Stakeholders Driving Payment Evolution and Digital Identity

October 2010 ACTion Newsletter

IN THIS ISSUE

1. Editorial - 76%
2. Go Big or Go Home
3. Visa Launches First Debit Product in Canada
4. Card Fraud Falls to Ten Year Low
5. 10 Key Trends Changing the Face of the Financial Services Industry - Members Only News
6. Interac Offers ATM ISOs Alternatives to Comply With Chip Migration
7. Watchdog Warns Criminals, Terrorists Could Abuse New Payment Methods
8. NBS Technologies Granted Canadian Patent for Smart Card Personalization
9. More Than 1 Billion EMV Cards in Circulation
10. PayPal Positions Itself as the Mobile Payment Platform, Predicts $700 Million Sales in 2010 - Members Only News
11. Gemalto & VeriFone Forge Strategic Partnership
12. Apriva Releases AprivaPay for Android
13. Collis & Toro Forge Strategic Technology Partnership
14. Ingenico & Sage Payment Solutions Partner for New Integrated Payments Capabilities for SMBS
15. TfL Confirms Contactless Payment Plans - Members Only Access

ACT Canada Partners

Visa

Visa operates the world's largest retail electronic payments network and is one of the most recognized global financial services brands. Visa facilitates global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses and government entities.

Collis

Collis is a leading provider of EMV, e-ID, and e-Passport test tools, consulting, and training in Canada. Contact us for EMV training and test tools for every step of the EMV Transaction life-cycle - Cards, Terminals, Acquiring host and Authorization host. Collis America at 1-651-925-5410.

ACT CANADA THANKS OUR NEW & RENEWING MEMBERS

PRINCIPAL

Canadian Payments Association ~ member since 1998
Giesecke & Devrient ~ member since 1990

GENERAL

Hypercom ~ member since 2008
YESpay ~ member since 2008

ASSOCIATE

FlexExports ~ member since 2008
PJE Consulting Inc ~ member since 2005

CALENDAR OF EVENTS

Smart Card Alliance 2010 Government Event
November 16-19, 2010
Washington, DC, USA
http://www.smartcardalliance.org

CARTES & IDentification 2010
December 7-9, 2010
Paris-Nord Villepinte Exhibition Centre
Paris, France
http://www.cartes.com

1. EDITORIAL COMMENT
Source: Catherine Johnston, President & CEO, ACT Canada (10/27)

76%

This month the Merchant Advisory Group met in Dallas. MAG members process 3 quarters of a trillion dollars a year in payment.

The conference kicked off with a 3 hour EMV workshop. Tracey Black of GFH reviewed the Kitchener Waterloo trial and early information about the national rollout. Robert Hayhow of TD Merchant Services talked about merchant experiences and Dave Mahr of STJ Retail and I joined Rob for the closing panel.

We were asked questions that had come from round table discussions. Merchants asked about business cases, mobile, contactless, signature vs PIN and future proofing POS. After all was said and done the merchants in the audience were asked "Do you want EMV in the US"? Each merchant had 1 vote.

76% said yes. For Canadian and other issuers who want to see an end to mag stripe issues, is this a silver bullet? Having merchants ask for EMV is a new phenomenon. How will other stakeholders react?

ACT Canada will soon launch EMV-USA.com, where merchants and those other stakeholders may ask questions and source information about EMV and our experiences in Canada.

2. GO BIG OR GO HOME.
Source: ACT Canada (10/27)

That seemed to be the theme of ACT Canada's President's report this week as the association rolled out a new searchable members' directory on its web site, launched 2 new Strategic leadership teams; Prepaid and Cyber Security, announced the new President's Advisory Council and a Board Advisory committee. Members also heard that the association membership grew by 31% in the past year and the conference by 55% (delegates). ACT Canada was also active in the US market as the Federal Reserve, Merchant Advisory Group, American Bankers Association and the IBM Retail Users Group all sought EMV information.

