Stakeholders Driving Payment Evolution and Digital Identity

May 2007 ACTion Newsletter

IN THIS ISSUE

1. Editorial Comment
2. Canadian Tire Participates In Industry Chip Card Pilot
3. Visa Introduces Visa payWave In Canada
4. MBNA Canada Bank To Acquire CUETS
5. Gemalto First To Receive MasterCard And Visa CAP 2007 Certification For Its Two-Factor Authentication Device
6. Fully Automated Test Tool Launched By ICC Solutions For Device/ABM Testing
7. Partnership Agreement Between China Unionpay (CUP) And Ingenico
8. Infineon Chips Ensure 22 Million Daily Contactless Transactions Run Smoothly For Seoul's Public Transportation System
9. StepNexus And Dynamic Card Solutions Team To Provide Banks With Instant Branch Issuance Solution
10. Citibank Unit Issues Smart Cards In Mexico
11. Barclaycard Plans Visa, Transport Combo Contactless Card
12. PCI Council Solicits PCI DSS Input
13. LifeNexus Selects Gemalto For North America's First Healthcare Payment Card
14. Additional Stories Available In Members Only Section

ACT CANADA THANKS OUR NEW & RENEWING MEMBERS

GENERAL

Infineon Technologies ~ member since 1998
Interac Association ~ member since 1995

UPCOMING EVENTS

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

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.

1. EDITORIAL COMMENT
Source: Catherine Johnston, President & CEO, ACT Canada (05/29)

Risky Business

Every decision involves risks; managing those risks is a core component of success.

Ironically, the Internet can add to our daily risks by providing too much information, conflicting information and much of it out of context but that risk can be managed.

Context helps you decide what is best for your customers in your market and what is best for the Canadian public. For many financial institutions the time has come to decide what the future of their EMV offerings. Governments are deciding what cross border ID and drivers' licences will evolve.

Both will seek out information and ask questions. Best practices will be studied and experts consulted. Then all the information will be analysed and plans made.

In this process, insight is a very valuable asset. It is insight that can reduce costs, protect corporate and political reputations and increase profits. I hope you will join us for a day of insights at Cardware 07.

On June 21st, we will present a panel of international speakers who have dealt with the challenges of identity management and credentialing. This meeting is in Ottawa.

On June 25th we move to Toronto, where the main panel focuses on EMV for issuers, acquirers and merchants. There are two additional focus workshops; one designed for merchants and one that deals with specific EMV issues.

The greatest value of Cardware events is that you have access to information, insights, experts who can answer your specific questions, peers to meet with and all this is in one place on one day.

Cardware: proving insights to help you manage risks.

2. CANADIAN TIRE PARTICIPATES IN INDUSTRY CHIP CARD PILOT
Source: Canadian Newswire (05/23)

Canadian Tire announced that it will participate in an industry-wide pilot program to test market-readiness for the introduction of chip cards in Canada by 2010.

The pilot will be launched in March of 2008 at the five Canadian Tire stores in the Kitchener-Waterloo area, leading the way for all 468 Canadian Tire stores across Canada to accept chip cards later in the year. Canadian Tire will be one of the first and largest retailers to participate in the pilot. The pilot will test the cards, as well as the chip-reading terminals ("readers") and the network required for processing chip card transactions.

"Chip card technology is really the next wave in providing our customers with enhanced payment security when they shop at Canadian Tire," said Marco Marrone, President, Canadian Tire Financial Services. "While we continue to invest in the integrity of the current system, we're setting up software, point-of-sale systems and retail processes that will test and deliver this innovative new service to Canadians."

Canadian Tire Bank will also be participating in the pilot by issuing chip cards to its Options MasterCard cardholders in the Kitchener-Waterloo area in time for the start of the March 2008 pilot. Canadian Tire Options MasterCards will continue to carry magnetic stripes in order to be compatible with non-chip payment sites and locations.

