Stakeholders Driving Payment Evolution and Digital Identity

October 2007 ACTion Newsletter

IN THIS ISSUE

1. Editorial Comment
2. Canadian Payments Industry Commences Chip Trial In Kitchener-Waterloo, Ontario
3. New Help For Canadian Retailers
4. Western Union In Mobile Money Transfer Pact - Members Only Access
5. Giesecke & Devrient Delivers The Card Application Management System For The Heilbronn Test Region In Baden-Wuerttemberg
6. Fime's Laboratory Accredited By Discover Network
7. Gemalto & Far Eastone Telecommunications Partner To Start Asia's First 'Pay-Buy Mobile' Trial
8. Top Latin American Banks Offer M-Banking - Members Only Access
9. Canadian Government Plans ID Theft Bill
10. Oberthur Card Systems To Take On New Name With Restructuring Of Group
11. ACT Canada To Exhibit At Cartes
12. Nigerian Banks Migrating To EMV
13. Gemalto First Company To Receive EMV & American Express Certifications For Its Linux(Tm)-Based Payment Terminals In Italy
14. How Chevron Met The PCI DSS Deadline - Members Only Access
15. Spain's Electronic ID Program Gathers Steam

ACT CANADA THANKS OUR NEW & RENEWING MEMBERS

PRINCIPAL

Giesecke & Devrient ~ member since 1990

GENERAL

Collis ~ member since 2006
FIME ~ member since 2006
Keycorp ~ member since 1998

GOVERNMENT

Ontario Government - Ministry of Government Services ~ member since 2006

UPCOMING EVENTS

Cartes & IDentification 2007
November 13 - 15, 2007
Paris, France
http://www.cartes.com
Meet with ACT Canada at this event

1. EDITORIAL COMMENT
Source: Catherine Johnston, President & CEO, ACT Canada (10/31)

EMV answers: ACT Canada launches new web service

Yesterday 60 key stakeholders met in Toronto to discuss questions retailers have asked ACT Canada about EMV. By the end of the session there were significantly more questions as retailers, issuers, acquirers and industry representatives discussed five questions posed by ACT Canada.

The diversity of retail operations across Canada means that there is no "one size fits all" EMV implementation strategy, so the challenge is to provide support and information for the multitude of retail operations and their differences, as they convert over the next three years.

Retail associations such as the Retail Council of Canada and Retail Merchant Associations, as well as card associations such as Visa, MasterCard and Interac are helping provide information.

Today, ACT Canada joins them in providing a new way for retailers, media, consumers and the industry to source general and specific information, with the launch of www.emvcanada.com. In addition to information and links, merchants have a forum where they can post questions. As of the launch, there are already 44 questions that have been asked and answered by ACT Canada members. They are categorized by business concerns, customer transactions, cashier and staff education, what happens when…, hardware related, card-not-present and general issues.

Being able to get answers to specific questions is a most valuable asset for merchants. Because ACT Canada members have worked with EMV in other implementations, they have those answers. A link within the forum allows merchants to submit questions and this can be done anonymously. Our members are identified when providing answers so that readers can follow up with them if they wish more information about the answer or the company.

I am very excited about the site and the reaction of those present yesterday. For me it is a little like giving a presentation. As you speak you're guessing at what the audience wants to hear and know, but in the question and answer period that follows, you really find out.

So, check it out. The merchant forum can be reached through the merchant tab. My thanks to the retailers who asked questions, all the associations that provided information, our members who have and will continue to provide answers and Andrea McMullen, who worked late into the nights and through weekends to create this site. I'd also like to thank Visa Canada Association for their sponsorship of yesterday's meeting.

Join us in supporting EMV stakeholders.

2. CANADIAN PAYMENTS INDUSTRY COMMENCES CHIP TRIAL IN KITCHENER-WATERLOO, ONTARIO
Source: Canada Newswire (10/16)

Members of the Canadian payments industry - Interac Association, MasterCard Canada Inc., Visa Canada and many of their respective card issuers, payment processors and merchants -announced the beginning of Canada's migration to chip-enabled debit and credit cards, Automated Banking Machines (ABMs) and merchant terminals starting with a trial in Kitchener-Waterloo, Ontario.

The trial of chip-based payments is designed to assess communications to customers and merchants and allow participants to monitor merchant and consumer awareness and adoption before continuing with the national chip rollout. The trial will also allow participants to ensure the interoperability of their respective cards and devices in a secure and controlled manner.