A new board was also announced. Paul Zatychec of EWA Canada will chair the new board, Sharon MacAlpine of HSBC is Vice Chair, Nino Di Teodoro, of Citi Card Canada is Treasurer and Susan Reynolds of Coinamatic is Corporate Secretary. Directors include Sharon Fisk, ATB Financial; Didier Serra, INSIDE Contactless; and Allen Wright, Interac. They are joined this year by Tracey Black of GFH Group, David Chaudhari of Ingenico and Willis Morettin of G&D. Catherine Johnston, President & CEO is also a director.

3. VISA LAUNCHES FIRST DEBIT PRODUCT IN CANADA
Source: Canada Newswire (10/18)

Visa Canada announced the launch of the company's first debit cards in the Canadian marketplace. CIBC is the first Canadian issuer to offer Visa Debit through its CIBC Advantage Card, which will be available in branches beginning today. In Canada, the CIBC Advantage Card will provide Canadian consumers with the ability to shop widely online, by phone or mail and in more than 200 countries and territories around the world using funds directly from their bank accounts.

Debit cardholders will continue to be able to withdraw cash from automated banking machines (ABMs) and purchase goods and services at a Canadian merchant with funds directly from their bank account. At the register, the CIBC Advantage Card will be processed through Interac, Canada's existing debit network.

Purchases made online, over the phone, by mail or internationally will be processed over Visa's network and will offer purchase protection with Visa's multiple layers of security including:

  • Visa Zero Liability Policy - Visa cardholders are not liable for unauthorized use of their card if their card is lost, stolen or if their card number is used fraudulently.
  • The Visa E-Promise - provides additional protection when using a Visa card to shop online, by mail, or by phone if the cardholder has tried, and has been unsuccessful, in resolving a dispute directly with the merchant.
  • Verified by Visa (VbV) - offers greater protection against unauthorized use of Visa cards online, by registering a password and shopping online at VbV enabled merchants.
  • Three-digit code (CVV2) - provides a crucial security feature on the back of Visa cards that helps merchants validate purchases made with Visa cards online and by phone.

All Visa Debit cards in Canada will also be chip-enabled, complementing Visa's migration to chip technology in Canada.

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

4. UK CARD FRAUD FALLS TO TEN YEAR LOW
Source: ICMA Industry News (10/13)

Credit card fraud in the first half of 2010 fell to its lowest level in a decade, with a number of initiatives contributing to the decline.

Losses caused by credit card fraud totalled £186.8 million during the first six months of 2010, a reduction of 20% compared with the period from January to June in 2009.

The UK Cards Association, which released the figures, said the ten year low was the result of a number of security initiatives.

They include the increasing roll-out of updated chip cards in the UK and the ongoing work with the retail community to raise awareness of the ways in which retailers can protect their chip and PIN equipment from criminal attack.

There has also been a greater sign-up to MasterCard SecureCode and Verified by Visa by cardholders and retailers; increasing use of fraud detection tools by banks and retailers; and the increasing roll-out of chip and PIN abroad.

Online banking fraud has also fallen dramatically. In the first six months of the year losses totaled £24.9 million-a 36% fall on the 2009 half-year figure.

Despite an increase in security software and an awareness of the importance of keeping details private, the industry said that losses over half year periods have been fairly volatile over the last five years, and that more work needs to be done in this area.

Phone banking fraud losses totaled £5.8 million during January to June 2010, an increase of 9%from January to June 2009.

Most losses involve customers being tricked into disclosing security details-through cold calling or fake emails-which the criminal then uses to commit fraud.

To help customers protect themselves the industry continues to highlight the fact that banks will never cold call or email customers and ask them for login details and passwords.

5. KEY TRENDS CHANGING THE FACE OF THE FINANCIAL SERVICES INDUSTRY - 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.

