Welcome to the March edition of ACTion News. Our newsletter is distributed each month in order to keep you up to date with events in the advanced card industry. This complimentary service is provided by ACT Canada; "building an informed marketplace". It is also available in the Industry Information section of our web site www.actcda.com. Please feel free to forward this to your colleagues.
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IN THIS ISSUE:
1. PLANNING THE CANADIAN INFRASTRUCTURE
2. MOST BRITONS WANT MEDICAL 'SMART CARD' POLL
3. 1st CAMPUS SMART CARD AUTOMATION SYSTEM IN BC
4. MASTERCARD & EUROPAY UNVEIL NEW SECURITY INITIATIVES
5. IDENTITY THEFT GROWING AT ALARMING RATE
6. CTST 2002 ~ SECURING THE 21ST CENTURY
7. MIST EXPANDS WITH THE OPENING OF ASIA-PACIFIC OFFICE
8. VISA LOGO WILL APPEAR ON MOSCOW SOCIAL SECURITY CARD
9. SMART CARDS TO ZOOM IN 2003. REALLY. THEY MEAN IT.
10. CPI RECEIVES HIGHEST LEVEL OF VISA CHIP CERTIFICATION
11. INDUSTRY PRESSURES TO USE SMART CARDS IN AVIATION SECURITY
12. NEW MEXICO TO TEST SMART CARD DRIVER'S LICENSE
13. CARD FIRMS USING EMV TO 'CONTROL' PAYMENTS
14. JCB ISSUER TO TEST DUAL-INTERFACE CARD
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ACT CANADA WOULD LIKE TO THANK OUR NEW & RENEWING MEMBERS:

PRINCIPAL
SchlumbergerSema (upgrade)

GOVERNMENT
Canadian Passport Office
Treasury Board Secretariat
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1. PLANNING THE CANADIAN INFRASTRUCTURE
Source: ACT Canada (03/26)

As countries struggle to plan conversions from mag stripe to smart (chip) card infrastructures, The Advanced Card Technology Association of Canada has launched a powerful multi-jurisdictional stakeholder group to put Canada at the forefront of North America. Bringing together federal and provincial government representatives, card associations and key industry members, ACT Canada is providing a forum for identifying issues and contributing to solutions without delay.

Catherine Johnston, President & CEO of ACT Canada explains, "Issuers are no longer in total control of timetables. 9/11, identity theft and increased security needs are driving us forward to protect citizens and customers. We can no longer afford to think or talk in terms of one national infrastructure. We need to accept that smart and laser (advanced cards) infrastructure will follow the Internet model."

On that basis, the National Infrastructure Forum will define core infrastructure standards to carry a mix of financial, non-financial and secure transactions. Once these are identified, issuers may move forward with their own plans. Johnston says, "This is a breakthrough because each issuer can work to meet their own business and timing objectives, knowing that by choosing to meet these core requirements they've kept the door open to carry other issuers' transactions."

Privacy, business rationales, security and consumer awareness are also on the agenda. Recognizing that these subjects will impact any deployment, the group has written brief position papers on each. Plans are to expand these briefs to a point where issuers can draw from them to customize their own plans and programs.

The next step is to broaden the stakeholder group. Interested parties should contact Catherine Johnston of ACT Canada at (1) 905 426-6360 x 23.
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2. MOST BRITONS WANT MEDICAL 'SMART CARD' POLL
Source: Reuters Health (03/05)

Almost 2/3 of Britons want to take responsibility for their own medical information by means of an electronic "smart card," a recently released poll shows.

The survey found that 69% of patients would be willing to have responsibility for producing the records on visits to their general practitioner (GP) or a hospital. Those surveyed also said they would be willing to share drug information with pharmacists.

The UK gov't has committed to providing all patients with electronic access to medical records by 2005 and pledged to test the feasibility of using smart cards.

"These results reflect a maturity among the population, who now see they have a partnership with doctors & other health professionals," said Dr. Ian Banks, of the Doctor Patient Partnership (DPP) & Consumer Health Information Center (CHIC), which jointly commissioned the survey. "The informed patient with autonomy and responsibility for their own health has taken over from the paternalistic practice model," he told Reuters Health.

