Stakeholders Driving Payment Evolution and Digital Identity

February 2008 ACTion Newsletter

IN THIS ISSUE

1. Editorial Comment
2. Canadian e-Passports To Be Issued In 2011
3. ICC Solutions Announces Availability Of Canadian Acquirer Test Solutions
4. Taking Chip-And-PIN Further - Members Only Access
5. Gemalto Provides World's First Comprehensive NFC Mobile Contactless Management Solution To Taiwan Mobile
6. Dynamic Card Solutions Introduces Contactless Instant Issuance
7. EWA-Canada SCAP Test Lab Accreditation Awarded By NIST & NVLAP
8. Oberthur Technologies Launches Flybuy Duo: A New & Unique Solution For Mobile Payment
9. Biometric Payments Standard Issued - Members Only Access
10. Giesecke & Devrient and Wirecard Bank Unveil the First E-Business Application to Use the European Citizen Card
11. Inside Contactless NFC Chip Sets New Standard For Handset Integration
12. ETSI Pushes Standards For NFC With Mobiles - Members Only Access
13. GRG Banking Optimizes ATMS With Paragon Software
14. ACI Worldwide Partners With Mfoundry To Deliver Mobile Banking Solution
15. BART Trial First To Use Mobile Phones To Pay For Fares & Food
16. ING & MasterCard To Develop Mobile Payments Solution
17. Indian Bank, Telco Launch Virtual Credit Card - Members Only Access

ACT CANADA THANKS OUR NEW & RENEWING MEMBERS

GENERAL

Dynamic Card Solutions ~ new member
NXP Semiconductors ~ member since 2006
President's Choice Financial~ new member

SME

RS Software ~ new member

ASSOCIATE

Blake, Cassels & Graydon LLP ~ member since 2007

CALENDAR OF EVENTS

CTST
May 12-15, 2008
Orlando, FL, USA
http://www.ctst.com
CTST is the premier advanced payments and security event in the Americas, bringing together 2000+ industry professionals to discuss solutions in smart cards, pre-paid cars, mobile payments, biometrics and more. The 4-day, 6-track event is produced in association with Cards and Payments Magazine and the Smart Card Alliance. ACT Canada members receive a 10% registration discount, please contact Andrea McMullen - 1 905 426-6360 ext 24 or andrea@actcda.com.

ACT Canada is pleased to present:

Cardware 08 - Government Focused Event
June 19, 2008
Ottawa, ON, Canada
&
Cardware 08 - Financial/Merchant Focused Event
October 8 & 9, 2008
Kitchener Waterloo, ON, Canada

Exhibit & Sponsorship information will be available in the event section of our web site as of March 1st. ACT Canada members receive discounts for this event. For additional information ,please contact Andrea McMullen - 1 905 426-6360 ext 24 or andrea@actcda.com.

1. EDITORIAL COMMENT
Source: Catherine Johnston, President & CEO, ACT Canada (02/22)

The Man in the Middle

Who owns the merchant relationship? Clearly the acquirer. Who owns the pain when point of sale training for EMV is inadequate? The merchant, the issuer and the consumer.

I say when, not if, because more than 60% of the transactions I've done across Canada, where my chip and pin are used, have required me to teach the cashier how to process the transaction. My favourite acquirer says that they teach the manager and if the manager fails to train the cashiers, it is not the fault of the acquirer. Normally I would agree, but not when it is a national rollout of a new payment mechanism. And not when a terminal has been deployed that has incomplete prompts, leading the transaction to time out and causing the cashier to announce that "those cards don't work" whenever chip cards are presented. (I'm pleased to say the terminal is not from one of our members.)

Issuers are hurt because their cards appear to fail. Customers are frustrated because it takes longer for them to pay, particularly when the cashier stops to decide whether a signature is required, and merchants will not accept slow downs at the POS. Cashier training is a BIG issue, as it has been for the past four trials in Canada. I realize that most acquirers were not here for those, but we were and we have been urging EMV stakeholders to pay close attention to this issue for many years. Failure to understand and appreciate the impact may be the biggest impediment to the success of EMV.