6. INTERAC OFFERS ATM ISOS ALTERNATIVES TO COMPLY WITH CHIP MIGRATION
Source: ATM Marketplace (09/30)

The Interac Association has given Canada's ISOs two alternatives to comply with the country's first EMV deadline for cash dispensing, non-deposit ATMs.

The ISOs, which own and operate non-bank ATMs, must have 50 percent of their machines chip-enabled by Dec. 31, 2010, or, as an alternative, have 80 percent of their cash dispensers that are considered high-risk meet EMV standards by the end of the year.

"The option was communicated to our members this year," said Tina Romano, spokesperson for Interac, which links the proprietary networks of Canada's banks and credit unions to allow them to exchange financial data. "There are a variety of factors that determine whether an ABM [ATM] is high-risk, such as geography, volume, etc.; however, for security reasons, we do not disclose detailed specifics."

Doug Epp, senior director of sales for Transaction Network Services Canada, owner of processor Calypso Canada, expanded on Romano's explanation.

High-risk ATMs are machines in which thieves have used counterfeit debit cards to steal cash, Epp says. Canadian ISOs have deployed 35,000 to 36,000 off-premises ATMs and 25 percent, or 9,000 machines, are considered high-risk. Fewer than 5 percent of the high-risk ATMs have been upgraded so far, he says.

Fraud at off-premises ATMs is expensive.

"Royal Bank of Canada estimates annual off-site ATM fraud to be in excess of C$140 million (U.S. $136 million)," Epp said. There are an estimated 300 to 400 Canadian ISOs, and if they do not meet Interac's requirements by the organization's deadline, they will be sanctioned, Romano says.

The final deadline for ATM EMV compliance is Dec. 31, 2012.

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

7. WATCHDOG WARNS CRIMINALS, TERRORISTS COULD ABUSE NEW PAYMENT METHODS
Source: The Star (10/08)

Canada's money-laundering watchdog is scrutinizing the growing popularity of prepaid cards, Internet-based payments and mobile payment services, suggesting those new payment methods are likely to be exploited by both criminals and terrorist financiers.

The Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC, also disclosed that it is collaborating with its global counterparts on this emerging issue.

Toward that end, FINTRAC is participating in a project spearheaded by the Paris-based Financial Action Task Force, an international body established in 1989 to combat money laundering and terrorist financing.

FINTRAC said that study focuses on "the risks" associated with new payment methods and will draw on numerous case studies showing how such services are used for illicit purposes.

"FINTRAC anticipates that the FATF will publish a public report on this work later in 2010," it said.

Over the past few years, prepaid cards and Internet payment services have only been identified in a minority of domestic money laundering and terrorist financing cases. In 2008-2009, for instance, Internet-based payment services were involved in roughly 4 per cent of all disclosed cases, FINTRAC said in its report.

"The low number of cases may be due to the lack of awareness of the reporting entities, to the low usage to date of NPMs (new payment methods) by money launderers and terrorist financiers, or to successful evasion of authorities," FINTRAC said.

"It may also be due to the fact that NPMs are still a new phenomenon and are not yet familiar to potential criminals and terrorist financiers."

Of chief concern, new payment methods like prepaid cards can be purchased and loaded anonymously, while Internet payment services require no "face-to-face" contact.

"This poses additional challenges for the providers' verification procedures, increasing the risk of customers remaining unidentified or using false/stolen identities," its report added.

FINTRAC is also worried about new payment services that allow consumers to withdraw or convert money in real time international transactions. "These factors can complicate monitoring as well as making it difficult for authorities to follow the money trail."

The agency also suggested it is monitoring the development and roll out of mobile payment services that will facilitate international fund transfers for consumers.

8. NBS TECHNOLOGIES GRANTED CANADIAN PATENT FOR SMART CARD PERSONALIZATION
Source: NBS Technologies (10/25)

NBS Technologies Inc (NBS) announced that the Commissioner of Patents of the Canadian Intellectual Property Office has issued the company a patent for the personalization of smart (EMV / chip) cards in client/server based environments.

