Stakeholders Driving Payment Evolution and Digital Identity

March 2006 ACTion Newsletter

IN THIS ISSUE

1. Editorial Comment
2. Cdn Payment Industry Comes Together To Ensure Smooth Migration To Chip
3. GO Charging Ahead Toward Smart Card- Outlines Strategies For Growth
4. Toronto Explores Registered Traveler Card
5. Chip & Pin Cuts UK's Card Fraud By 13 Per Cent
6. Portuguese & Czech Republic Epassport Deals Won By Axalto
7. Visa To Launch Contactless Cards In Europe
8. Oberthur: Prime Contractor For US Department Of Interior
9. Mint & Now Prepay Go Live With The 1st Nationwide Retail Network Designed For Reloading Prepaid Credit Cards In Canada
10. ACI Enables Multiple Application EMV Deployment In Greece
11. Visa Introduces Contactless Mini Card
12. Gemplus Delivers Indonesia's 1st Advanced Security EMV Credit Cards
13. ICC Solutions Announces The Availability Of Latest EMV Level 2 Test Scripts
14. QI Systems & Parcxmart Announce The One Card Payment Solution For Parking Payments And Small-Dollar Transactions
15. Additional Stories Available In Members Only Section

ACT CANADA THANKS OUR NEW & RENEWING MEMBERS

GOVERNMENT

Passport Canada ~ member since 2002

ASSOCIATE

Bohdan Myroniw ~ new member

UPCOMING EVENTS

Smart Card Alliance presents - 5th Annual Smart Cards in Government Conference 2006
April 18-20
Arlington, VA, USA
http://www.smartcardalliance.org

CardTech/SecurTech 2006
May 2-4
San Francisco, CA, USA
http://www.ctst.com

ACT Canada presents Cardware 2006
June 13 - Toronto, ON, Canada (financial focus)
June 15 - Ottawa, ON, Canada (government focus)
http://www.actcda.com

1. EDITORIAL COMMENT
Source: Catherine Johnston, President & CEO, ACT Canada (03/29)

Working Together To Raise the Bar

When normally competitive organizations work together for the benefit of Canadians, it should be noted and applauded. When one stakeholder reaches out to others for the same reason that too should be commended.

Kudos to Interac Association, MasterCard Canada Inc. and Visa Canada Association, for their commitment to work together in order to ensure a smooth transition to EMV in Canada. (story follows). In talking with stakeholders in England over the past two years, I've been told by many that a similar centralized approach has been of benefit to merchants, issuers, acquirers and consumer groups.

It takes both wisdom and courage for associations to undertake such a collaborative effort, and in making this announcement, these three clearly show that they are the leaders in a movement that will provide increased security within the payments landscape and greater convenience at point-of-sale for merchants and cardholders.

Visa Canada, who announced their intentions to move to chip in 2003, is also engaging stakeholders in a broader discussion on security. Last week they hosted a symposium where a number of security challenges were presented and solutions discussed in breakout sessions.

As Canadians, we enjoy one of the finest payment systems in the world. The Canadian Payments Association has worked hard to ensure the reliability of clearing for cheques and electronic payments. It is commendable that Interac, MasterCard and Visa are leading the way in Canada to enhance credit and debit platforms. We depend on all these payment systems and these associations have raised the bar on our behalf.
CARDWARE 06 GOES ON THE ROAD
Senior executives in both the public and private sectors are seeking answers to questions about advanced card infrastructure investments and identity management, so we are taking the annual Cardware on the road.

On June 13th, the Canadian financial sector and stakeholders will meet in Toronto to investigate practical ways to maximize EMV investments. The meeting explores means to leverage infrastructure investments and plans, as well as identifying value-add EMV business opportunities. Contact and contactless technologies will be featured.

June 15th, the government, both federal and provincials, will meet in Ottawa to look at emerging trends in identity management. Establishing, authenticating and protecting each person's identity is an important foundation to our ability to work, travel, bank and conduct our day-to-day business. Increasingly we are beginning to understand that we must not only control access to our offices, but also to our data, protecting it not only from outside attacks and also from internal misuse. The Cardware 06 Identity conference examines options open to government groups that issue ID to citizens as well as to employees and contractors. Balancing privacy and security will be among the topics on the program.