All this might be dealt with in the KW trial, but cards and terminals are in use well beyond that area. First impressions of how well the technology works is being formed in stores every day and when there is a problem it is highly unlikely that anyone says, "Oh, the acquirer's terminal isn't working." After all, very few Canadians are even aware of the role an acquirer plays.

So, for the next few years, either acquirers have to take additional steps to ensure that cashiers are trained, or relinquish their position in the middle to allow other stakeholders to solve this problem.

ACT Canada is working with our members to formulate training options for merchants and invites suggestions from all stakeholders.

2. CANADIAN E-PASSPORTS TO BE ISSUED IN 2011
Source: Mike Blanchfield, Canwest News Service (02/26)

Canadian travellers will be issued a higher-security electronic passport starting in 2011 that will be valid for 10 years instead of the current five, the federal budget announced.

Details of the new passport were contained in a two-year, $165-million spending package aimed at enhancing border security while still keeping people and goods moving.

The introduction of the new passport is the most novel of the new security measures outlined in the budget. Canada will join 42 countries, including the United States and all of Europe, with the introduction of the new electronic document that will look like the current passport booklet, but will contain a machine-readable encrypted microchip. The digital chip will contain the same information as the passport itself, but it will be virtually impossible to tamper with.

The government announced its intention four years ago to move to upgraded passports, but key details emerged in yesterday's budget.

The new measures also include $26-million to introduce the use of biometric data, such as fingerprints and live photographs, in the visas of foreign visitors, following the lead of the United States, Australia and Britain.

Ottawa will spend $6-million over two years to support enhanced provincial drivers' licences that will, for the first time, list a driver's citizenship. This new licence will help people living in border communities conform to the U.S. Western Hemisphere Travel Initiative, which requires the use of a secure travel document at land crossings by June, 2009.

The government is also kicking in an additional $14-million to more than double the number of people using the NEXUS program for low-risk frequent travellers between Canada and the United States, from 160,000 to 350,000. It will also spend $15-million to establish a facility to monitor the flow of small boats and big commercial ships on the Great Lakes/St. Lawrence Seaway.

Overall, the budget earmarks $75-million to the Canada Border Services Agency to more efficiently and securely manage the flow of people and goods at more than 1,200 entry points.

Passport Canada is a member of ACT Canada, please visit http://www.passport.gc.ca.

3. ICC SOLUTIONS ANNOUNCES AVAILABILITY OF 'CANADIAN ACQUIRER' TEST SOLUTIONS
Source: ICC Solutions (02/20)

ICC Solutions is delighted to announce the immediate availability of 'Canadian Acquirer' test solutions comprising the test cases recommended in the Acquirer Test Plan released by Interac Association. A test script pack is available to run on the industry recognised ICCSimTM Terminal Test Tool used globally. A stand-alone ICCSimAT dedicated to running the "Canadian Acquirer" test scripts is also available.

The Acquirer Test Plan defines a set of test cases that Acquirers or Integrators would use to test with their merchant terminals prior to the terminals going 'live' on the network. The tests will ensure that the merchant terminal will send test transactions through to the Acquirer host who would simulate Issuer Host. The tests simulate conditions that may be encountered in the field to ensure that the terminals respond correctly; the majority of the tests are negative conditions that could typically arise on a relatively frequent basis.

The tests associated with the 'Canadian Acquirer' test solutions are intended to be performed after the terminals have been configured to suit Acquirer or Integrator specific requirements (i.e. typical live terminal configurations), helping to ensure that the terminal continues to operate correctly after being integrated into the Acquirers network. ICC Solutions is an Interac Association approved Test Tool vendor.

ICC Solutions and Interac Association are members of ACT Canada, please visit http://www.iccsolutions.com & http://www.interac.org.