The NOP Research survey of 1,000 people also found that although 73% of people were aware they can ask to view their medical records, 87% were unaware they can be charged up to £10 for access. In addition, 62% of patients surveyed were unaware that they could expect to pay their GP practice up to £50 in administration costs to receive a copy of their medical record.

Executive Editor's Note: As Canadians review their own health care options; this is one that we should consider. Along with a counterfeit resistant card to reduce fraud, smart cards will also protect us from identity theft by moving information from the face of the card and placing it in a 'safe' location on the chip.
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3. 1st CAMPUS SMART CARD AUTOMATION SYSTEM IN BC
Source: Market News Publishing via COMTEX (03/22)

QI Systems Inc. announced the successful completion of the University of Northern British Columbia's (UNBC) campus-wide smart card automation system, marking British Columbia's first university to convert from a magnetic stripe-based card system to a smart card system.

The campus-wide automation system involved installing QI's smart card payment terminals for the Unattended Point Of Sales (UPOS) machines, including name brand vending, laundry, copier and parking equipment. In addition, QI developed, designed and installed direct cash-to-card value reload stations, which are PC based, capable of cash-to-card, accounts-to-card and credit-to-card with on-line communication capability. Moreover, the stations are designed to accept bills and coins, print receipts on demand, dispense cards, have a built in alarm, and can reload values to a variety of proprietary and open card schemes. Touch Technology International, Inc., a leading turnkey smart card solutions system integrator providing back office operations and management software for campuses, the military and corporations, provided the operating system for the project with the installation of its transaction processing, settlement and reporting software.

For more information about QI Systems Inc., please visit their web site at http://www.qisystems.ca.
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4. MASTERCARD & EUROPAY UNVEIL NEW SECURITY INITIATIVES
Source: Card News/PBI Media via COMTEX (03/20)

MasterCard International and Europay International announced worldwide developments for securing electronic and mobile commerce transactions, and for extending a payment guarantee to online merchants.

MasterCard's member financial institutions can now offer a unified solution for authenticating EMV (Europay/MasterCard/Visa) smart card cardholders using MasterCard's Universal Cardholder Authentication Field (UCAF) a standard, globally interoperable method of collecting cardholder authentication data at the point of interaction across all channels, including the Internet and mobile devices.

The EMV smart card and UCAF combination is particularly well suited to regions in which smart cards have been widely issued, and there is a need for secure authentication in non- face-to-face environments. UCAF is intended to guarantee payment to online merchants by presenting, collecting and passing cardholder authentication information generated by issuers and cardholders. Once collected by a merchant and their acquirer, this information is communicated to the issuer in the payment authorization request and provides explicit evidence that the transaction was originated by the accountholder.

UCAF fully supports MasterCard and Maestro credit and debit transactions and gives issuers a secure way of enabling debit over the Internet, thus opening the door to more cross-border transactions with merchants in countries where debit is dominant. To make guaranteed online payments a reality, MasterCard has implemented the UCAF messaging requirements in its global authorization network and has mandated member financial institution support by April 2002. In MasterCard's European region, online transactions will be guaranteed when both merchant and acquirer support the UCAF specification, effective April 2002. In the U.S., plans are currently under review for the payment guarantee to be extended for fully authenticated cross-border online transactions in the fourth quarter 2002. Similar plans are scheduled for other key markets around the world throughout the year.

MasterCard Canada is a member of ACT Canada. For more information please visit their web site at http://www.mastercard.ca.
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5. IDENTITY THEFT GROWING AT ALARMING RATE
Source: ACT Canada (03/19)

Catherine Johnston, President & CEO of ACT Canada (Advanced Card Technology) Association told a symposium in Toronto that, "In the next 2½ hours, 150 North Americans will have their personal identities stolen, or one every 60 seconds." Johnston also noted that counterfeit credit cards now represent the largest category of credit card fraud in Canada during the ACT Canada Symposium on Identity Theft and Secure ID.

Representatives of the advanced card technology industry heard staggering statistics related to the numbers of counterfeit documents now employed on a daily basis. Speakers included Catherine Johnston, President & CEO of ACT Canada; Paul Facciol, VP of Corporate Security for Metaca and Davis+Henderson Intercheques; Ontario Provincial Police Detective Sgt. Barry Elliott coordinator of Phonebusters, a national call centre combating telemarketing fraud; and RCMP Constable Edie Kaldis currently involved in fraud and counterfeit investigations.