2. PAYMENT INDUSTRY COMES TOGETHER TO ENSURE SMOOTH MIGRATION TO CHIP TECHNOLOGY IN CANADA
Source: Canada Newswire (03/13)

Members of the payment card industry - Interac Association, MasterCard Canada, Visa Canada Association, and many of their respective card issuers and acquirers - announced a firm commitment to a broad industry migration to chip technology. The migration to chip card technology represents a significant change in the Canadian payments landscape, and this large-scale coordination of key players is an important step in ensuring a smooth transition for all participants in the electronic payments system.

While each organization provides their own proprietary security offerings, the payment card industry has come together to ensure a common set of international standards around this new technology. These global standards, known as EMV(TM), allow for the harmonizing of policies, procedures and technical standards, ensuring interoperability among all payment schemes and thereby simplifying the implementation requirements for payment system participants, including merchants. The adoption of these international standards also ensures that participants in the Canadian payments system will utilize established technology, which has been tested and proven in other countries that have already migrated to chip.

This multilateral announcement follows individual announcements by Interac, MasterCard and Visa regarding their respective intentions to move to chip card technology, with each organization setting out individual timelines for migration. Beginning in 2007, many merchants and cardholders will start to see the introduction of cards that feature chip technology, and within three years of this date, it is expected that the majority of cardholders and merchants will be able to fully benefit from this new technology.

Interac, MasterCard and Visa Canada are members of ACT Canada; please visit http://www.interac.org; http://www.mastercard.ca; and http://www.visa.ca.

3. GO CHARGING AHEAD TOWARD `SMART CARD'- OUTLINES STRATEGIES FOR GROWTH
Source: Toronto Star (03/22)

GO Transit wants to give "reward miles" to commuters, build a dedicated bus lane on the Don Valley Parkway and run local transit services to feed its suburban stations, says its top official.

"We're pushing forward with small successes," general manager Gary McNeil told a transportation summit run by the Strategy Institute think tank at the Delta Chelsea. "It's one little battle after another, but eventually we are going to win."

Currently, GO is part of a provincial pilot project to bring "smart card" fare payment to transit users across the GTA, the first step to a reward-based fare system. The pilot project will be underway in 2007 for commuters on Mississauga's Milton line. They'll swipe a card through a reader to pay their fare.

When the project rolls out in full, GO will abandon its monthly passes and 10-ride passes in favour of a program where the more you take GO, the less you'll pay each time, McNeil said.

The fare card will act as a transit bank account; when you use the system, money will be deducted.

"Your ticket price will gradually decrease as you use the system. You won't have to worry whether you should buy a monthly pass this month if you're going on vacation, or whether you should buy a 10-ride ticket".

4. TORONTO EXPLORES REGISTERED TRAVELER CARD
Source: CardTechnology (03/13)

Add Toronto Pearson International Airport to the list of airports that want to use Verified Identity Pass Inc.'s "registered traveler" program. VIP, a New York-based company, announced that its Canadian division, Verified Identity Pass Canada Inc., is working with the Greater Toronto Airports Authority, which manages Pearson, to bring its Clear smart card program to the Canadian airport. VIP estimates 50,000 people might sign up in the first 18 months of the program. The Canadian Air Transport Security Authority will review the proposal, with a decision expected in a few months, a VIP spokesperson says. Travelers who choose to get a Clear card would need to complete an online application, provide biometric data, including fingerprints and iris images, and pass a review by unspecified government agencies. On approval, a Clear card, containing the traveler's biometric data stored on a chip, would be issued. That card would then be presented at a special Clear lane in the airport to expedite the cardholder's access to security screening. A spokesperson for the Toronto airport would only say the Clear card is at the conceptual stage now, and had no further details. Currently, VIP says the program would only be available to Canadian citizens. VIP does not know yet if U.S. Clear cardholders would be able to use their cards at Pearson. VIP has one operational Clear program now, at Orlando International Airport in Florida. There, about 17,000 participants pay $79.95 a year to carry the card. Two other U.S. airports, Norman Y. Mineta San Jose International Airport and Indianapolis International Airport, are working with VIP on Clear card programs, which are expected to start this year.