4. TAKING CHIP-AND-PIN FURTHER - Members Only Access

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. GEMALTO PROVIDES WORLD'S FIRST COMPREHENSIVE NFC MOBILE CONTACTLESS MANAGEMENT SOLUTION TO TAIWAN MOBILE
Source: Gemalto (02/07)

Gemalto announced that it has been chosen by Taiwan Mobile, Taiwan's leading telecommunication service provider, to provide the world's first commercial NFC SIM-based mobile contactless system. It is designed to remotely manage the life-cycle of any type of contactless service within a mobile phone environment, especially payment applications that mandate high security levels.

After multiple mobile contactless trials in Asia and in the rest of the world, Gemalto successfully developed a secure solution fulfilling the specific needs of its partners and end-users. It will allow Taiwan Mobile to register, issue, manage and terminate mobile NFC services over-the-air (OTA).

Taiwan Mobile's subscribers will be free to securely purchase goods, top-up their transport pass and proceed to coupons management just by using their mobile phone in a contactless mode. As most people always keep this personal device with them, the mobile contactless technology clearly brings them more freedom and convenience.

This comprehensive solution will be commercially rolled out nation-wide during 2008. It will enable banks, transport companies and other service providers to incorporate their services onto a mobile environment. This will complete Taiwan's contactless experience along with previous commercial launches for payment and transport.

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

6. DYNAMIC CARD SOLUTIONS INTRODUCES CONTACTLESS INSTANT ISSUANCE
Source: Dynamic Card Solutions (02/19)

Dynamic Card Solutions unveiled contactless capabilities with the latest version of its CardWizard software. Contactless personalization will be available with its FCP 20/20 full card personalization instant issue solution along with the Datacard 150i embosser. With contactless technology integrated into DCS' signature CardWizard product, financial institutions can maintain the customer and revenue benefits of instant issuance while capitalizing on one of the card industry's new growth opportunities.

The combination of smart card technology and DCS' instant issuance solutions helps financial institutions provide immediate access to contactless cards for new and existing customers. DCS' CardWizard contactless system will instantly issue cards with both chip and magnetic stripes allowing them to remain usable with a variety of existing merchants' payment systems.

Dynamic Card Solutions is a member of ACT Canada, please visit http://www.instantissuance.com.

7. EWA-CANADA SCAP TEST LAB ACCREDITATION AWARDED BY NIST & NVLAP
Source: EWA-Canada (02/01)

EWA-Canada's IT Security Evaluation & Test (ITSET) laboratory was the first lab accredited by the National Institute of Standards and Technology (NIST) and the National Voluntary Laboratory Accreditation Program (NVLAP) to perform Security Content Automation Protocol (SCAP) testing under the Information Security Automation Program.

The Information Security Automation Program (ISAP) is a U.S. government multi-agency initiative to enable automation and standardization of technical security operations. The Security Content Automation Protocol (SCAP) is a method for using specific standards to enable automated vulnerability management, measurement, and policy compliance evaluation (e.g., FISMA compliance). US Federal agencies must use certified tools to determine and verify that their systems are using the NIST - approved standard configuration(s). Vendor's tools that claim SCAP conformance can now be validated.

EWA-Canada's ITSET lab is also an accredited Common Criteria Test Lab (CCTL, or CLEF - Commercial Lab Evaluation Facility) and a device certification agent for the Payment Card Industry (PCI) and the Interac Association. The accreditation to perform SCAP testing expands our accreditation to perform FIPS 140 Cryptographic Module testing and FIPS 201 Personal Identity Verification (PIV) testing as a NVLAP Cryptographic and Security Testing lab.

EWA-Canada is a member of ACT Canada, please visit http://www.ewa-canada.com.