More than 20 organizations representing debit card issuers, credit card issuers, ABM providers, payment processors and merchants are taking part in the trial. Card issuance, ABM upgrades and merchant terminal deployment will increase over the coming months with sufficient volume for merchant and consumer experience research expected by spring 2008. Consumers who receive a chip-enabled debit or credit card during the trial will benefit from the chip functionality in the Kitchener-Waterloo area. The cards can also be used anywhere where credit and debit cards are accepted as the magnetic stripe will remain on the back of chip cards and chip-ready terminals and ABMs will continue to recognize both chip and magnetic stripe cards.

The Kitchener-Waterloo trial is expected to continue through to October 2008 at which point the deployment of chip-enabled cards, ABMs and merchant terminals will roll out nationally over the next several years.

The migration to chip technology represents an evolution of the electronic payments industry and is designed to make an already safe payments system even more secure. Widely used in more than 100 countries around the world, chip credit and debit cards contain an embedded computer chip that provides increased protection against counterfeit and lost and stolen card fraud.

More information about the trial, including a list of participating organizations can be at www.chipmigration.ca.

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

3. NEW HELP FOR CANADIAN RETAILERS
Source: ACT Canada (10/31)

Catherine Johnston, President & CEO of ACT Canada, today offered help to Canadian retailers converting to EMV (Europay,MatserCard,Visa) payment. Noting that the move will help cut fraud and other crime in Canada, she acknowledged that the diversity of retail operations in Canada precludes a "one size fits all" strategy. "A retailer's ability to not only get information, but also to ask questions and get timely answers, will ultimately pay off in benefits to consumers, merchants and society in general", said Johnston at a meeting of 60 key stakeholders in Toronto yesterday.

Today, ACT Canada publicly announced a new way for retailers, media, consumers and the industry to source general and specific information, with the launch of www.emvcanada.com. In addition to information and links for these groups, merchants have a forum where they can post questions. As of the launch, there are already 44 questions that have been asked and answered by ACT Canada members. They are categorized by business concerns, customer transactions, cashier and staff education, what happens when…, hardware related, card-not-present and general issues.

Johnston pointed out that, "Being able to get answers to specific questions is a most valuable asset for merchants. Because ACT Canada members have worked with EMV in other implementations, they have those answers. A link within the forum allows merchants to submit questions and this can be done anonymously. Our members are identified when providing answers so that readers can follow up with them if they wish more information about the answer or the company."

4. WESTERN UNION IN MOBILE MONEY TRANSFER PACT

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.

5. GIESECKE & DEVRIENT DELIVERS THE CARD APPLICATION MANAGEMENT SYSTEM (CAMS) FOR THE HEILBRONN TEST REGION IN BADEN-WUERTTEMBERG
Source: ICMA Daily News (10/25)

The second phase of testing for the German electronic health care card has begun. In the Heilbronn test region, the German electronic health care card is being personalized using Giesecke & Devrient's card application management system (CAMS).

The Heilbronn test region is one of seven regions selected by the Federal Ministry of Health, which is testing offline how the German electronic health care card interacts with the other components of the data transmission infrastructure. The AOK Baden-Wuerttemberg health insurance company, supported by the system and software company AOK Systems and technology group Giesecke & Devrient, is taking a leading role.

The CAMS plays a key role in the infrastructure for the German electronic health care card. It controls all functions throughout the lifecycle of the card: from card management-manufacture, personalization, and issuing of the card-to ongoing data maintenance during the lifecycle of the card to cancellation due to expiry or loss of the card.

Hans Wolfgang Kunz, Group Executive for the Government Solutions business unit at G&D, explains: "The CAMS that G&D has specially developed for the health care system is a flexible, streamlined, client-capable system. The electronic health care cards of approximately seventy percent of all insured individuals in Germany will be managed this way in the future. This has allowed us to establish a standard in the German health care system."

One of the most important features of the new CAMS is its 'telematics capability'. This allows it to combine data from different sources using modern communication channels. Strict compliance with all data protection laws is guaranteed at all times. Because not all patient data is stored on the chip of the German electronic health care card, the CAMS acts as a link which ensures the synchronization of data between external systems, such as the master insurance data for individuals or the image database, and the German electronic health care card. The CAMS is therefore able to manage the German electronic health care card in a networked structure online. Whenever a patient's card is inserted into a reader, the card data is updated as well.

The CAMS supports all standard computer center platforms as well as the interface to different card manufacturers. In addition, the certificates of external certificate service providers can be integrated; the CAMS certificate authorities (CA) for generating X.509 and CV certificates can be used as well. The certificates are required for the data transmission infrastructure authentication; customers can choose from two options: they can use the software provided by G&D, which can be seamlessly integrated into the CAMS used by the computer center, or they can use certificates from an external trust center.

