global payment standard for smart cards, could get a boost. Representatives from EMVCo., the organization that maintains the standard, are meeting in Japan to better define the business requirements for a global standard covering contactless payments made with EMV-compliant cards. "We're hoping to have a fully stable position by the end of this year," Simon Pugh, senior vice president of MasterCard Worldwide's advanced payment solutions unit and a member of EMVCo.'s board of managers, tells Card Technology.

MasterCard, Visa International, and Japan's JCB Co. are joint owners of EMVCo. While many countries are abandoning magnetic-stripe cards in favor of EMV-compliant smart cards in order to reduce the levels of card fraud, the U.S. has so far not taken that step. Having a unified contactless standard for the whole world could make card issuing and payment processing simpler.

Even without a common standard, many card issuers have already produced EMV-compliant cards capable of contactless transactions. For instance, at least 500,000 of the 6 million Visa-branded contactless cards issued worldwide to date are based on the EMV standard, Stephanie Ericksen, Visa's VP of product and technology innovation, tells Card Technology.

MasterCard Canada and Visa Canada Association are members of ACT Canada; please visit http://www.mastercard.ca & http://www.visa.ca.

4. CANADIAN FIRST: FIRST NATIONS TO RECEIVE SOCIAL ASSISTANCE BENEFITS ON PREPAID CARDS
Source: Market Wire (07/18)

Mint Capital Corp and FP Financial Ltd. announced that they have partnered to provide the first prepaid financial services product in Canada used to remit recurring social assistance benefits to Canada's First Nations communities. As a replacement for traditional paper cheques, the FirstPeoples Prepaid Benefits Card program will allow administrators and benefit recipients to take advantage of direct financial savings, convenience and the added safety and security that a traditional credit card offers.

Under the FirstPeoples Prepaid Benefits Card program, social assistance benefits can be remitted monthly onto personalized prepaid cards and recipients will then be able to have immediate access to funds, withdrawing funds from ATMs and making purchases everywhere traditional credit cards are accepted. The First Nations prepaid card addresses the real needs of benefit recipients. On average, recipients spend countless hours in line each month waiting to receive their cheques and many must then travel outside of their communities to cheque cashing facilities. The majority of benefit recipients in Canada's native communities do not have traditional banking relationships and rely solely on cheque cashing facilities losing, on average, 3% of their monthly benefits income plus a $2.50 to $3.00 fee per cheque for this service. Reviewing a case study of an average family with several children receiving monthly benefits of $724.48 and using this service, cashing a cheque costs approximately $24.23 each month, or $290.76 a year. In addition to financial savings and convenience, the FirstPeoples Prepaid Benefits Card is far safer than carrying cash, and cardholders benefit from a zero liability policy if their card is lost or stolen.

Mint is a member of ACT Canada; please visit http://www.mintinc.ca.

5. NEW YORK SUBWAY 'SMART CARD' PILOT BEGINS
Source: ICMA Daily News (07/11)

The rat race could get a little faster as commuters launch a pilot test of "smart cards" meant to grant instant entry to city subways. Throughout the six-month experiment, commuters at some stations will be able to pay for their ride by simply tapping specially designed credit cards, debit cards and key-chain tags against new turnstile readers.

Under the current system, riders must sometimes wait in line to buy magnetized fare cards called MetroCards, which are then swiped at the turnstiles.

The new readers have been installed at all Manhattan stations on the 4, 5 and 6 lines and at four stations in the Bronx, Brooklyn and Queens, said Cathleen Conforti, a SVP for MasterCard Worldwide Inc., which is paying for the trial along with Citigroup Inc.

Any Citibank customer can apply to participate in the experiment, which requires a Citibank MasterCard that is enabled with PayPass technology. The companies are offering three free rides to all participants.

Riders using the new system cannot buy weekly and monthly passes. They do receive a standard 20 percent bonus for advance purchases over $20.

Citi Cards Canada and MasterCard Canada are members of ACT Canada; please visit http://www.citibank.ca & http://www.mastercard.ca.

6. FRANCE TAKES LEAD IN ISSUANCE OF MORE SECURE PAYMENT CARDS
Source: ICMA Daily News (07/05)

The French have taken the global initiative when it comes to rolling out the more secure EMV DDA payment card technology, having given the go-ahead for 10 million of the new cards to be issued by the end of this year.

French card organization Groupement des Cartes Bancaires has told CardLine Europe that 700,000 of the more security-focused cards have already been issued. The group says that it has forecast 10 million will be in circulation by the end of 2006, rising to 25 million by the middle of 2007.

The French commitment to roll out the DDA cards comes in the wake of a spate of high profile cases which have highlighted that the less secure option, predominantly used in the first wave roll-out of chip and PIN cards, was prone to certain types of fraud, including cloning.

In the UK, oil major Shell recently removed its chip and PIN payment terminals from operations after suffering a GBP1 million cloning fraud. Meanwhile, other high profile identity fraud cases were seen in New Zealand and Canada.

