Stakeholders Driving Payment Evolution and Digital Identity

January 2007 ACTion Newsletter

IN THIS ISSUE

1. Editorial Comment
2. The Changing Canadian Payments Landscape
3. Gemalto was 1st to Achieve Interac Certification for Secure Banking in Canada
4. Chase Paymentech Becomes 1st Canadian Acquirer Approved by MasterCard to Process Chip Transactions
5. Citigroup, MasterCard, Cingular & Nokia Team to Pilot Mobile Phone with "Tap & Go" Payment in New York City
6. Giesecke & Devrient Provides Secure Chip Management Solution for Bank of America's NFC Trial
7. Integri's EMV Card Level 1 Test Tool has successfully passed the EMVCo qualification process
8. Visa Launches Mobile Platform
9. ACI Worldwide Responds to Smart Card Market Demand
10. Oberthur Ships Fobs For Bank Of America Contactless Pilot
11. Survey Says Retailers Are Embracing Contactless Payments
12. Giesecke & Devrient Supplies Electronic Passports for Latvia
13. Germany Qualifies Gemalto for World's Largest Microprocessor Card-Based Healthcare Initiative
14. Magnifying Glass Protects PIN Entry
15. Additional Stories Available In Members Only Section

ACT CANADA THANKS OUR NEW & RENEWING MEMBERS

PRINCIPAL

CUETS ~ member since 1990
Gemalto ~ member since 2005

GENERAL

Canadian Banknote ~ member since 2003
Coinamatic ~ member since 1995
Connexim ~ new member
eFunds ~ member since 2005
ICC Solutions ~ member since 2003

ASSOCIATE

Osler, Hoskin & Harcourt LLP ~ member since 2005
Pierre A. Roberge ~ member since 2005

WHERE TO FIND ACT CANADA

In the coming months, ACT will be continuing our advocacy and lobbying work, speaking at a record number of events. Watch the events calendar on www.actcda.com for more details, but here are some of the conferences where we will be speaking in the coming months.

2007 Public-Private Sector National Security Summit: Ottawa
Marketing Association of Canada: Banff
Canadian Payments Association: Calgary
CardTech/SecurTech: San Francisco
World IC Summit: Beijing

UPCOMING EVENTS

Smart Card Alliance: Smart Cards in Government Conference and Exhibition
April 10 - 13, 2007
Washington, DC, USA
http://www.smartcardalliance.org

CardTech/SecurTech
May 15 - 17, 2007
San Francisco, CA, USA
http://www.ctst.com
ACT Canada members receive 10% off delegate registration fee (including early-bird & renewal rates). Contact Andrea McMullen for more details - andrea@actcda.com.

ACT Canada presents Cardware 07
Government Focus Event - June 21st in Ottawa, ON, Canada
Financial Focus Event - June 25th in Toronto, ON, Canada

1. EDITORIAL COMMENT
Source: Catherine Johnston, President & CEO, ACT Canada (01/30)

THEY WILL BE MISSED.

In 44 years, nothing has been as hard to write as this editorial.

Since our last e-news, Kelly Silverstein of Davis and Henderson and Robert Garigue of Bell Canada have passed away. Both were remarkable men and we grieve at the loss.

Kelly was one of the most genuinely nice people you could ever know. From the first time we spoke, it was clear that he was proud of the services his company offered and he took great pains to ensure that I also understood the value they provide.

I had used Davis & Henderson products for many years, but through Kelly's eyes I saw them in a new light. Over many meetings and phone calls, I came to recognize that Kelly brought the same heartfelt interest to everything he did in his life.

Kelly was a remarkable example of how you can improve your business by focussing solely on what you have to offer, as opposed to comparing yourself to the competition. What a class act!

Robert Garigue was Vice President for Information Integrity and Chief Security Executive, for Bell Canada. He was both a genius and a visionary, with the ability to articulate his vision and garner people's support. Robert was a most engaging person, genuinely interested in other people and their challenges, and quick to provide insightful advice.