Patent #2331494, entitled 'Smart Card Personalization in a Multistation Environment', recognizes NBS' ability to produce personalized smart cards on a multitude of devices which are connected to a server PC responsible for data preparation and cryptographic operations. NBS' technology enables the personalization of smart cards, including financial, ID, contact or contactless cards.

With NBS' smart card personalization environment, card issuers can offer a myriad of smart card personalization options on a multitude of devices without the need for spending funds on increased cryptographic devices or support of multiple development environments. This flexibility greatly reduces the total cost of ownership of a card producer's smart card personalization process. The architecture also increases the security of the system as all data preparation, including confidential operations, takes place in a secure environment at the Server.

NBS Technologies is a member of ACT Canada; please visit http://www.nbstech.com.

9. MORE THAN 1 BILLION EMV CARDS IN CIRCULATION
Source: ICMA Industry News (10/20)

EMVCo, the EMV standards body collectively owned by American Express, JCB, MasterCard and Visa, reports that over one billion EMV cards and 15.4 million EMV terminals are active globally as of September 1, 2010.

Furthermore, EMVCo says that 36% of total cards and 65% of total terminals in circulation are now based on the EMV standard.

According to EMVCo, Europe Zone 1 (Western) has the highest adoption of EMV technology with 555.7 million cards issued and 9.4 million terminals in place, representing an adoption rate of 65.4% of cards and 84.7% of terminals currently active in the region.

Within the Asia-Pacific region, 305.1 million cards and 3.2 million terminals are in operation, followed by the Canada, Latin American and the Caribbean region, which has 182.2 million cards and two million terminals in circulation. These two regions share a similar rate of EMV adoption with 26.6% and 26.4% for cards, and 41.6% and 55.6% for terminals, respectively.

In Europe Zone 2 (Eastern), 22.8 million cards and 458,000 terminals are now active, representing an adoption rate of 11.5% for cards and 61.2% for terminals.

16.8 million cards and 348,000 terminals have been deployed in Africa and the Middle East, representing an adoption rate of 13.7 percent for cards and 62.5 percent for terminals.

The U.S. is excluded from the figures as there are currently no EMV programs deployed.

American Express; MasterCard and Visa are members of ACT Canada; please visit http://www.amex.ca; http://www.mastercard.ca & http://www.visa.ca.

10. PAYPAL POSITIONS ITSELF AS THE MOBILE PAYMENT PLATFORM, PREDICTS $700 MILLION SALES IN 2010 - 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.

11. GEMALTO & VERIFONE FORGE STRATEGIC PARTNERSHIP
Source: ICMA Industry News (10/27)

VeriFone Systems, Inc. and Gemalto announced a comprehensive strategic partnership:

The two companies will jointly pursue new chip card solutions based on the global EMV payment standard, particularly as U.S. retailers and card networks increasingly acknowledge chip card and contactless technologies as a core component of a comprehensive security infrastructure.

The two companies are also in exclusive discussions for VeriFone to acquire Gemalto's point of sale (POS) solutions business.

Gemalto to be the preferred supplier of Machine-to-Machine (M2M) wireless modules and related solutions for VeriFone payment systems.Gemalto and VeriFone believe customers of Gemalto's POS solutions will benefit from access to VeriFone's full payment solutions product line. Based in France, the POS solutions business would also serve as an ideal launching pad for VeriFone's planned European expansion campaign.

With Cinterion Wireless Modules, Gemalto is also the leading provider of industrial M2M wireless communication modules and solutions. M2M enables the remote connectivity and administration that is crucial in deploying over-the-air activation, software updates and post-issuance services to wireless POS solutions already in the field. With the preferred supplier relationship for Gemalto M2M technology, VeriFone will continue to benefit from the quality of Cinterion wireless modules and will be able to take advantage of the latest Gemalto developments in M2M packaged solutions.