Canadian Tire Bank and MasterCard are members of ACT Canada; please visit http://www.ctfs.com & http://www.mastercard.ca.

3. VISA INTRODUCES VISA PAYWAVE IN CANADA
Source: Visa Canada (05/02)

Visa Canada Association announced the availability of its contactless technology, Visa payWave, in the Canadian market. Visa payWave-enabled products will deliver speed and convenience to participating merchants and Visa cardholders while offering the security benefits inherent in EMV chip technology.

"Visa Members in the U.S. and Asia-Pacific have successfully deployed contactless technology starting in 2005," said Michael Bradley, Vice President, Products at Visa Canada. "In Canada, Visa payWave will leverage our Members' investment in chip security, and offer customers a fast and convenient way to pay."

For merchants, Visa payWave will offer benefits including faster transaction times, increased ticket size, card usage, and customer loyalty. "Visa's global experience has shown that both retailers and consumers support contactless programs because they allow payments to be transacted faster and are more convenient than cash for smaller ticket items," continued Bradley.

Visa payWave builds on the success of Visa's "No Signature Required" (NSR) program as it offers merchants in traditionally cash-heavy, smaller ticket businesses with a payment option that can decrease check-out times. Currently, the NSR program does not require a cardholder signature for purchases of $25 or less at certain merchant locations. Visa payWave-enabled products will offer quicker transaction times and leverage the security of chip card technology.

The introduction of Visa payWave in Canada follows the January 2007 Visa mobile platform announcement that paves the way for deployment of mobile payments and services. It is also closely aligned with the Visa migration to chip card technology, as Visa payWave was developed using a standard for global interoperability and fraud prevention. Visa employs technology both on the card itself as well as on Visa's processing network to help prevent fraud.

Visa payWave in Canada is based on EMV chip technology, which can securely store and encrypt confidential information. An EMV chip is virtually impossible to copy and uses a standard 128-bit encryption technology to generate a cryptogram that uniquely identifies each transaction. No two cards share the same key, and the key is not transmitted.

"Because Visa uses encrypted data, even if a fraudster attempts to 'read' the information from a Visa payWave-enabled transaction, the information would be useless," added Bradley.

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

4. MBNA CANADA BANK TO ACQUIRE CUETS
Source: CUETS (05/30)

MBNA Canada Bank and CUETS announced an agreement for MBNA to acquire CUETS, the largest MasterCard credit card issuer for credit unions in Canada. Under the terms of the agreement, CUETS will become a subsidiary of MBNA Canada Bank, leveraging superior capabilities of both companies to increase customer value and grow market share in Canada.

CUETS is currently jointly owned by Credit Union Central of Saskatchewan (SaskCentral) and Credit Union Central Alberta Ltd. The agreement is subject to regulatory approvals. The new MBNA Canada subsidiary housing the CUETS business will be led by Stan Kuss, currently chief executive officer of CUETS. CUETS' workforce, which is primarily based out of a head office in Regina and a service centre in Winnipeg, will be combined with the current MBNA workforce of more than 1,725 associates who work out of MBNA's head office in Ottawa.

CUETS board chair and CEO of SaskCentral, Sid Bildfell, noted that CUETS will stay committed to the communities in which it operates. "Our sale arrangement with MBNA includes a continued presence for CUETS and employment of CUETS employees in our home cities of Regina and Winnipeg."

CUETS & MasterCard Canada are members of ACT Canada; please visit http://www.cuets.ca & http://www.mastercard.ca.

5. GEMALTO FIRST TO RECEIVE MASTERCARD AND VISA CAP 2007 CERTIFICATION FOR ITS TWO-FACTOR AUTHENTICATION DEVICE
Source: ICMA Daily News (05/10)

Gemalto announces it is the first company to achieve the MasterCard and Visa Chip Authentication Program (CAP) 2007 certification of its Pocket reader, designed to secure authentication of cardholders for remote banking and e-commerce. In addition, the Gemalto product is compliant with APACS (the UK payment association) specifications. With this convenient device, banking customers use their payment card and their Personal Identification Number (PIN) code to securely access online services, just as easily as they do at point-of-sale terminals. It has already been selected by major banks across Europe and close to one million units will be shipped this year.