Having heard so much about him, I was a little apprehensive about meeting him, but I shouldn't have been. Where others were in awe of him, Robert treated people as though they were every bit as bright and interesting as we found him to be.

You might wonder why I would write an editorial about these sad losses.

The day I received the news about Robert, I was having dinner with a mutual friend. We said that the world was a poorer place for his passing, but Paul pointed out that Robert left the world in better shape than he had found it. That is also true of Kelly.

Is that not how we would all like to be remembered?

Thousands of people get this newsletter. Each of us has the ability to foster positive change and growth. Following Kelly and Robert's examples, we need to seek out and use opportunities to do that.

Robert and Kelly, we thank you and will sorely miss you both, but we will continue to be inspired by you.

The United Way was one of many charities supported by Kelly and donations may be made in his name. A scholarship has been set up in Robert's name and you can make donations to the ''Robert Garigue Memorial Scholarship'' at any branch of the Bank of Montreal (account reference 0380 8203-445).

2. THE CHANGING CANADIAN PAYMENTS LANDSCAPE
Source: ACT Canada (01/30)

There is no question that moving to EMV in Canada is a complex, expensive and necessary move. Although there will be similarities to the UK and other countries where the conversion has taken place, there will be many considerations unique to Canadian stakeholders.

ACT Canada has undertaken two key pieces of research to support our members in understanding the impact on all stakeholders, so that they may gain the greatest benefits from the investments in the migration.

The first is the "Chip Cards in Canada: 2006" a syndicated consumer research Study by Ipsos Reid and ACT Canada. For organizations that issue cards, acquire transactions or supply terminals, cards or applications, this provides value insight into how consumers view chip cards and security. It is a must read for anyone investing in this market and is now available.

The second is a thorough study of the Canadian market in relationship to EMV migration. This detailed analysis will help stakeholders understand both the challenges and opportunities for their own organization, as well as for the others in their value chain. The study is now in final edit and will be available in the coming weeks.

For more information on either study, please contact Catherine Johnston at catherinej@actcda.com. ACT Canada members receive discounts for both studies as a part of their membership benefits.

3. GEMALTO WAS FIRST TO ACHIEVE INTERAC CERTIFICATION FOR SECURE BANKING IN CANADA
Source: Gemalto (01/24)

Gemalto announced that its personalization center outside of Toronto, Ontario, Canada was the first to achieve smart banking card certification from Interac, Canada's debit and Automated Banking Machine (ABM) network. Gemalto adds this to existing ISO, MasterCard and Visa certifications, demonstrating its commitment to aid Canadian financial institutions overcome credit and debit card fraud. This will be accomplished by converting an estimated 100 million magnetic stripe payment cards to microprocessor-based smart cards.

Having met all of Interac's stringent standards for security, reliability and performance, Gemalto can now provide financial institutions with chip-based banking cards for use within Interac's Shared Services. Interac has set final deadlines for the conversion to smart bank cards. Its Shared Services will be ready to use chip-based banking cards in 2007 and by 2015, magnetic stripe cards will no longer be accepted within the network.

Gemalto, Interac Association, MasterCard Canada and Visa Canada are members of ACT Canada; please visit their web sites at http://www.gemalto.com; http://www.interac.org; http://www.mastercard.ca & http://www.visa.ca.

4. CHASE PAYMENTECH SOLUTIONS BECOMES FIRST CANADIAN ACQUIRER APPROVED BY MASTERCARD TO PROCESS CHIP TRANSACTIONS
Source: MasterCard (12/06/06)

MasterCard Canada announced that Chase Paymentech Solutions has become the first acquirer in Canada to receive approval from MasterCard to process chip transactions. Chase Paymentech's approval sets the stage for the introduction of MasterCard chip cards in 2007.

"Chase Paymentech has played a significant role in strengthening our relationship with merchants and we look forward to continuing to work together to introduce chip to their merchant customers in the coming months and years," said Kevin Stanton, President, MasterCard Canada.

"From 'Tap & Go' payments with PayPass to Chip and PIN, MasterCard is advancing the Canadian payments industry. MasterCard and Chase Paymentech will help reduce the cost of chip implementation and ease the transition to chip by helping businesses become chip-ready in conjunction with their regular equipment and system upgrades," said Stanton.

