Stakeholders Driving Payment Evolution and Digital Identity

August 2007 ACTion Newsletter

IN THIS ISSUE

1. Editorial Comment
2. Gemalto & NXP Join Forces To Boost Mobile NFC Solutions Deployment Around The Globe
3. The Role Of Loyalty In Choosing Credit Or Debit Payments - Members Only Access
4. LaserCard Receives Subcontract Extension For Canadian Permanent Resident Cards
5. Port Upgrades Security With Smart Cards For Workers
6. Co-Op To Survey Customers With Chip-And-Pin - Members Only Access
7. Giesecke & Devrient: First Manufacturer To Receive ZKA Certification For Seccos 6.1 Smart Cards
8. Canada-Based Sunshine Coast Credit Union Selects Open Solutions' Core And Complementary Products
9. London Transit Operator Launches NFC Trial - Members Only Access
10. NYC Taxis Go Live With Contactless Fares
11. Gemalto Simplifies Strong Authentication Solution Deployment
12. London Contactless Payment Launch Will Test European Business Models - Members Only Access
13. LaserCard Announces Expansion Of Middle East Project
14. Travel Industry Said Hit By Card-Not-Present Fraud
15. Gemalto And FPT Information System Partner For The First EMV Deployment In Vietnam
16. Japan Leads Asia-Pacific In Visa-Branded Smart Cards
17. Prepaid Cards' Success Lies In Solving Consumer Problems - Members Only Access

ACT CANADA THANKS OUR NEW & RENEWING MEMBERS

PRINCIPAL

Visa Canada Association ~ member since 1995

GENERAL

ATB Financial ~ member since 2006
Citi Cards Canada ~ member since 2006
HSBC ~ member since 2006
Ingenico ~ member since 1990

GOVERNMENT

Royal Canadian Mint ~ member since 2005

SME

ISATCOM ~ new member

UPCOMING EVENTS

World eID
Sept.19 - 21, 2007
Sophia Antipolis, French Riviera
http://www.strategiestm.com/events/se/index.htm
ACT Canada members receive 25% delegate discount (including early-bird & renewal rates). Contact andrea@actcda.com for more details.

Loyalty World 2007
Sept. 25 - 28, 2007
London, United Kingdom
http://www.loyalty-world.com/2007/lw07/
Meet with ACT Canada at this event

Smartcards in Transport
October 1 & 2, 2007
Paris, France
http://www.groupeactis.com/rubrique.php3?id_rubrique=48

Smart Card Alliance Annual Conference
October 8 - 11, 2007
Boston, MA, USA
http://www.smartcardalliance.org

Cartes & IT Security
November 13 - 15, 2007
Paris, France
http://www.cartes.com

Attention All Canadian Organizations

ACT Canada is working with The Canadian Embassy in France to facilitate a networking event at this year's Cartes conference. As such we would like to know if your organization is likely to attend. Please contact Andrea McMullen at andrea@actcda.com

1. EDITORIAL COMMENT
Source: Catherine Johnston, President & CEO, ACT Canada (08/20)

It was the best of times; it was the worst of times…

As Dickens said "It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness". This is what I often think of in relationship to this industry. Here are some recent examples.

Cardware 07: to provide a little background, the conference takes more than 180 man days to organize each year. Considering that we have 2.5 people and that our other work doesn't stop, it means that working evenings and weekends is required for weeks on end. As many of you know, even broken bones provide no excuse for slowing down during conference season.

This year in Ottawa, there was a moment where it was all worthwhile. Hearing that the Province of Ontario was able to move forward with a state-of-the-art project, based on what they had seen and learned at Cardware 06, justified the hard work.

Then in Toronto, there was more than one moment of extreme foolishness. Here is just one. A person arrived and told the staff that he was only for the exhibits and so would not be paying to register, but then went into the conference. Allowing that it may have been a change of heart, we invoiced after the conference. There has been no response. As I write this at 1 o'clock in the morning, trying to get through my work for the day, you can guess what I'm thinking. The question is, "what was this person thinking"? This was no way to treat our members or us and it was a very shortsighted move in a small market where memories run long.