Pocket reader is extremely convenient as it is independent from the PC configuration, giving users the freedom to perform online transactions wherever they are, at home or in an Internet café. Having inserted their banking card into the reader, users are prompted to enter their PIN code. Then the device formats and displays a unique and non-reusable numeric password computed by the card, allowing two-factor authentication of its owner.

Gemalto is a member of ACT Canada and a Cardware 07 exhibitor; please visit http://www.gemalto.com.

6. FULLY AUTOMATED TEST TOOL LAUNCHED BY ICC SOLUTIONS FOR DEVICE/ABM TESTING
Source: ICC Solutions (05/25)

ICC Solutions is delighted to announce the imminent availability of ICCSimTM: Test Manager being a fully Automated Test Environment. This is great news for all our valued Canadian customers where ICCSimTM: Test Manager will be provided as an 'upgrade' at no cost to all existing ICCSimTT and ICCSimDE license holders with a valid Support & Maintenance Contract in place.

Based on feedback from selected EMVCo Level 2 laboratories having had prior access to the tool, ICC Solutions is confident that ICCSimTM is now the most efficient, comprehensive and stable Level 2 certification test tool available on the market which will substantially reduce test times and resource levels required during test campaigns. Interac Association and contactless device certification testing will also be supported by ICCSimTM:Test Manager.

In other news, ICC Solutions recently returned from a very successful exhibition in Mexico City in conjunction with Global Platform and the Smart Card Alliance. The "Smart Cards for Government and Payment" conference was held in Mexico City on 8th and 9th of May 2007. Many delegates from throughout North America visited the ICC Solutions' booth to see demonstrations of the Global Platform Compliance Kit where ICC Solutions is the sole certified global provider. There was also considerable interest in contactless testing coinciding with the rollout of many implementations worldwide where ICC Solutions is able to offer certification test script packages for both cards and terminals.

ICC Solutions is a member of ACT Canada and a Cardware 07 exhibitor; please visit http://www.iccsolutions.com.

Cardware 07 Program Designed for the Canadian Market

EMV stakeholders are looking for a significant amount of information, according to our recent survey, and governments are focussed on credentialing information. To meet these needs, Cardware 07 will have a full track and 2 workshops in Toronto on June 25th. A full day is devoted to information that will help stakeholders attain profits, minimize costs and hear from other stakeholders. The first workshop focuses on specific issues that need to be addressed to roll out EMV and the second provides information for everyone who is in the early stages of EMV, including staff from retailers, issuers, acquirers and others.

One June 21st, the government Cardware will address the practical issues of identity credentialing for both employees and citizens. For more information on registration, exhibiting or sponsoring, please contact ACT Canada.

7. PARTNERSHIP AGREEMENT BETWEEN CHINA UNIONPAY (CUP) AND INGENICO
Source: Ingenico (05/30)

Ingenico, and China Unionpay (CUP), China's sole nationwide payment network operator, signed a partnership agreement on May 11th at Ingenico's head office in Neuilly-sur-Seine.

The agreement makes Ingenico the official supplier of electronic payment terminals (EPTs) to China Unionpay, an organization that accounts for nearly 50% of all payment terminal purchases in China. Ingenico has pledged to promote business growth and acceptance for CUP cards in Europe on its standalone terminals.

As a structure with 175 member institutions, China Unionpay handles interbank transactions and cash withdrawals effected with CUP payment cards in China and abroad.

Ingenico is a member of ACT Canada and a Cardware 07 exhibitor; please visit http://www.ingenico-ca.com.