5. CHIP & PIN CUTS UK'S CARD FRAUD BY 13 PER CENT
Source: The Evening Standard (03/07)

In 2005, the UK's total card fraud losses fell by 13 per cent to Stg 439.4 million, from Stg 504.8 million in 2004, a figure that APACS attributes to the country's migration to chip and PIN. In 2003, the UK's card fraud dropped by a small Stg 4 million, but last year's fall of Stg 65 million was the biggest since 1995. Fraud from counterfeit cards fell by 24 per cent to Stg 96.8 million, while fraud on bank or card account takeover dropped by 17 per cent to Stg 30.5 million, ATM fraud fell 12 per cent to Stg 65.8 million and card ID theft comprised just 7 per cent of the entire total.

By contrast, fraudulent card transactions for Internet, mail and phone order rose by 21 per cent to Stg 183.2 million, but the UK's banking industry is working to address this issue. Losses to online banking fraud almost doubled to Stg 23.2 million in 2005, which underscores the need for the bank industry to renew its efforts in educating customers on the possible pitfalls of banking online. In 2002, APACS predicted that if chip and PIN was not rolled out, the UK's fraud total would have exceeded Stg 800 million by 2005 instead of falling to its new total of Stg 439.4 million.

6. PORTUGUESE EPASSPORT DEAL & CZECH REPUBLIC DEAL WON BY AXALTO
Source: Security Document World (03/16)

Axalto has been selected by Imprensa Nacional-Casa da Moeda (INCM), the Portuguese national printing agency, to provide electronic covers as part of the country's e-passport roll out. Under the agreement, INCM will use the supplier's Axseal technology to manufacture and personalize the passport booklets.

By the autumn of 2006 all newly-issued Portuguese passports should include a contactless smart card chip and INCM expects to produce 150,000 e-passports in 2006. INCM currently produces 400,000 passports each year.

Axseal's e-cover involves the radio frequency interface being put into passport coversheets. This, the company claims, allows for industrial volume rollout on existing equipment while significantly increasing the durability of the electronic passport solution.

The Axseal solution also includes secure operating software with cryptographic capabilities running on a large capacity contactless chip.

In other news, Axalto won a five-year contract for digital security technology to be used in electronic passports for citizens of the Czech Republic. The company did not disclose the contract amount. [Source: ICMA Daily News (03/27)]

The Czech government plans to deliver the first e-passports to its citizens by early April, then increase production to 200,000 e-passports by the end of the year. The Czech Republic produces 500,000 to 600,000 passports a year. The Axalto contract includes 3 million pieces by 2010.

Axalto is a member of ACT Canada; please visit http://www.axalto.com.

7. VISA TO LAUNCH CONTACTLESS CARDS IN EUROPE THIS YEAR
Source: CardTechnology (03/21)

Several major European banks will soon launch Visa-branded contactless payment pilots, in which consumers can make purchases by tapping their cards against a reader, Kevin Smith, Visa Europe's VP of consumer market development, tells Card Technology sister publication CardLine Europe. "It's fair to say that we will see pilots of these applications later this calendar year," he says, after which some banks will roll the programs out to all cardholders in 2007. According to Smith, major banks and retail chains in the UK are together exploring the possibility of contactless payments. The retailers, in particular, are showing interest because they believe contactless payment will increase customer spending, Smith says, noting that a recent study by Visa USA confirms that supposition. "It does indicate that, for existing card acceptors, contactless actually does provide incremental card activity," he says. In addition, Smith says, many European banks view the addition of a contactless payment function to their existing cards as a means of differentiating their cards in the market and bolstering their brands. "There's a mixture here of marketing to existing and new customers, but also as a true way of actually driving additional volume and activity on these cards," he says.

Visa Canada is a member of ACT Canada; please visit http://www.visa.ca.