Let me end with on a positive note. In this market where financial card issuers, retailers, acquirers and governments are moving forward, many companies came out to offer advice and pertinent information, both as speakers and exhibitors. It won't surprise me, if next year, we hear that projects moved forward because of what people saw and learned at Cardware 07. I've already seen positive results from meetings that took place there.

Loyalty World Europe is back for a fifth year and, yet again, it brings you the speakers, the information and the networking opportunities to ensure that your loyalty strategy stays ahead of the game and keeps your customers coming back. Hear from the region's leaders in the field of custromer retention, including:

Andrew Mann, Clubcard Director, Tesco
Chris Sedgwick, Global Retail Marketing Innovation Director, BP
Kelly Odell, Senior Vice President Corporate Marketing, TeliaSonera
Mark Hall, Marketing Director, Toyota UK
Norbert Schweimanns, Director CRM and Business Clients, Deutsche Bank

For more information visit www.loyalty-world.com/2007/lw07

2. GEMALTO AND NXP JOIN FORCES TO BOOST MOBILE NFC SOLUTIONS DEPLOYMENT AROUND THE GLOBE
Source: ICMA Daily News (08/24)

Gemalto and NXP announced their collaboration on SIM-enabled Near Field Communication (NFC) solutions based on the Single Wire Protocol (SWP). Both companies will together define and develop SIM products for SWP-based solutions to ensure interoperability with MIFARE technology as well as other widely deployed contactless protocols. This agreement will enable the industry to rapidly address the growing demand for NFC-based applications among telecom operators, service providers and consumers.

This initiative from NXP and Gemalto aims to facilitate the definition of standardized SIM-based NFC products. It will also speed up the availability of SIM-based NFC phones compliant with telecom operators' requirements.

Following the successful joint evaluation and specification of MIFARE compatibility with SWP technology, NXP is designing a new SIM-enabled NFC chip and SIM chip that support the SWP protocol and provide MIFARE capability. Gemalto is developing a SIM card and trusted service management offering for banks, transport companies and telecom operators to manage the provisioning and the personalization of mobile contactless applications.

Gemalto and NXP Semiconductors are members of ACT Canada; please visit http://www.gemalto.com & http://www.nxp.com.

3. THE ROLE OF LOYALTY IN CHOOSING CREDIT OR DEBIT PAYMENTS 

Available in the ACT Canada Members Only section of our web site. Click on the link below to access this section.
http://www.actcda.com/members-only/members-only-news/

If you are a member of ACT Canada but do not have your login details please contact me - andrea@actcda.com.

4. LASERCARD RECEIVES SUBCONTRACT EXTENSION FOR CANADIAN PERMANENT RESIDENT CARDS
Source: LaserCard (08/08)

LaserCard Corporation announced receipt of a 12-month extension to a five-year subcontract from General Dynamics Information Technology (Fairfax, Va.) for the manufacture and supply of optical memory-based Permanent Resident Cards for the government of Canada. The contract extension was accompanied by a purchase order for $2 million in cards to be delivered over the next 12 months.

The Canadian Permanent Resident Card was the first optical memory card to comply with standards published by the International Civil Aviation Organization (ICAO) for travel cards and the card received industry accolades for its outstanding graphic design and unequalled security.

"We are proud to continue supporting this high profile secure ID card program," said Richard Haddock, President and CEO, of LaserCard. "We have supplied more than 30 million secure optical cards to the governments of the United States and Canada. The two countries' installed base of cards and their more than 1,100 interoperable optical memory card border inspection systems represent the largest advanced technology, secure ID card program in North America.

LaserCard is a member of ACT Canada; please visit http://www.lasercard.com.

5. PORT UPGRADES SECURITY WITH SMART CARDS FOR WORKERS
Source: Nova Scotia Chronicle Herald (08/18)

The Halifax Port Authority has signed a contract with Unisys Corp. to use vascular technology to identify port workers as part of its security program.