Speakers addressed areas such as, the cost of identity theft to Canadians; how the effective use of tax dollars is eroded by fraud in Canada; credit card interest rates used to offset fraud; and why Canadians are generally unaware of the growing identity theft problem.

Counterfeiting in Canada includes the creation of false bank notes, forged credit cards, traveler's cheques, passports, health cards, SIN cards, photo ID Driver's licenses, and other related identity documentation.

Delegates also learned about impressive new methods being utilized by the advanced card technology industry to combat the growing fraud problem. "Today advanced technologies can provide the highest levels of security, including secure protection of our personal identities, while adding new levels of convenience," Johnston concluded.

The media has become an ally in bringing this problem to the attention of Canadians, who need to understand their personal risk and steps they must take to protect themselves.
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6. CTST 2002 ~ SECURING THE 21ST CENTURY

Mark your calendars and register now for the 12th Annual CardTech/SecurTech (CTST) Conference to be held at the Morial Convention Center, New Orleans, April 22-25, 2002. CTST is the largest North American smart card, biometrics, and security technology conference and exhibition, and offers new and exciting changes for 2002!

Visit ACT Canada in booth F of the Supporting Organizations Pavilion.

Attention ACT Canada members ~ be sure to take advantage of the member discount on the registration form. To check your membership status, please visit the members section of our web site: http://www.actcda.com/html/members.htm.

CTST 2002 Conference Program has been re-organized! Four separate tracks focused on the most pressing challenges and opportunities now facing businesses and governments.
Worldwide ID Congress
Smart Cards on Main Street
Financial Card Technology
Defending Cyberspace

For more information, or to register online, please visit http://www.ct-ctst.com/ctst2002/.
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7. MIST INC. EXPANDS WITH THE OPENING OF ASIA-PACIFIC OFFICE
Source: Market News Publishing via COMTEX (03/21)

MIST Inc. announced that its NBS Smart Card Issuance group is expanding its sales and service operations in the Asia-Pacific region and opening an office in Japan.

The new office will be located in Tachikawa-city, Tokyo, Japan and is the first office in Asia for the MIST NBS Smart Card Issuance group, headquartered in Paramus, New Jersey, USA. "The opening of this office will allow MIST to provide an enhanced level of service to both our Asian dealers and our increasing number of issuer-customers," said Charles Lee, President of MIST Inc. Lee continued, "With the rapid adoption of smart card technology in Asia, MIST will be better able to focus its efforts on providing its customers with superior smart card personalization technology and issuance solutions. Smart card usage in Asia is two or three years ahead of the North American market and our expansion there will provide the foundation for our business growth in that region."

MIST Inc. is a member of ACT Canada. For more information please visit their website at http://www.mistwireless.com.
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8. VISA LOGO WILL APPEAR ON MOSCOW SOCIAL SECURITY CARD
Source: ICMA Daily News (03/25)

The Bank of Moscow has reached preliminary agreement with the Visa International payment system to place the Visa Electron logo on the Moscow Social Security Card. This is a co-branded project by the Moscow Government and the Bank of Moscow.

Participants include the Moscow Metropolitan, Moscow City Committee for Social Security, the Moscow Railway, the Moscow City Mandatory Medical Insurance Fund, the Moscow City Department of Consumer Market and Services, and the Bank of Moscow.

All of the participants have been working on the technical and technological requirements for the project. The Moscow Health Committee also recently joined the project, as plans call for the social card to carry medical information. Rosan Finance Company, certified by Visa International for Visa card production, will manufacture the Moscow Social Security Card.

The Social Card from the Bank of Moscow is already accepted at merchant outlets located in several test market districts of the city (West Birulevo, Central Chertanovo and South Chertanovo). The Bank of Moscow has opened cash points for pension payments at the post offices. Facilities have opened in six district hospitals for registration of people who are insured by the MMI system (Mandatory Medical Insurance) through their Social Cards. In addition to privileged travel on public transport and suburban commuter trains, the Social Card can be used for discounts at several shops in the aforementioned districts. The Social Card gives holders the ability to withdraw cash at any branch of the Bank of Moscow (more than 40) and through its wide ATM network (more than 100 ATMs). By the end of 2002 Bank will set up 200 more ATM's serving the social card in addition to the existing structure.