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

6. FIME'S LABORATORY ACCREDITED BY DISCOVER NETWORK
Source: FIME (10/25)

FIME announced that Discover Network has accredited FIME's laboratory for full contactless functional testing.

Discover Network selected FIME R&D and consulting services to design and implement its global test and certification environment for contactless smartcards and terminals. Discover Network's accreditation of FIME enables contactless payment device and terminal manufacturers to develop products in compliance with Discover Network's specifications and international standards.

The accreditation is the outcome of 12 months of work devoted to the three major industrial steps: The definition of a specific quality environment, the completion of more than 10 pilot processes and the demonstration of end-to-end expertise in contactless technology.

FIME is a member of ACT Canada; please visit http://www.fime.com.

7. GEMALTO AND FAR EASTONE TELECOMMUNICATIONS CO. LTD. PARTNER TO START ASIA'S FIRST 'PAY-BUY MOBILE' TRIAL
Source: Gemalto (10/04)

Gemalto announced a partnership with Taiwan's Far EasTone Telecommunications Ltd. to start Asia's first mobile contactless SIM-based NFC (Near Field Communications) trial. This trial, starting in November and rolled out in phases, is part of the GSM Association's 'Pay-Buy Mobile' initiative which seeks to define a common global approach to using NFC technology to link mobile devices with payment and contactless systems. Taiwan's fast-paced adoption of contactless payment services and appetite for new technologies makes it the perfect place to start the trial.

Far EasTone subscribers participating in the trial will be able to make mobile contactless purchases at any Far EasTone trial partner merchant with the same ease and convenience as if using an ordinary contactless payment card. Additionally, a fun new way to shop is to interact with "smart posters". Taiwan's hypermarket chain, Far Eastern Geant for instance, will hang posters embedded with NFC tags at their stores. Shoppers walk by, wave their NFC mobile across the poster and walk away with a coupon downloaded to the SIM for use at the checkout or for later purchases. This type of shopping gesture is just one of the exciting new ways to connect the mobile lifestyle with the convenience of contactless. Moreover, subscribers can view and interact with services provisioned using the mobile's own web browser. In this way, subscribers see the services on the SIM presented as a web page.

Consecutive trial phases, leading to commercial rollout in 2008, will gradually introduce a broader variety of different merchants, partners and services including Taiwan's largest convenience store chain 7-Eleven, department store Shin Kong Mitsukoshi, vending machines from HeySong and rail transport operated by Kaohsiung Rapid Transit Corporation.

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

8. TOP LATIN AMERICAN BANKS OFFER M-BANKING

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.

9. CANADIAN GOVERNMENT PLANS ID THEFT BILL
Source: epaynews (10/05)

Canada's Federal Government will introduce tough legislation to criminalize identity theft this fall. Rob Nicholson, Canada's Federal Justice Minister, said that he will introduce a series of amendments to the country's Criminal Code. The amendments will make it easier for police to combat the rapidly growing problem of ID theft, allowing officers to intervene sooner and before frauds are perpetrated.

The government says the Criminal Code currently does not ban the collection, possession and trafficking in identity information such as credit card numbers or social security numbers. "Our Government will be giving police the tools to better protect Canadians by stopping identity theft activity before the damage is done," Nicholson said.

Jennifer Stoddart, Canada's Federal Privacy Commissioner, welcomed Nicholson's announcement, but said there needs to be better coordination among agencies involved in preventing ID theft. "Past efforts to combat ID theft and fraud using personal information have been hampered by a lack of coordination among various Government departments and agencies, the Provinces, law enforcement agencies and private-sector organizations," she said in a statement. According to credit information bureau Equifax Canada, over the past two years Canadian creditors reported over 45,000 cases of identity theft.

10. OBERTHUR CARD SYSTEMS TO TAKE ON NEW NAME WITH RESTRUCTURING OF GROUP
Source: Card Technology (10/29)

Oberthur Card Systems has announced it will rename itself Oberthur Technologies with the acquisition of the security-printing business of its parent, privately held François-Charles Oberthur Group of France.

With the restructuring, smart cards and conventional cards and related services would still make up 80% of the expanded company. But next year, after the deal is expected to be completed, the company would include passports, visas, conventional ID cards and banknote printing, along with scratch cards for mobile network operators and a small unit that sells containers protecting cash while in transit. The added businesses would have added about 120 million euros (US$157.98 million) in sales to Oberthur Card Systems' 524 million euros revenue in 2006.