8. OBERTHUR TECHNOLOGIES LAUNCHES FLYBUY DUO: A NEW AND UNIQUE SOLUTION FOR MOBILE PAYMENT
Source: Oberthur (02/12)

Oberthur Technologies has designed FlyBuy Duo, a new and unique solution for Near Field Communication (NFC) Mobile Payment featuring an innovative two-chip architecture which complies with the needs of both banks and telecom operators. FlyBuy Duo won the Sesame for 'Best Mobile Application' at the Cartes exhibition in November 2007.

Operators and banks have expressed strong interest in NFC mobile payment, as it brings value to their business and customers. The main technical challenge was to combine the SIM card and secure payment element certifications, which follow different certification cycles.

FlyBuy Duo is a SIM-centric solution composed of two chips in a unique SIM plug-in:
- One completely standard (U)SIM chip for communication, transport, access control, e-ticket or loyalty applications, and which also acts as a router between the payment chip and the NFC front-end.
- One payment-certified chip dedicated to NFC payment applications.

This innovative solution is compatible with all standard SWP[1] handsets. Subscribers using SWP phones simply replace their SIM card with FlyBuy Duo in order to use NFC-enabled services.

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

9. BIOMETRIC PAYMENTS STANDARD ISSUED - Members Only Access

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. GIESECKE & DEVRIENT AND WIRECARD BANK UNVEIL THE FIRST E-BUSINESS APPLICATION TO USE THE EUROPEAN CITIZEN CARD
Source: ICMA Daily News (02/28)

Giesecke & Devrient (G&D) and Wirecard Bank AG are showcasing the first e-business application that utilizes the electronic ID card, which several European Union member states are planning to introduce. To use the application, consumers have to register with Wirecard Bank's internet payment service, Wirecard, and install special software and a simple contactless card reader on their home PCs. This new application allows banks and consumers to authenticate one another using an official personal identity document and a personal identification number (PIN) for the first time ever.

Giesecke & Devrient's new launch represents the first implementation of the standards for microchip-equipped European Citizen Cards along with the middleware to support commercial applications.

Several European countries, including Germany, are planning to introduce electronic personal ID documents with integrated microchips. Citizens will thus be able to identify themselves to government offices on the Internet as well. At the same time, the electronic ID can also help make e-business applications more secure - and more convenient, since it eliminates the need to maintain numerous user names and passwords for various internet portals.

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

11. INSIDE CONTACTLESS NFC CHIP SETS NEW STANDARD FOR HANDSET INTEGRATION
Source: INSIDE Contactless (02/07)

INSIDE Contactless introduced the latest version of its MicroRead multi-standard NFC chip, a third-generation product that sets a new standard for ease of integration. The MicroRead suite combines third-generation silicon, a full set of host interfaces, NFC software libraries and APIs, a field-proven reference design and robust standards support into a turnkey NFC solution ideal for a broad range of applications in any cell phone, smart phone, or other mobile or consumer electronics device.

The MicroRead chip offers the broadest range of NFC options, complying with the ISO 14443 A/B/B' standard, ISO 15693 and ISO18092, and NFC forum specifications, allowing a MicroRead-enabled device to be used not only for all traditional NFC applications, but also for new applications such as access control, logistics and tracking, as well as a wide range of legacy RFID applications.

The MicroRead IC is the first NFC chip to be both SIM- and SE- friendly. The unique multi-host router technology built into the MicroRead chip provides the capacity to implement any secure element, including SIM, SE or SD card, to support any business model.

Also unique is the MicroRead's self-powered "battery-off" mode, which provides simplicity and convenience to improve the user experience by enabling transactions to take place successfully even when the host device is turned off or the battery is completely drained.

INSIDE Contactless is a member of ACT Canada, please visit http://www.insidecontactless.com.

12. ETSI PUSHES STANDARDS FOR NFC WITH MOBILES - Members Only Access

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. GRG BANKING OPTIMIZES ATMS WITH PARAGON SOFTWARE
Source: Paragon Application Systems (02/19)

Paragon Application Systems announced the licensing of its FASTest and ATMulator Plus software to GRG Banking Equipment Company Ltd. (GRG Banking), the largest domestic ATM manufacturer in China. GRG Banking will use Paragon's FASTest and ATMulator Plus to develop, test and demonstrate new ATM features.