The Achilles heel of the first generation chip and PIN cards is seemingly that they largely lack the most comprehensive level of fraud protection, which has left them prone to cloning. However it should be noted that even entry level Chip and PIN remains far more secure than the previous magnetic stripe system, according to data from UK payments body APACS.

France appears to have taken the lead, certainly in Europe at least, due to its heavy investment in point of sale (POS) terminals. However, it is likely to have set an example that will be closely followed.

7. GIESECKE & DEVRIENT AND NOKIA TO PROVIDE SECURE APPLICATION MANAGEMENT SERVICES FOR NFC ENABLED MOBILE DEVICES
Source: ICMA Daily News (06/27)

Giesecke & Devrient (G&D) and Nokia announced an agreement with intent to form a joint venture. Giesecke & Devrient will own 57 and Nokia 43 percent of the new company. The joint venture will provide services to the NFC ecosystem by enabling consumer applications, such as credit cards or transport tickets, to be securely and easily downloaded over-the-air to NFC enabled mobile devices. Over-the-air management of the consumer applications is a critical part for the emerging NFC ecosystem, and the joint venture will work closely together with other stakeholders when bringing these services to the market. The joint venture is expected to commence operations in the fourth quarter 2006.

The joint venture will implement and operate a secure and versatile service platform to manage the over-the-air transactions with consumers' NFC enabled devices. The service platform will be operated in a white-label mode with in-built interfaces to the IT systems of the actual service providers, such as banks issuing credit cards. The over-the-air services will be offered to all parties in the NFC ecosystem, where mobile operators and other service providers are exploring the opportunities to cooperate in launching new services to consumers. The new company's services will be available and open to any NFC enabled devices from all vendors.

Giesecke & Devrient is a member of ACT Canada; please visit http://www.gi-de.com.

8. MASTERCARD RELEASES PAYPASS FIGURES
Source: CardTechnology (07/18)

MasterCard Worldwide released new statistics on its PayPass contactless product. The average PayPass transaction is worth US$20 and the PayPass consumer uses cards with the application onboard 18% more frequently than MasterCard cardholders use their standard debit or credit card. About 75% of all PayPass transactions are for purchases below $25, and about 45% are for less than $10. There was a 36% increase in use per PayPass account from 2005 to 2006, and a 45% increase in total transactions per account, according to one issuer, although MasterCard would not disclose the name of the issuer or the specific quarter in 2006 in which it saw the increase. There were also big increases in the number of merchants accepting PayPass, says MasterCard. There are 10 million PayPass cards or key fobs in consumers' wallet's or purses, according to the card organization. Most of them are in circulation in the United States, although credit card companies or banks in Asia have launched some PayPass projects and two small pilots have launched in Europe.

MasterCard Canada is a member of ACT Canada; please visit http://www.mastercard.ca.

9. GEMALTO SELECTED FOR E-PASSPORT ROLL OUT IN SLOVENIA
Source: SecureID News (07/10)

Gemalto will provide the technology to be used in electronic passports for Slovenian citizens. Gemalto will supply the secure polycarbonate devices embedding its advanced secure electronic passport software technology to Cetis, Slovenia's leader in security document printing. One million passports are currently in use in Slovenia and the government intends to roll out the first electronic passports at the end of August.

The contract involves 600,000 devices to be supplied by 2016. Gemalto has already delivered a first batch of 50,000 products to Cetis, which will deploy the corresponding number of e-passports by year's end.

Gemalto is a member of ACT Canada; please visit http://www.gemalto.com.

10. CONTACTLESS READERS FROM SCM MICROSYSTEMS AMONG TOP PERFORMERS AT E-PASSPORT INTEROPERABILITY TEST IN BERLIN
Source: SCM Microsystems (07/10)

SCM Microsystems, Inc. announced that its radio frequency readers were among the most successful reader entries in the June international e-Passport testing in Berlin, where electronic passport samples were tested against readers from multiple manufacturers for interoperability.

SCM Microsystems' reader successfully read 89 of 90 electronic passports - a success rate of almost 99 percent. The company was one of the top performers out of 47 reader vendors at the event, improving on its excellent results at the previous interoperability test in Singapore held last November. Among the ten most successful manufacturers of e-Passport readers at the June test were also several whose readers included SCM radio frequency technology.

The interoperability test took place from May 29th to June 1st in Berlin, Germany, with more than 450 participants from 38 nations representing both industry and government. The test was organized by the German Institute for Standardization (DIN) and was held under the auspices of the European Commission, as well as the German and French Federal Ministries of the Interior.

SCM Microsystems is a member of ACT Canada; please visit http://www.scmmicro.com.

11. QI SYSTEMS LAUNCHES QIWAVE VENDING SUPPORT FOR HID'S ICLASS; QI TO PROVIDE PAYMENT SOLUTIONS TO ACCESSID'S CLIENTS
Source: ICMA Daily News (07/11)

QI Systems Inc announced the launch of their new QiWAVE cashless vending system. The new product line, which incorporates HID Global(TM) Corporation's iCLASS(R) contactless smart card technology, is designed for use in university and corporate campus vending, laundry, parking and photocopying applications.