8. OBERTHUR: PRIME CONTRACTOR FOR US DEPARTMENT OF INTERIOR
Source: BUSINESS WIRE (03/14)

Oberthur Card Systems has won a contract to issue the TotalIDOne smart card solution to all personnel within the Department of the Interior as well as any Agencies that contract through the National Business Center for their HSPD-12 needs. Under the multi-year program, Oberthur Card Systems will manufacture and issue all DOI identification cards as part of the Department's HSPD-12 mandate.

Oberthur Card Systems is the only US Company offering an identification ID solution which includes smart card manufacturing, personalization, fulfillment and activation services, as well as the exclusive rights to the card software applets. Additionally, all Oberthur Card Systems smart card products provided to the government market are FIPS 140-2 certified and FIPS 201 compliant, a requirement for any ID card product sold to the US Federal Government.

Oberthur is a member of ACT Canada; please visit http://www.oberthurcs.com.

9. MINT & NOW PREPAY GO LIVE WITH 1ST NATIONWIDE RETAIL NETWORK DESIGNED FOR RELOADING PREPAID CREDIT CARDS IN CANADA
Source: Mint Inc (03/28)

Now Prepay, a subsidiary of VendTek Systems Inc. and Mint Inc announced that the first retail-based cash acceptance network designed for reloading prepaid financial products has launched under a partnership previously announced in a news release dated November 9, 2005.

Initially 1,000 of Now Prepay's 8,500 retail partner locations across Canada will provide a secure point-of-sale system for activating and reloading prepaid credit card products from Mint's portfolio of cards over Now Prepay's existing national prepaid network. Retailers prominently display the Mint logo so that valued customers will be able to know where to purchase prepaid credit cards and existing cardholders can reload their cards with funds. As an added convenience, Now Prepay has also included a "location look up" feature on its web site so that customers can locate a merchant near them.

"There are an estimated 3,000,000 or more Canadians who are the target consumers for these cards, let alone traditional credit card users who also benefit from using a prepaid credit card. This network will enable wide distribution and the reloading of prepaid credit cards to these markets and to provide the first widespread distribution channel to get these products into people's hands and to provide them with convenient outlets to reload more money onto their cards." said Doug Buchanan, President, Now Prepay.

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

10. ACI ENABLES MULTIPLE APPLICATION EMV DEPLOYMENT IN GREECE
Source: ACI (03/28)

ACI Worldwide announced it has enabled the deployment of one million EMV debit cards for Emporiki Bank, Greece. This deployment, driven by ACI Smart Chip Manager, will enable Emporiki Bank's cardholders to use their EMV card for secure POS purchases, ATM transactions and international payments.

Emporiki Bank issues its multi-application EMV cards using ACI Smart Chip Manager for Card and Application Management to manage and automate the process of smart card issuance. The software offers life-cycle management of all smart cards and applications while performing the data preparation process for these EMV cards. Emporiki Bank also personalises these cards in-house using ACI Smart Chip Manager for Card Personalisation Management on a Datacard 9000. This offers the required flexibility in smart card personalisation to cope with multiple card platforms and applications. The next step in the EMV migration will be to dynamically manage their off-line risk, where the solution's script engine will play a dominant role as well.

Emporiki Bank was the first Greek bank to issue EMV on a sizeable scale, ensuring safe and secure transactions across their payment processing network. Emporiki Bank now has the ability to handle international payments quickly and efficiently. The bank will also benefit from the liability shift and the market positioning of the Visa and MasterCard brands. ACI Worldwide is a member of ACT Canada; please visit http://www.aciworldwide.com.

11. VISA INTRODUCES CONTACTLESS MINI CARD
Source: Contactless News (03/22)

USA: Visa announced the availability of the Visa Contactless Mini Card, delivering all of the speed of contactless payments in a card that is about half the size of a traditional payment card and easy to carry on a key ring. The new Contactless Mini Card is the industry's first alternative contactless form factor that is ready for large-scale commercial deployment. Like the standard-sized Visa Contactless card, the Contactless Mini Card has an embedded contactless chip and antenna that deliver the contactless functionality, as well as a magnetic stripe to ensure that consumers can use the card wherever Visa is accepted.