The new card will bear the symbols of the City of Moscow, the Bank of Moscow and Visa International. When the Bank of Moscow issues social cards with the Visa Electron logo, the card will become substantially more significant. Expectations are that the number of Social Card holders that use it as a mean of payment will greatly increase.

Brain Huckett, EVP for CEMEA region, marked: "We are proud of the fact that the Bank of Moscow chose our payment system as the basis for the Muscovite Social Card. Now, Moscow residents have the ability to use a protected product that meets international requirements and is accepted at more than 21 million merchant outlets worldwide. We believe that the Moscow City Government, together with the users of this card based on Visa Electron, will soon appreciate its benefits and conveniences. This event is also
remarkable for us because we have become closer to our goal of becoming a local payment system with international access."

Executive Editor's Note: This project is the outcome of a smart card pilot launched last September. During the pilot up to 85,000 people received their benefits in a new way. They used their free or subsidized transit fares through the card as well as identifying themselves for insurance at six regional health clinics by holding the card in front of contactless readers.
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9. SMART CARDS TO ZOOM IN 2003. REALLY. THEY MEAN IT.
Source: ICMA Daily News (03/18)

Analysis released by TowerGroup here indicates that smart cards may finally begin achieving over the next year the high expectations long held for them.

There are an estimated 17.5-million smart cards in circulation now, and TowerGroup is projecting that as many as 50 million will be in circulation by 2003. One reason: research by American Express, which issues the Blue smart card, indicates that 67% of consumers who hold smart cards claimed they would charge less were it not for the chip.

In addition, the response rate for smart card mailings was three times higher than typical response rates. By the second quarter of next year it is expected that 10% of all American Express cards will be Blue cards. Citibank has also begun issuing a Citi.you smart card.

One glitch holding up expansion of smart cards is the lack of smart card infrastructure in the U.S., which trails much of the rest of the world in smart cards. Many ATMs and POP terminals will need to be updated for smart card usage to increase

Executive Editor's Note: The Canadian infrastructure story has new allies. See "Planning the Canadian Infrastructure" story, this edition.
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10. CPI RECEIVES HIGHEST LEVEL OF VISA CHIP CERTIFICATION
Source: CPI Card Group (03/15)

CPI Card Group's Colorado plant has received VISA Chip Certification for personalization of VISA Chip Cards. This certification allows CPI to not only embed and pre-personalize chip cards, but to also personalize any VISA products that contain ICC (chips). CPI was originally certified to embed and pre-personalize VISA Chip Cards in early 2000. Their MasterCard Chip Certification was first issued in late 2000.

The VISA ICC personalization process is very detailed and takes eight to nine months to complete. To date, only three U.S. card manufacturers, including CPI Card Group, have received this level of certification from VISA.

CPI Card Group is a member of ACT Canada. For more information about CPI, please visit their web site at http://www.cpicardgroup.com.
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11. INDUSTRY PRESSURES FOR USE OF SMART CARDS IN AVIATION SECURITY
Source: ICMA Daily News (03/14)

A group of industry associations wants the feds to get moving on smart cards for aviation security. Last week, they petitioned the Office of Homeland Security and the Transportation Security Administration to implement development of a smart-card based, internal airport access system for airport employees, crews and passengers. For the passenger, it would be the first step toward a ``trusted traveler'' status. The Mar. 6 letter to Tom Ridge and John Magaw, OHS and TSA chiefs, respectively, points out that the task of building a ``highly secure, interoperable and cost-effective'' system rests on establishing TSA-approved technical specifications and operating rules. To that end, the signatories--including the Air Transport Assn., National Air Transport Assn., the Air Line Pilots Assn. and the Regional Airline Assn.--are recommending the formation of an ``independent, not-for-profit organization of stakeholders.''
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12. NEW MEXICO TO TEST SMART CARD DRIVER'S LICENSE
Source: Card Technology (03/08\0