Unisys Canada Inc will develop and manage a biometric credentialing and access control database for about 4,000 port workers. Transport Canada and the port will fund the project, scheduled for completion Nov. 30.

The port authority commissioned the system to comply with the Marine Transportation Security Act.

Unisys will integrate vascular scanning technology to identify port workers as part of the program. An infrared scan of the back of the cardholder's hand will be embedded in a smart card, which also will include the holder's photo. The vascular image, which is recognized by a non-invasive infrared sensor, will be used to identify the cardholder when he or she presents the card and places the back of his or her hand in the scanner.

Verification is instantaneous and is achieved when the blood flow pattern of the holder's hand matches the pattern of the scan stored on the card. The biometric is stored only on the card, not in the database, eliminating the possibility of the file being stolen or corrupted.

The system also controls exits from port facilities. Workers must use the card and verify their identity when they leave an area into which the card granted them access. In an emergency, authorized individuals can override this requirement so as not to impede evacuation processes.

6. CO-OP TO SURVEY CUSTOMERS WITH CHIP-AND-PIN

Available in the ACT Canada Members Only section of our web site. Click on the link below to access this section.
http://www.actcda.com/members-only/members-only-news/

If you are a member of ACT Canada but do not have your login details please contact me - andrea@actcda.com.

7. GIESECKE & DEVRIENT: FIRST MANUFACTURER TO RECEIVE ZKA CERTIFICATION FOR SECCOS 6.1 SMART CARDS
Source: ICMA Daily News (08/20)

In mid-July, the Zentraler Kreditausschuss (ZKA), the central organization that represents Germany's main banking associations, has awarded an official certification for SECCOS 6.1 smart cards to the first smart card manufacturer: Giesecke & Devrient (G&D). German financial institutions are now free to launch pilot projects using the new G&D cards in the third quarter of 2007. And by the end of the year, bank customers should receive the first batch of cards produced by the world's second largest provider of smart card solutions. The introduction of the SECCOS 6.1 specification means the card is no longer restricted to the German banking sector. Instead, the new cards will conform to the SEPA Cards Framework (SCF) and so can be used in all countries in the Single Euro Payments Area.

SECCOS 6.1, being a SEPA-compliant operating system, expands the current national ec-cash debit system to ensure compliance with the international EMV standard. In addition, it supports the implementation of MasterCard and Visa credit card applications. The multi-application cards come packed with other applications, including GeldKarte and an optional digital signature function that already meets future legal requirements for key length and other security mechanisms. SECCOS 6.1 also supports co-branding for both Maestro and V Pay, the international debit card functions of MasterCard and Visa. That gives banks greater opportunities to expand and enhance their card offerings.

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

8. CANADA-BASED SUNSHINE COAST CREDIT UNION SELECTS OPEN SOLUTIONS' CORE AND COMPLEMENTARY PRODUCTS
Source: Open Solutions (08/09)

Sunshine Coast Credit Union, located in British Columbia, Canada, has selected Open Solutions Inc.'s The Complete Credit Union Solution as its core banking system. The credit union will complement the core solution with Open Solutions' Financial Accounting Suite and cView knowledge centre modules MyVision and ReportWizard. A long-time Open Solutions Canada client, Sunshine Coast Credit Union will continue to run its data processing through the company's Vancouver-based data centre.

Sunshine Coast Credit Union is a full-service financial institution that has assets exceeding $295 million CAD and serves more than 14,000 members through branches located in three communities on British Columbia's "Sunshine Coast," located just north of Vancouver.

Built on a single, centralized Oracle database, The Complete Credit Union Solution's open architecture and member-centric platform are designed to help credit unions streamline both front- and back-office applications with a focus on improving member service. Open Solutions' powerful financial accounting suite is an industry-leading product used by financial institutions of all sizes throughout North America to address their accounting needs. The MyVision and ReportWizard applications are tools to help credit unions focus their marketing efforts by better understanding their members' needs.