QiWAVE's contactless iCLASS solution increases transaction speed and convenience for the user, reduces or eliminates cash handling, reduces machine maintenance and extends card life by eliminating mechanical contact between the card and the reader.

QI Systems is a member of ACT Canada; please visit http://www.qisystems.ca.

12. GEMALTO TO IMPLEMENT SMART CARD-BASED HEALTHCARE SYSTEM IN ALGERIA
Source: ICMA Daily News (07/05)

Gemalto announced it has been selected by the Algerian national health insurance authority (Caisse Nationale de la Securite Sociale des Travailleurs Salaries) CNAS to be its sole provider for the deployment of the first healthcare microprocessor cards in Algeria.

Gemalto will provide CNAS with a microprocessor card-based turnkey solution to authenticate both healthcare beneficiaries and healthcare providers, at the same time ensuring full prescription traceability. According to the company, Gemalto's solution involves smart cards for citizens, smart cards for healthcare professionals, the related customisation system and an integrated issuance and management system. In addition, Gemalto will assist the CNAS in starting off the production process, and provide training for the CNAS personnel.

Main roll out is to take place in 2007, including a total of 7m smart cards. No financial details of the contract were disclosed.

Gemalto is a member of ACT Canada; please visit http://www.gemalto.com.

13. MASTERCARD, PHILADELPHIA COCA-COLA BOTTLING COMPANY & USA TECHNOLOGIES INTRODUCE CONTACTLESS PAYMENT IN VENDING MACHINES
Source: ICMA Daily News (06/27)

MasterCard International has teamed with The Philadelphia Coca-Cola Bottling Company and USA Technologies to announce that 1,000 Coca-Cola vending machines enabled with the e-Port cashless transaction solution will begin accepting MasterCard PayPass. The deployment is considered to be the largest rollout of contactless technology in vending machines in a U.S. market to date.

The landmark rollout in Philadelphia follows the successful trials of USA Technologies' e-Port by MasterCard and USA Technologies in vending machines in New York City and Atlanta. USA Technologies' Generation Six (G6) e-Port radio frequency technology was developed specifically to accept MasterCard PayPass and other forms of contactless payments.

MasterCard Canada is a member of ACT Canada; please visit http://www.mastercard.ca.

14. DATACARD GROUP TAKES SMART CARD PRODUCTION AND PERSONALIZATION TO 5,000 CARDS PER HOUR
Source: ICMA Daily News (06/27)

Datacard Group introduced a new release of its Datacard(R) MPR5000 card production and personalization system that is capable of issuing 5,000 smart cards per hour, a 28% increase in speed. This enhanced speed is a result of newly designed card personalization features including modules for high volume smart card encoding, dual laser engraving and card input and output.

"The MPR5000 system is the only fully inline system capable of offering such a competitive advantage, with reduced cost per card and the promise of an improved return on investment," said Neil Crocker, VP of marketing and product management for Datacard Group.

Datacard Group is a member of ACT Canada; please visit http://www.datacard.com.

15. GIESECKE & DEVRIENT SUPPLIES EMV CARDS TO ITALY'S FINECO
Source: Finextra (07/11)

Giesecke & Devrient (G&D) has won a deal to supply EMV smart cards and software to Italian online bank Fineco. Following a pilot phase, the bank is now replacing all its existing magnetic strip-based debit and credit cards with the new chip-based EMV cards. Fineco's 300,000 credit and debit card clients will see their magnetic stripe cards swapped over to EMV during the next several months.

Under terms of the agreement G&D will provide Fineco with initialisation, card design, production and fulfilment. G&D's Italian partner Metalplex will perform personalisation services while FirstData will generate data and manage keys.

Giesecke & Devrient is a member of ACT Canada; please visit http://www.gi-de.com.

16. ADDITIONAL STORIES AVAILABLE IN ACT CANADA MEMBERS ONLY SECTION

These additional stories are available to ACT Canada members via the Members Only section of our web site. Click on the link below to access this section.
If you are a member of ACT Canada but do not have your login details please contact me - andrea@actcda.com.
http://www.actcda.com/members-only/members-only-news/

CARDS SHOWN FACE UP

The (Australian) Federal Government unveiled a sample design of its proposed "smart card" in a bid to dispel fears about privacy. Minister for Human Services Joe Hockey released the design (right) at the Smart Card Summit in Sydney…

NIST REVAMPS CRYPTO REQUIREMENTS FOR PIV CARDS

The National Institute of Standards and Technology has revised guidelines for the cryptographic elements on new smart government ID cards, which agencies are scheduled to begin issuing in October…

For more information, please contact Andrea McMullen at 1 905 426-6360 ext 124 or email andrea@actcda.com.

Please forward any comments, suggestions, questions or articles to andrea@actcda.com. Please note that articles contained in this newsletter have been edited for length, and are for information purposes only.