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

12. APRIVA RELEASES APRIVAPAY FOR ANDROID
Source: Apriva (10/13)

Apriva announced the general availability of its AprivaPay Point-of-Sale (POS) application for Google's Android mobile operating system. A full-featured, secure, downloadable application, AprivaPay for Android is a comprehensive solution that serves the needs of mobile merchants by providing them with a cost-efficient and flexible tool to accept card-based payments.

AprivaPay for Android provides a more professional and convenient experience for both the merchant and consumer. The application enables merchants to conduct "card present" transactions, which translates into lower interchange rates. AprivaPay for Android is compatible with all 2.0, 2.1 and 2.2 software versions and supports the Woosim PORTI SC-30 combination reader/printer. Apriva is evaluating additional peripherals that will enhance the consumer experience and meet specific merchant needs. AprivaPay is certified and available through the online Android Market, as well as AprivaPay authorized resellers.

In addition to its release on the Android platform, AprivaPay is currently available on Apple's iPhone and iTouch as well as Windows Mobile devices. AprivaPay is also available as a web-browser based tool that can be utilized through any feature phone or Smartphone with web-browser capabilities. AprivaPay for select BlackBerry devices is expected to be released by end of 2010.

Apriva is a member of ACT Canada; please visit http://www.apriva.com.

13. COLLIS & TORO FORGE STRATEGIC TECHNOLOGY PARTNERSHIP
Source: Collis (10/06)

Collis and Toro signed a global strategic partnership agreement recently. The partnership will see joint offering of state-of-the-art Mobile Payment & NFC Test Tools and expert Services.

Combining Collis & Toro NFC and Mobile Payment expertise will provide the Mobile Telecom market with faster implementations, reduce costs and provide better quality results.

Collis offers Products & Services for the NFC Mobile Ecosystem and the Mobile Payment ecosystem. Collis ensures trust in technology, so when the time comes to launch an NFC payment product, we are by your side with the appropriate tools, consultancy, training and knowledge support to ensure a smooth NFC implementation.

Toro has developed and continues developing akami suite, a mobile platform for NFC services. akami suite is a complete front-end software suite, complementary to the TSM platforms, that allows the provisioning and managing of a user's own applications' User Interface to customers using NFC phones, and the possibility to extend the wallet into a marketing platform.

Collis is a member of ACT Canada; please visit http://www.collis.nl.

14. INGENICO AND SAGE PAYMENT SOLUTIONS PARTNER FOR NEW INTEGRATED PAYMENTS CAPABILITIES FOR SMBS

Source: Ingenico (10/11)
Ingenico and Sage Payment Solutions announced their partnership to bring to market a new integrated payments offering for small and mid-sized businesses (SMBs). Through the partnership, Sage customers will be able to use Ingenico's advanced credit card terminals with Sage Exchange connectivity to securely process payments, and benefit from data integration and two-way communication advantages.

The Ingenico terminals will seamlessly integrate with Sage Exchange, Sage's secure, Payment Application Data Security Standard (PA-DSS) certified payments platform. The devices are currently being tested by several Sage customers, and will be generally available later this year.

Ingenico will offer Sage users its latest line of payment hardware, including standalone Ethernet (IP) and wireless terminals and integrated PIN Pads equipped with the Telium 2 technology. Ingenico will also integrate Incendo Online, its web-based, thin-client terminal application, with Sage Exchange to give SMBs secure, centralized control of their Ingenico payment devices, including 24/7 access to usability enhancements and security updates.

Sage Exchange will allow businesses and organizations to accept all forms and methods of payment, including credit and debit cards, gift/loyalty cards, electronic bank accounts (ACH), and paper and e-checks including electronic check conversion, with seamless data integration to a wide range of Sage business management software products and third-party business software and services.

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

15. TFL CONFIRMS CONTACTLESS PAYMENT PLANS - 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.