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

9. LONDON TRANSIT OPERATOR LAUNCHES NFC TRIAL

Available in the ACT Canada Members Only section of our web site. Click on the link below to access this section.
http://www.actcda.com/members-only/members-only-news/

If you are a member of ACT Canada but do not have your login details please contact me - andrea@actcda.com.

10. NYC TAXIS GO LIVE WITH CONTACTLESS FARES
Source: Business Wire (08/21)

A number of NYC taxis began accepting PayPass in June 2007, and more than 5,000 NYC taxis are expected to take contactless cards by the end of this year, MasterCard and VeriFone say.

In November 2006, taxis in Philadelphia became the first taxis in the U.S. to accept contactless payments. Currently, 1,600 Philadelphia taxis are equipped with systems implemented by VeriFone's U.S.-based taxi business, VeriFone Transportation Systems. These Philadelphia taxis accept PayPass, MasterCard says.

MasterCard and VeriFone are also involved in a contactless pilot in Las Vegas taxis which is scheduled to be completed later this year.

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

11. GEMALTO SIMPLIFIES STRONG AUTHENTICATION SOLUTION DEPLOYMENT
Source: ICMA Daily News (08/07)

Gemalto announced Live Provisioning, a feature within the Protiva strong authentication solution that enables enterprise security managers quickly and easily deploy new strong authentication devices or re-use existing ones. This comprehensive solution provides enterprises with a safe and simple way to secure remote access to networks, applications and documents.

"Information security managers can now set up strong authentication tokens themselves, making contactless live provisioning an industry first," said Cedric Collomb, senior vice president, identity and access management, Gemalto. "We continue to add capabilities to our solution that give our enterprise clients and channel partners more flexibility and control so they can respond faster to end-user security needs."

Live Provisioning, offered with the Customer Care Portal, is a new Web-based capability to automatically create all of the information needed to set up and use a strong authentication device with the Protiva Strong Authentication Server. The system includes a Gemalto contactless reader used to securely communicate with the smart card-based strong authentication device. Live Provisioning also generates the device ID, creates the device record, adds it to the data server and then transfers the information to the device, updating the backend user database. With these tools, security administrators can now manage the entire lifecycle of a digital security device more conveniently and productively.

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

12. LONDON CONTACTLESS PAYMENT LAUNCH WILL TEST EUROPEAN BUSINESS MODELS

Available in the ACT Canada Members Only section of our web site. Click on the link below to access this section.
http://www.actcda.com/members-only/members-only-news/

If you are a member of ACT Canada but do not have your login details please contact me - andrea@actcda.com.

13. LASERCARD ANNOUNCES EXPANSION OF MIDDLE EAST PROJECT
Source: ICMA Daily News (08/13)

LaserCard Corporation announced the expansion of the national ID card program for a Middle Eastern government.

A new centralized high-volume card issuance system which will personalize the smart chip, the optical memory and the eye-readable data of this state-of-the-art national ID card is being implemented by the prime contractor. LaserCard has received the $2.3 million purchase order for the supply of chip-ready optical memory cards, which include high resolution security printing and custom security features. Deliveries are scheduled to begin by September and continue through November 2007.

LaserCard has previously received orders totaling over $10 million in optical smart cards, personalization systems and services under a previously announced subcontract for the initial phase of this project, which saw the implementation of a number of distributed card issuance sites. The augmentation of this distributed infrastructure by the new centralized facility will greatly enhance the card issuing capacity of this important national ID program.

LaserCard is a member of ACT Canada; please visit http://www.lasercard.com.

14. TRAVEL INDUSTRY SAID HIT BY CARD-NOT-PRESENT FRAUD
Source: ePaynews.com (08/07)

The travel industry is being hit by a wave of cardholder-not-present (CNP) fraud, warns UK-based fraud prevention firm Retail Decisions. Fraudsters are using stolen card numbers to book tickets either online or on the phone at the last minute to get round airline fraud detection systems, ReD says.

The International Association of Airline Internal Auditors estimates that in 2006 payment card fraud cost the airline industry US$100 million. But this figure may be less than the true cost of card fraud, particularly given the cost of processing chargebacks for fraudulent transactions.