In order to expand internationally, GRG Banking needed software to assist them in testing new features such as the integrated chip card (EMV) extension to their ATM application offerings. GRG chose Paragon solutions based on the proven track record of the software and Paragon's expertise implementing new technologies including EMV world-wide.

Paragon Application Systems is a member of ACT Canada, please visit http://www.paragonedge.com.

14. ACI WORLDWIDE PARTNERS WITH MFOUNDRY TO DELIVER MOBILE BANKING SOLUTION
Source: ACI Worldwide (02/07)

ACI Worldwide announced that it will use mFoundry's Spotlight Financial Platform to offer mobile banking capabilities to users of its online business and consumer banking software. The mobile banking solution will integrate mFoundry's award-winning downloadable application software with ACI Enterprise Banker, ACI's industry-leading online banking system. The solution will allow business and consumer online banking customers to use their cell phones and other wireless handheld devices to access real-time account information and other banking applications.

As the number of mobile users continues to grow into the billions, financial institutions looking for an innovative payments solution to address this market can leverage the expertise of both companies. This solution will provide a direct link between a user's handheld device, their mobile communication carrier and the Enterprise Banker platform.

The downloadable applications running directly on the mobile handsets will provide the best possible experience for end users while enabling banks to extend their brand. In an industry first, the two companies plan to develop business user access to additional applications for alerts of time-critical transactions and notification and release of transactions awaiting approval. Future mobile banking initiatives will include mobile remittance to allow users to transfer funds globally in a variety of currencies via their handset.

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

15. BART TRIAL FIRST TO USE MOBILE PHONES TO PAY FOR FARES & FOOD
Source: ViVOTech (01/29)

A select group of BART riders is helping to launch a first-in-the-nation technological trial that will allow participants to walk up to any BART fare gate with a specially-equipped Sprint wireless phone and pay for their ride by tagging the phone on a reader located on top of the gate. Once through the gate, the 230 trial participants can hold their specifically-equipped Sprint mobile phone up to certain Jack in the Box and Sprint "smart advertisements" on BART station walls and download either directions to the nearest Jack in the Box restaurant or content from Sprint. Then, after taking the train to their favorite Jack in the Box location, participants can use their phone to pay for their meal. All this thanks to a developing new technology called "Near Field Communication" (NFC).

Details were unveiled for the launch of this first-in-the-nation, four month trial. This trial is much different from others in that it is the first to give participants the added benefit of automatically receiving the discounts and offers which companies usually only provide to customers who have enrolled in their loyalty programs. In the past, other pay-by-mobile-phone trials have just allowed customers to pay for goods and services using a credit card tied to their phone, which often prevented them from automatically receiving the discounts merchants provide. However, in this trial participants will automatically get those special discounts.

There are several other companies playing important roles in this trial including NXP Semiconductors and ViVOtech.

NXP Semiconductors and ViVOtech are members of ACT Canada, please visit http://www.nxp.com & http://www.vivotech.com.

16. ING AND MASTERCARD TO DEVELOP MOBILE PAYMENTS SOLUTION
Source: Collis (02/11)

ING Payments Retail Europe announced at the Mobey Forum in Amsterdam, their plans to partner with MasterCard Worldwide in the development of a Mobile Payments solution that focuses specifically on consumer convenience. The design will provide the consumer with flexibility and control over the Mobile Payments application used for small purchases.

ING and MasterCard Worldwide in close cooperation with Collis, Venyon, Toro and LogicaCMG will further develop this Mobile Payments solution. ING is exploring possible locations to test this solution.

Collis and MasterCard Canada are members of ACT Canada, please visit http://www.collis.nl & http://www.mastercard.ca.

17. INDIAN BANK, TELCO LAUNCH VIRTUAL CREDIT CARD - Members Only Access

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.