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

11. ACT CANADA TO EXHIBIT AT CARTES

ACT Canada will be exhibiting at Cartes & Identification 2007, the international smart card and identification trade show, from November 13 to 15, 2007 at the Villepinte Exhibition Centre in Paris. Our booth number is 4 H 055 and we encourage ACT Canada members to stop by and say hello.

Catherine Johnston and Andrea McMullen will be on hand to discuss member benefits, opportunities, and the Canadian market. We also invite you to visit ISCAN (International Smart Card Associations Network) to learn more about world wide activities.

For more information about ACT Canada visit http://www.actcda.com.

12. NIGERIAN BANKS MIGRATING TO EMV
Source: epaynews (10/17)

According to Thales, Access Bank and United Bank of Africa (UBA) are in the process of migrating their existing magnetic-stripe cardholder base to EMV, making them the first Nigerian banks to move to chip-and-PIN. Access Bank and UBA have installed the payment security firm's Host Security Module (HSM) 8000, a hardware device that encrypts EMV card transactions.

According to Mitchell Elegbe, InterSwitch's managing director, Access Bank and UBA will have completed their EMV migration by the end of December 2007. The whole process will have taken "just a few months," he says.

The Central Bank of Nigeria issued guidelines in 2005 suggesting that all Nigerian banks should migrate to chip-and-PIN by 2008. It is also expected that Nigerian EMV cards will carry other applications in the future such as loyalty and biometrics.

Card fraud levels are likely to rise in Nigeria due to increased card usage and the growing use of international card brands such as Visa and MasterCard. Other Nigerian banks are expected to follow Access Bank and UBA and roll out EMV cards to protect their customers against fraud, it notes.

13. GEMALTO FIRST COMPANY TO RECEIVE EMV AND AMERICAN EXPRESS CERTIFICATIONS FOR ITS LINUX(TM)-BASED PAYMENT TERMINALS IN ITALY
Source: Gemalto (10/03)

Gemalto announced its MagIC³ range of Point-Of-Sale (POS) terminals has been EMV certified both by the Association of Italian Banks (ABI), in compliance with its Progetto Microcircuito specification, and by American Express. This platform, which incorporates the MagIC Open&Sec technology running on Linux, is aimed at securing the open world with unrivalled power and connectivity - MagIC³ is powered by two 32-bit microprocessors and features Universal Serial Bus (USB) devices. In addition, its Ethernet connection propels it into the Internet world.

The Gemalto terminals' Linux-based operating system leverages Internet Protocol (IP) technology and accelerates the development of new value-added solutions. Their high level of connectivity allows users to easily upgrade their software or install additional modules by simply downloading these through a USB key. Furthermore, MagIC³ provides an intuitive user interface which makes this range of terminals extremely easy and convenient to operate.

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

14. HOW CHEVRON MET THE PCI DSS DEADLINE

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.

15. SPAIN'S ELECTRONIC ID PROGRAM GATHERS STEAM
Source: CardTechnology (10/29)

Spain's Interior Ministry announced it has distributed 1.2 million chip-based national ID cards and expects to issue at least 800,000 more by the end of the year. Eventually, more than 30 million Spaniards will carry them.

ID cards have been a fixture in Spain for more than 50 years. But the current program, called DNI-e, for Documento Nacional de Identificación electrónica, opens up the possibility for new applications.

Over the years, the DNI has evolved from its earliest role as a mandatory document for internal spot checks by police to being the standard identification for everything from getting a driver's license or passport to collecting a pension and social security benefits.

The new card does all that. In addition, cardholders will be able to use the ID to securely conduct business with the government online. The card is equipped with a contact interface and more than 32 kilobytes of memory.

There are three levels of access within the chip. The "public zone" is accessible for reading without restrictions, the "private zone" can be read using the owner's PIN, and the "security zone" is accessible with a card reader.

The online user guide for the DNI-e card states the card is valid for all types of e-government transactions, from requesting a scholarship grant to making tax payments and carrying out business with private companies. Other governments, including those in Finland and Belgium, however, have offered this type of digital-certificate functionality on their cards without generating a lot of interest from citizens.

Spain's program was launched in February 2006 with a 7,000-card pilot program that followed three years of development. It has slowly accelerated, and now more than 100,000 new cards are issued each month, said the government.

Several government departments or agencies are involved in the DNI-e program, including the Ministry of the Interior, the Ministry of Tourism, and the national mint. The program will cost an estimated 313 million euros. (US$450.4 million). The 2007 budget is 77 million euros.

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.