"Many travel companies include their CNP transactions with their card-present transactions, when they present reports to their acquirers," Carl Clump, ReD's CEO, tells ePaynews. "By merging their CNP and card-present transaction data, this enables travel companies to stay under the radar and avoid being fined for excessive chargebacks," Clump says. Merchants who have excessive amounts of card fraud are fined by the card associations.

Based on the fraud prevention work it does for travel companies, ReD has discovered that fraudulent ticket purchases are usually for third-parties. "A fraudster will use a stolen card number to book tickets for an associate," Clump says. "The reason is probably because this person is being asked to carry something illegal on behalf of the fraudster."

The person traveling on a stolen ticket will likely carry legitimate identity documents, says Clump.

A popular destination for fraudulent ticket purchasers is Pearson Airport in Toronto, Canada. "Our guess is that this is because Toronto is close to the U.S., and has weaker airport security than U.S. airports," Clump says. "Smugglers can then cross over the land border into the U.S."

Fraudsters have started creating bogus travel companies that sell tickets to legitimate cardholders. "People are always looking for bargain flights, and the fraudsters can take advantage of this," Clump says. "We've seen fraudulent travel companies set up Websites, sell bogus tickets to cardholders, then shut down. The fraudsters have not only stolen money from cardholders, they also retain their card numbers."

15. GEMALTO AND FPT INFORMATION SYSTEM PARTNER FOR THE FIRST EMV DEPLOYMENT IN VIETNAM
Source: Gemalto (08/30)

Gemalto and Vietnam's largest system integrator FPT Information System (FPT-IS) have partnered for the first EMV deployment in Vietnam with Vietnam Joint-Stock Commercial Bank for Private Enterprises (VPBank). This collaboration meant that VPBank got their first EMV microprocessor cards issued within 2 months of the commissioning.

Together, Gemalto and FPT-IS provide end-to-end services by developing a personalization solution tailored for VPBank's needs, set up 24/7 support, provided consultation and training and deliver EMV microprocessor cards. The partnership between Gemalto and FPT-IS ensured that there was a solid teamwork to cover all aspects of the deployment, which is critical for such fast turn-around times.

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

16. JAPAN LEADS ASIA-PACIFIC IN VISA-BRANDED SMART CARDS
Source: CardTechnology (08/08)

Japanese banks and credit card companies had issued nearly 38 million Visa-branded smart cards that carried payment applications complying with the EMV standard as of the end of March, Visa International's Asia-Pacific branch announced yesterday.

That makes Japan the country with the largest number of EMV cards on issue in the region and represented about 40% of Visa's card base in Japan. Across the region, about 20% of Visa cards had been converted from magnetic stripe to more fraud-resistant EMV by the end of the first quarter, Visa Asia-Pacific said.

About 400,000 point-of-sale terminals had been converted in Japan to accept EMV. Terminal migration has always lagged behind card issuance in Japan's EMV rollout. About 1.8 million POS terminals had been upgraded to accept EMV as of the end of March in the Asia-Pacific region, Visa said. Visa didn't release figures on the percentage of terminals accepting EMV in Japan or throughout the region. But it said about 80% of terminals in Singapore and Hong Kong accept EMV, and Malaysia has completed its card and terminal EMV rollout.

Hong Kong had the fastest smart card growth for Visa in the region, outside of Cambodia, for the first three months of 2007. In Hong Kong, more than 1.3 million cards were on issue at the end of March, a 29% increase from the previous quarter. South Korean issuers had distributed more than 9 million EMV cards by the end of the first quarter, up 16% from the end of last year, Visa said in the release. Australian issuers had rolled out more than 1.6 million Visa-branded smart cards, up 12% from the previous quarter.

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

17. PREPAID CARDS' SUCCESS LIES IN SOLVING CONSUMER PROBLEMS

Available in the ACT Canada Members Only section of our web site. Click on the link below to access this section.
http://www.actcda.com/members-only/members-only-news/

If you are a member of ACT Canada but do not have your login details please contact me - andrea@actcda.com.

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.