8. INFINEON CHIPS ENSURE 22 MILLION DAILY CONTACTLESS TRANSACTIONS RUN SMOOTHLY FOR SEOUL'S PUBLIC TRANSPORTATION SYSTEM
Source: Infineon (05/23)

Infineon Technologies announced that it has been supplying semiconductors to the T-money (Transportation money) project in the greater Seoul area of Korea. This is one of the largest projects worldwide for contactless applications in public transportation systems. Since the system launched in July 2004, the electronic tickets for the public transport network in the greater Seoul area have used Infineon semiconductors. Infineon's security controllers ensure that travelers pay the right fare for bus, subway or taxi routes in the Korean capital, which account for nearly 22 million transactions a day. The security controllers can also be used for vending machines or coffee shops. Infineon has delivered ten million security controllers to Infotrust Inc. Korea. The system integrator is the partner of Korea Smart Card Co. (KSCC), the public transport operator in Seoul. Infotrust expects to deliver 14 million security chips by the end of 2008 based on the increasing commuter traffic and expansion of transport networks.

Infineon is a member of ACT Canada; please visit http://www.infineon.com.

9. STEPNEXUS AND DYNAMIC CARD SOLUTIONS TEAM TO PROVIDE BANKS WITH INSTANT BRANCH ISSUANCE SOLUTION
Source: StepNexus (05/13)

StepNexus and Dynamic Card Solutions announced an innovative solution for instantly issuing branded EMV debit and credit cards at the branch level, significantly reducing initial costs and deployment times. CardWizard instant issuance software by Dynamic Card Solutions can now leverage StepNexus EMV Data Preparation Services to instantly issue MULTOS™ chip cards. StepNexus Data Preparation Services eliminates the need for data preparation infrastructure investments. Instead of large up front deployment costs, small setup and annual maintenance fees are assessed along with a click charge per application personalized on each chip.

StepNexus is a member of ACT Canada and Dynamic Card Solutions is a Cardware 07 exhibitor; please visit http://www.stepnexus.com & http://www.globalinstantissue.com.

10. CITIBANK UNIT ISSUES SMART CARDS IN MEXICO
Source: CardTechnology (05/22)

Banamex, the Mexican unit of Citigroup, is planning to add smart card chips to all of its payment cards, according to Australia-based Keycorp, which will supply software for the cards. The cards will support the international EMV standard for credit and debit cards and at least some of them will run the Multos operating system, Card Technology's sister publication CardLine reported. These will not be the first chip cards issued by Banamex, but they will be the first running Multos, which offers a secure system for downloading applications or other data to cards in the field. Keycorp is a supplier of Multos software. The bank also said it has launched a test of contactless payment cards using a dual-interface Multos card. In March, point-of-sale terminal maker VeriFone said it was supplying contactless readers for a Banamex contactless pilot in Monterrey, Mexico.

Citi Cards Canada and Keycorp are members of ACT Canada; please visit http://www.citicards.ca & http://www.keycorp.net.

11. LIFENEXUS SELECTS GEMALTO FOR NORTH AMERICA'S FIRST HEALTHCARE PAYMENT CARD
Source: Gemalto (05/16)

Gemalto has been chosen by LifeNexus, Inc. as the exclusive supplier of technology and professional services for North America's first healthcare payment card. LifeNexus will issue the Personal Health Card directly to consumers, working with employers and other sponsoring organizations. This groundbreaking initiative makes access to personal health information and payment for health related services secure, fast and convenient.

The new program is based on the patented LifeNexus Personal Health Card equipped with Gemalto's .NET technology to enable secure storage of health and financial information. Consumers will use the LifeNexus card to keep track of their personal health information, give it to healthcare providers when needed, and then pay for services - all with the same card. For example, individuals can store information such as allergies, immunizations, medications, lab results and recent trips to other providers right on the LifeNexus Personal Health Card.

Gemalto's digital security solution also protects the privacy and security of the cardholder. In fact, the Personal Health Card meets privacy and security requirements set forth by the Health Insurance Portability and Accountability Act of 1996 (HIPAA), because the information is encrypted and accessed only with the patient's PIN.