New Mexico aims to become the first state to issue a smart card driver's license and plans to offer space on the chip to credit card issuers and other service providers. License-holders will have the option to add other features to the smart card, such as emergency medical data or a program that disarms a home security system
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13. CARD FIRMS USING EMV TO 'CONTROL' PAYMENTS
Source: Card News Etc (03/01)

Fraud prevention "is not the only motivation for the card associations' support of EMV", Lafferty reports, in that "smart cards [are] capable of supporting many more payment mechanisms than debit and credit". In sum, the widespread use of smart cards positions the card firms "to protect their interests and play a part in the future of smart cards", with the associated profits and power. To reign supreme in payments, the card firms "need large numbers of smart cards issued by banks, large numbers of acceptance devices for those cards and a cultural shift so that clients are not adverse to using and trusting such technology".

Consequently, Lafferty predicts the banking industry to "see a substantial global network of chip-capable devices as well as significant numbers of payment cards in circulation". As smart cards gain in adoption, Lafferty expects an infrastructure "for the support of other payment tokens and the vast opportunities that evolve as a result". Such payment tokens might include electronic purses and pre-authorized schemes such as Visa Horizon, or the use of EMV as an authentication device, possibly to generate digital certificates for the access of online bank accounts or other data.

"Provided the banks remain the prime issuers of smart cards that are open and portable (mobile phone SIMs are less so)", Lafferty asserts, "they are well positioned to be the "managers" of new applications". Most importantly, "banks will be able to benefit from any revenue-earning potential that comes from any evolving smart card applications", Lafferty says, even if "it is the issuers that reap the main benefits of EMV...reduced fraud". In this light, Europay, Visa and MasterCard are "making every effort to encourage migration" to EMV, "through regulation and sometimes financial incentives", but it is in their best interests. (Lafferty Publications, 26 February 2002)
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14. JCB ISSUER TO TEST DUAL-INTERFACE CARD
Source: CardTechnology (03/15)

Japan's JCB credit card brand could find its way onto multi-application cards that run in both contact and contactless modes as early as this summer, says Masahiro Omoto, senior VP and head of IC strategy for JCB International.

One or more JCB issuers will likely launch a pilot by the end of this year on a new dual-interface chip being developed by Sony Corp, using the company's FeliCa contactless technology. That chip, with cards produced by Tokyo-based Toppan Printing Co., is scheduled to be on the market this summer, the first true dual-interface chip from Sony, whose contactless chips are being used by transit operators in Hong Kong, Tokyo and Singapore.

The JCB-branded cards for the pilot could potentially combine a transit fare paying application with other contactless applications, such as building access or electronic ticketing for concerts or sporting events. A credit card application complying with international EMV standards also would be stored on the chip and run through the contact interface, which requires cardholder to insert cards into readers at point-of-sale terminals.

"We believe we've got to have multi-application cards in Japan to appeal to our customers," says Omoto. Most of the credit smart cards or IC cards, as they are called in Japan, have been issued by credit card companies to combat growing fraud of magnetic stripe credit cards, which reached 30 billion yen ($231 million) last year.

Omoto predicts about 20% of the nearly 40 million JCB cards in the country will be converted from magnetic stripe to smart cards by the end of the year. The cards will also carry loyalty applications. Some JCB cards have been issued with both contact and contactless interfaces in the past, mainly for corporate ID cards, but these applications have been stored on separate chips.
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ACT Canada is an international non-profit association for the advancement of card technologies. We work on behalf of our members to promote the awareness, understanding and use of all advanced card technologies; including optical, smart, capacitive and emerging technologies. If you would like to learn more about ACT Canada membership please visit http://www.actcda.com or contact our office at (905) 426-6360 ext. 22.
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Please forward any comments, suggestions, questions or articles to andrea(AT)actcda.com. If you would like to be removed from our newsletter distribution list please reply to this email with the word "REMOVE" in the subject field. Please note that articles contained in this newsletter have been edited for length.
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Andrea McMullen
AVP
ACT Canada
tel: 905 426-6360 ext. 24
fax: 905 619-3275
email: andrea(AT)actcda.com
web: www.actcda.com
mail: 85 Mullen Drive, Ajax, ON, L1T 2B3