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

5. CITIGROUP, MASTERCARD, CINGULAR & NOKIA TEAM TO PILOT NEXT GENERATION MOBILE PHONE WITH "TAP & GO" PAYMENT IN NEW YORK CITY
Source: Citigroup (12/14/06)

Citigroup, MasterCard Worldwide, Cingular Wireless and Nokia announced a consumer technology trial of Near Field Communication (NFC)-enabled mobile phones with MasterCard PayPass(tm) contactless payment capability in New York City. The goal of this trial is to evaluate the speed and convenience that "tap and go" payments made through mobile phones can provide to Citi credit cards and Cingular customers in the New York City area. The trial is expected to run three to six months.

Pre-selected Citi MasterCard cardholders with Cingular Wireless accounts are participating in the trial and will receive Nokia NFC-enabled mobile phones with MasterCard PayPass payment functionality. MasterCard PayPass is a "contactless" payment program that provides consumers with a fast and convenient way to pay.

With their NFC-enabled phone, trial participants can pay for purchases at any merchant that accepts MasterCard PayPass by simply holding their phone near a secure PayPass payment terminal. If they choose, participants will be permitted to enable the PayPass functionality only at the point of sale and to disable it at all other times.

Trial participants can also take part in the New York City Subway contactless transit fare payment trial sponsored by Citigroup, MasterCard Worldwide, the Metropolitan Transportation Authority, and MTA New York City Transit.

NXP Semiconductors (formerly Philips Semiconductors) developed the NFC technology and chips for the NFC-enabled mobile phones in the New York City trial. Giesecke & Devrient developed the Over the Air (OTA) personalization software that allows for the process of initializing your mobile phone with the information it needs to conduct secure transactions.

Citi Cards, Giesecke & Devrient, MasterCard Canada and NXP Semiconductors are members of ACT Canada; please visit their web sites at http://www.citibank.ca; http://www.gi-de.com; http://www.mastercard.ca & http://www.nxp.com.

6. GIESECKE & DEVRIENT PROVIDES SECURE CHIP MANAGEMENT SOLUTION FOR BANK OF AMERICA'S NFC TRIAL
Source: Giesecke & Devrient (01/17)

Bank of America has chosen Giesecke & Devrient (G&D) to provide Over The Air (OTA) personalization services as part of a trial to test radio frequency contactless payment companion devices.

As contactless cards continue to grow in issuance, the Bank of America trial will confirm consumer interest in companion devices for contactless payment and solidify plans to offer as an option the MasterCard PayPass application on an NFC-enabled mobile handset. In this trial, Bank of America associates are given the option of NFC-enabled mobile phones. The user acceptance trial program tests consumer interest in different devices, including the Nokia NFC handset as a companion device to traditional credit cards. The payment application for the transactions is stored in a "secure area", a smart card technology-based chip, in the mobile handset. This area is managed by G&D's Secure Chip Management platform.

The Secure Chip Management solution allows the remote upload, activation and personalization of applications and customer data to the mobile phone's secure area. It thus removes the need to load applications and personalize handsets in a specific location. Instead, the management is performed over the air (OTA) using a mobile operator's network. This is a convenience to the subscriber as their handset can be updated wherever they are in the mobile service area.

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

7. INTEGRI'S EMV CARD LEVEL 1 TEST TOOL HAS SUCCESSFULLY PASSED THE EMVCO QUALIFICATION PROCESS
Source: Integri (01/19)

Integri announced the EMVCo qualification of the EMV Card Level 1 Test Tool. The test suite is fully automated and contains a complete set of functional tests for Card Level 1 approval. The resulting test suite is available as an off-the-shelf product that runs on the INQ Level 1 Platform, Integri's core platform for all solutions in Low-Level Protocol Testing. Next to EMV Card L1, Integri is also qualified by EMVco for EMV CCD L2 and provisionally qualified for EMV CPA.

Integri is a member of ACT Canada, please visit http://www.integri.com.