LifeNexus, Inc. is a rapid growth company led by a team of executives experienced in all facets of the healthcare industry. The company is dedicated to creating superior value for the consumer by linking personal, financial and medical information on a single credential.

"Through working with Gemalto, we are able to provide what healthcare providers have been asking for - a portable, personal health record and payment process that is secure and efficient," said Bob Flury, president and COO for LifeNexus, Inc. "Our decision to put our trust in Gemalto for this project is based on their ability to innovate in secure technology, and expertise across financial and healthcare sectors."

In addition to the LifeNexus healthcare payment card project, Gemalto is participating in successful healthcare initiatives worldwide in Algeria, Belgium, China, Finland, France, Germany, Mexico, Puerto Rico, United Kingdom and Slovenia.

Gemalto is a member of ACT Canada and a Cardware 07 exhibitor; please visit http://www.gemalto.com.

12. PCI COUNCIL SOLICITS PCI DSS INPUT
Source: PR Newswire (05/11)

The PCI Security Standards Council, the independent body which manages the Payment Card Industry Data Security Standard, has set up formal channels for stakeholders to contribute to the development of data security standards.

The Council has sent documents to participating organizations requesting feedback on the requirements of the current PCI DSS standard. It is also seeking feedback on the Self Assessment Questionnaire which payments firms and merchants have to fill in as part of the process of becoming PCI DSS-compliant. It says the feedback documents must be returned by late June.

The Council says it will use the comments it receives from stakeholders on the changing landscape of security threats, technology advances and security implementation realities to shape the next generation of data security standards. It also plans to present an overview of the findings from the feedback process at a meeting to be held in Toronto, Canada on September 17 to 19.

13. BARCLAYCARD PLANS VISA, TRANSPORT COMBO CONTACTLESS CARD
Source: ePaynews.com (05/04)

Barclaycard is to launch a combined transit card and Visa payWave contactless credit card this September. The UK issuer says it has completed technical trials and is working with retailers to ensure POS terminals are ready for the launch of the UK's first contactless credit card.

The multi-application card will double up as a conventional Visa card that can be used for either contactless or chip-and-PIN transactions and as a Transport for London (TFL) Oyster card.

Oyster is a contactless, prepaid transit card that is used on London's public transport network. Currently, 10 million Oyster cards are in issue, says TFL spokesperson Graham Goodwin.

"We are keen to get further market penetration for the Oyster card, and teaming up with Barclaycard will help us do this," Goodwin says. "Issuing a combination card also means that users will retain their Oyster card and renew their season tickets on the same (credit) card."

In December 2006, Barclaycard won a three-year exclusive deal with TranSys, the consortium which runs Oyster in partnership with TFL, to combine the Oyster card and Barclaycard on one piece of plastic. John Stout, TranSys's CEO, says that the deal came about because Barclaycard came up with an idea that would dovetail with the Oyster card's existing functionality without disrupting TFL's existing transit system.

"Barclaycard and Visa have invested a substantial sum to ensure that their payment software and the Oyster card software can co-exist on the same chip," Goodwin says. "TranSys considered it was fair to grant a period of exclusivity to Barclaycard to reflect that investment, and TFL agreed with the deal."

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

14. 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/

PAYING BY MOBILE, THAT'LL DO NICELY

You know the scenario. Fumbling through your pockets at the supermarket checkout, you realise you've left your wallet at home and all you have by way of payment are a few coppers and an old bus ticket..

UK'S CITY OF CAMBRIDGE LAUNCHES RESIDENT LOYALTY CARD

In the United Kingdom, the city of Cambridge is to get its own electronic loyalty card for cooperative use by local shops, restaurants and leisure facilities, thanks to an initiative launched by the Cambridge City Council in conjunction with the Local Secrets online leisure guide....

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.