Issuer, merchant, and cardholder interest in contactless payments continues to surge. Visa research shows that the mini card is the second most preferred form factor after the standard-sized card, with the majority of consumers stating that they would be interested in adding contactless functionality to a mini card. Now Visa issuers can offer both standard-sized and mini contactless cards to their cardholders in full, large-scale deployment.

Visa Canada is a member of ACT Canada; please visit http://www.visa.ca.

12. GEMPLUS DELIVERS INDONESIA'S FIRST ADVANCED SECURITY EMV CREDIT CARDS TO BANK BUANA
Source: Gemplus (03/08)

Gemplus announced it has delivered Indonesia's first advanced security EMV Dynamic Data Authentication (DDA) cards to Bank Buana, one of Indonesia's leading commercial banks. The implementation of the DDA EMV cards is in line with Bank Indonesia's recommendation to banks to migrate to chip based EMV cards in 2006. Bank Buana plans to migrate its entire credit card base to the DDA EMV cards from this year.

Dynamic Data Authentication credit cards provide the most advanced security available for securing payment transactions today. They offer a sophisticated authentication scheme whereby unique transaction signatures are generated by the cryptographic processor on the card for each individual transaction. As each signature is computed based on random data provided by the point-of-sale terminal, this makes them difficult to duplicate, thus offering a significantly higher level of security than the more commonly used Static Data Authentication (SDA) cards which use a single static card signature for every transaction made with the card. DDA cards also offer off-line transaction processing capabilities, which will help Bank Buana reduce its network communications costs.

Gemplus is a member of ACT Canada; please visit http://www.gemplus.com.

13. ICC SOLUTIONS ANNOUNCES AVAILABILITY OF LATEST EMV LEVEL 2 TEST SCRIPTS
Source: ICC Solutions (03/23)

ICC Solutions is pleased to announce the availability of the very latest EMV level 2 test scripts for use with ICCSimTT.

Thousands of fully validated Test Scripts, which correspond to the Implementation of EMVCo Type Approval Terminal Level 2 Test Cases v4.1a, are available for use with ICCSim for testing. V4.1a will become the test standard for EMV level 2 application kernels and can be used for official EMVCo Type Approval Testing, replacing previously published v3.5.

The majority of the EMVCo Test Laboratories will use ICCSimTT and the new EMV level 2 test scripts for formal Type Approval.

ICC Solutions is a member of ACT Canada; please visit http://www.iccsolutions.com.

14. QI SYSTEMS & PARCXMART ANNOUNCE THE ONE CARD PAYMENT SOLUTION FOR PARKING PAYMENTS AND SMALL-DOLLAR TRANSACTIONS
Source: QI Systems (03/21)

QI Systems and Parcxmart Technologies announced the United States' first installation of a true one card solution for on-street parking, small dollar transactions, and chip based loyalty applications. The New Haven installation incorporates QI Systems' proprietary card payment and tracking technology for Smart Card solutions. The first system installation is now in revenue service in the City of New Haven, Connecticut.

QI, Parcxmart and Cale Parking Systems USA Inc. have worked together to produce this convenient multi-application smart card program for the City of New Haven. It includes payment functionality for all on-street parking meters, easy reloading and acceptance of the New Haven Parcxmart Card™ in all participating merchants, and the introduction of the Parcxmart Instant Cool Rewards™ program which allows consumers to win valuable prizes instantly at the point-of-sale.

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

15. 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/

SMART CITY CARD FOR LONDONERS

A new smart card is to be issued to Londoners living in the City of Westminster, bringing together numerous functions, such as travel, library services, youth passport payments and leisure…

BELGIUM CONSIDERS HEALTH FUNCTION FOR NATIONAL ID CARD

Government leaders in Belgium are considering adding the nation's health-card function to its chip-based national identification card...

HONG KONG'S SMART ID CARDS SECURE ONLINE BANKING

…in Hong Kong the use of smart cards and tokens is flourishing as consumers use the technologies for digital banking and other services…

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.