8. VISA LAUNCHES MOBILE PLATFORM
Source: Visa (01/08)

Visa launched a mobile platform that lays the foundation for the commercial availability of mobile payments and services to millions of mobile users around the world. The new platform is designed to foster collaboration between the financial services and mobile telecommunications sectors for the delivery of mobile payment applications and payment related services.

The platform is a comprehensive suite of technology tools and applications, security standards, and business models that will enable Visa issuers and mobile operators to engage in market trials to drive product development and commercialization of mobile payment services. Informed by years of experience in the mobile payments market and developed in partnership with mobile technology companies, including handset manufacturers, chip suppliers, mobile applications developers, over-the-air (OTA) service providers and mobile messaging providers, the platform is both flexible and complementary to existing technologies so that it can seamlessly integrate with global wireless technology and payments infrastructures.

The initial version of the platform offers solutions for contactless mobile payment, OTA personalization, coupons and direct marketing. Subsequent versions of the platform, to be made available later in the year, will include solutions for remote payment and person-to-person payment. This tiered launch approach enables Visa issuers and mobile industry partners to take advantage of near-term opportunities in specific markets and consumer segments now, while also building towards a complete mobile payments program that brings long-term growth and delivers value to consumers as new technologies and architectures are deployed.

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

9. ACI WORLDWIDE RESPONDS TO SMART CARD MARKET DEMAND
Source: ACI Worldwide (01/24)

ACI Worldwide announced the general availability of Release 4.9 of its smart card management solution. The new version of ACI Smart Chip Manager™ now features enhanced support for in-branch issuance, accompanied by new card inventory management support to give issuers control over distributed card issuance. Other important enhancements include Payments Card Industry (PCI) compliance and support for Saudi Payment Network (SPAN2) cards. The additional functionality increases the value, security and performance of issuers' smart card management.

ACI Worldwide is a member of ACT Canada; please visit http://www.aciworldwide.com.

10. OBERTHUR SHIPS FOBS FOR BANK OF AMERICA CONTACTLESS PILOT
Source: CardTechnology (12/20/06)

Oberthur Card Systems has supplied contactless key fobs to U.S.-based Bank of America Corp. for a trial involving MasterCard Worldwide's PayPass contactless technology. In a statement, Oberthur says the bank wants to test customer response to the key fobs as companions to contactless credit cards. Bank of America will use Oberthur's VersaFob key fobs that are equipped with PayPass during the trial.

Oberthur Card Systems and MasterCard Canada are members of ACT Canada; please visit http://www.oberthurcs.com & http://www.mastercard.ca.

11. SURVEY SAYS RETAILERS ARE EMBRACING CONTACTLESS PAYMENTS
Source: CardTechnology (01/05)

Contactless payment is gaining ground with retailers, but questions remain about the costs of readers and how merchants can use data gathered from contactless transactions to improve their businesses, according to a survey from Aberdeen. The Boston-based consultant in December surveyed 160 retailers of various sizes, Sahir Anand, a retail research analyst for Aberdeen, tells Card Technology. Contactless backers MasterCard, Visa, Discover and reader vendor Vivotech underwrote the research. Almost 30% of retailers report having contactless payment systems, and 58% said they would start accepting contactless payment within two years. The costs to buy and install contactless readers could delay contactless adoption for some retailers, Anand says, adding that leased readers, rather than subsidized ones, may become more common for merchants.

Retailers also have been slow to break out data about contactless transactions from data from other transactions, he says, with 80% of those surveyed saying they don't review the transactions. Breaking out such data, even if it's sparse, "can provide retailers with a road map of success or a direction to make changes," says Anand. And though the security of contactless payments is a significant concern for consumers, according to at least one other recent survey, Aberdeen says 80% of retailers are "unfazed" by worries that cardholder data might be stolen off chip cards. One reason for this confidence is the liability protections that apply to both magnetic-stripe and chip cards, Anand says. Also, contactless cards are tapped or waved at readers, meaning customers don't have to hand cards over to clerks.

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

12. GIESECKE & DEVRIENT SUPPLIES E-PASSPORTS FOR LATVIA
Source: Giesecke & Devrient (01/05)

Giesecke & Devrient (G&D) has been awarded a contract by the Latvian government to produce 1.1 million electronic passports (e-passports) over the next five years. G&D will also supply all the necessary systems for data capture and processing, personalization, and issuing of the documents. The first electronic passports will be issued to the citizens of Latvia in the third quarter of 2007.

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

13. GERMANY QUALIFIES GEMALTO FOR WORLD'S LARGEST MICROPROCESSOR CARD-BASED HEALTHCARE INITIATIVE
Source: Gemalto (12/14/06)

Gemalto announced it is taking part in Germany's first healthcare pilot program based on highly secure microprocessor cards. The Gemalto product is fully compliant with the latest specifications from Gematik, the organization in charge of defining and approving the healthcare infrastructure, which enables the company to deliver cards to the pilot regions. Gemalto received first orders to supply and personalize patient cards for the regions of Bavaria, Baden-Württemberg, North Rhine Westphalia and Saxony. The first trial phase commenced in December 2006, involving 70,000 units in 7 regions. A larger scale experimentation of 300,000 cards is due to start in 2007, which will be followed by mass deployment. This new advanced digital healthcare solution aims at reducing administrative costs and ensuring better delivery of services and benefits to citizens.

The German authorities are implementing this new infrastructure based on high-end microprocessor cards to provide better quality of service to insurance beneficiaries while increasing the security of access to personal data. This latest-generation card will act as an active security device to perform strong authentication of the patient therefore contributing to reducing fraud costs and increasing privacy. It will enable access to an electronic medical file, and will include emergency data such as blood group, allergies alerts and ongoing treatments records. In addition, the new health card will be able to carry electronic prescriptions, which will reduce significantly paperwork. Authorized healthcare professionals can read personal information only if the patient consents by entering the card's Personal Identification Number.

For insurance funds, the deployment of this new generation of highly secure health cards will significantly trim administrative and operational costs. It will avoid duplicate examinations and lessen unnecessary use of healthcare services. Furthermore, by allowing automatic data update once the card is in the field, the new system will enable insurance funds to decrease their cost of ownership and optimize their investments

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

14. MAGNIFYING GLASS PROTECTS PIN ENTRY
Source: ePaynews.com (01/24)

A magnifying glass case may soon enable UK chip-and-PIN cardholders to give shoulder-surfers the brush-off. The product, known as ViewSafe, was developed for use with PIN pads by Secure Access Solutions (SAS), a University of Warwick spin-off, and is being marketed by POS terminal vendor Ingenico.

ViewSafe magnifies the PINpad for the benefit of users, particularly those who are visually impaired. However, the case distorts the view from any other angle, thus protecting the cardholder's PIN from casual observers, thieves, CCTV and hidden cameras.

According to a 2006 survey by market research firm Harris Interactive, 63 percent of UK credit cardholders said they were conscious of people sometimes watching them enter their PIN at the point of sale.

ViewSafe has been on trial at the Cambridge branch of UK pharmacy chain Boots. Now it is to be introduced across the UK under an agreement with Ingenico.

Ingenico is a member of ACT Canada; please visit http://www.ingenico.com.

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/

THUMB-PRINT BANKING TAKES INDIA

A pilot program will put 15 biometric ATMs at village kiosks in five districts across southern India. The machines are expected to serve about 100,000 workers who will use fingerprint scanners, rather than ATM cards and PINs, to obtain their funds…


BARCLAYS TO ADD LONDON TRANSIT TO CONTACTLESS CARDS

Barclays has signed an agreement with TranSys, which runs the Oyster card scheme, The deal gives Barclays exclusive rights to place Oyster on contactless Barclaycard credit cards and Barclays Connect Visa debit cards for the next three years…


UK DETAILS PLANS FOR NATIONAL ID SMART CARD
Source: CardTechnology (12/19/06)

The UK government delivered to Parliament as promised an outline of the rollout of a smart card-based national identity card that could ultimately be carried by 60 million British citizens and foreign nationals…

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.