November 13, 2002
Welcome to the October/November 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 Resource Centre of our web site http://www.actcda.com. Please feel free to forward this to your colleagues.


IN THIS ISSUE:
1. Editorial Comment
2. ACT Canada Membership Elects 2003 Board of Directors
3. ACT Canada: Making Solutions Possible
4. Smart Card Shipments to U.S. & Canada Doubles in 1st Half of 2002
5. Datacard Solution Allows Sumitomo Mitsui to Become the World's 1st Issuer to Download New Applications to Visa Smart Cards Post Issuance Via the Internet
6. Keycorp to Provide 1.2 Mln Smart ID Cards to Hong Kong
7. Ingenico & Cogent Systems Enter Biometrics Partnership
8. Loyalty Providers Work Toward Interoperability
9. NBS Card Technology & ACI Worldwide Sign Co-Operative
10. Caradas & Xiring's Strategic Partnership Promotes Smart Card-Based E-Payments
11. Smart-Card IDs a Good Way to Protect Individual Privacy


ACT CANADA WOULD LIKE TO THANK OUR NEW & RENEWING MEMBERS:

PRINCIPAL
MasterCard Canada ~ member since 1999

GENERAL
Chrysalis-ITS ~ new member
Coinamatic ~ member since 1995
ERG Transit Systems ~ member since 1995
Ingenico ~ member since 1990
Ministry of Consumer & Business Services ~ member since 2000
MIST ~ member since 2000
President's Choice Financial ~ new member
Scotiabank ~ member since 1997

ASSOCIATE
LB Human Resources ~ member since 2001
Osler, Hoskin & Harcourt ~ new member
RDM ~ new member
Way Systems Inc. ~ new member

GOVERNMENT OBSERVER
Moving the Economy ~ new member
ACT CANADA - REGISTER OF ACHIEVEMENTS
Over the past month we have worked closely with the media to heighten awareness of problems that would be addressed through the use of advanced card technologies. When the Auditor General of Canada issued her report, she called on the federal government to put into place measures to reduce Social Insurance Number fraud. The Government announced 3 measures that will have a positive effect, but only when the government is the issuer of the SIN card. Counterfeiting by organized crime and fraud artists remains a large problem and must be stemmed by a move to counterfeit and tamper resistant card technology. On the day of the report, we did 12 radio interviews with stations across Canada and reached a 5 million-listener audience the following day through Radio Canada.

We continue to advocate the use of advanced cards to address the growing problem of identity theft and fraud. The number of counterfeit cards recently seized by law enforcement evidences the need for counterfeit and tamper resistant card technology. We have given speeches at the ICMA Annual Expo (International Card Manufacturers' Association) Vancouver; Smart Choices, Coquitlam BC; Technology in Government Week, Ottawa; Mississauga Technology Association and The Kitchener Westmount Rotary Club, Kitchener Ontario. Media coverage of this issue was carried local newspapers and radio stations.

ACT Canada also met with the Network of Excellence for Sustainable Transportation-Moving the Economy to discuss what skilled resources must be developed for Canadians to benefit from this technology. We noted that employment and export opportunities exists, but could be lost to other countries if we do not move to train and educate.

On behalf of our members we were asked by the Trade Commission of Belgium to meet with a company from Belgium. We have identified possible opportunities for our members.

The month ended with our first Market Intelligence Roundtable. (see story # 3)
1. EDITORIAL COMMENT
Source: Catherine Johnston, President & CEO, ACT Canada (10/31)
Another year has passed and it gave me cause to ask whether anything had really changed in the past twelve months. Had biometrics moved into the market as we sought security following 9/11? Had we as Canadians changed our priorities? Had financial institutions or governments announced major moves to advanced card technologies?

On the surface, the answer might appear to be negative, but when you look closer, I think there has been a positive shift. We didn't rush into changes, but evaluated our newly defined needs. Even the recent permanent resident card, which uses optical or laser technology, has been in the works for many years.

Questions are being asked:
Who should have access to our computers & networks?
How do we stop people from impersonating us?
How do we take control of our personal & private data?
How do we cut credit & debit fraud?
How do we keep fraud out of our social programs so that we can reinvest it in benefits for Canadians?
How do we build confidence in e-commerce?

Each of these is driven by the one dramatic change we've seen over the past year. The cost to Canadians of fraud is reaching a point where we either can't or won't accept the status quo.

Next month we will look at the role of the public in effecting positive change.
2. ACT CANADA MEMBERSHIP ELECTS 2003 BOARD OF DIRECTORS
 Source: ACT Canada (11/04)
Following the October 29th Annual General Meeting, ACT Canada is pleased to announce the 2003 Board of Directors:

Richard Adamson ~ Coinamatic; Robert Aylward ~ RBC Financial Group; Douglas Beardshaw ~ DEVMARK Technology Management; Sandra Bergen ~ CUETS; Geoffrey Bowen ~ Ingenico; Bob Cheriton ~ Insight Navigation; Michael de Rosenroll ~ Treasury Board Secretariat of Canada; Rebecca Dornbusch ~ IBIA; Ed Gresham ~ Giesecke & Devrient; David Grindal ~ ACI Worldwide; Bryce Hutt ~ Scotiabank; Francois Le Bel ~ SchlumbergerSema; Ian May ~ Metaca; Gary McDonald ~ Canadian Passport Office; Cindy Pearson ~ SMART Toronto; Randy Vanderhoof ~ Smart Card Alliance; and Allen Wright ~ Visa Canada.

Douglas Beardshaw, incoming Chair of the ACT Canada Board, is quoted as saying, "I extend my thanks and congratulations to the elite group of professionals who have come together in a special effort to volunteer their valuable time as members of the ACT Canada Board of Directors for 2003.

This group represents the diverse government and commercial interests in the ever-emerging marketplace for advanced card technologies in Canada, and encompasses groups that impact the development and delivery of meaningful solutions.

In 2003, we endeavour to continue evolving the ACT Canada Association to closely address the changing needs of our membership and target the overall requirements of the marketplace. I encourage you to contact us with your issues and ideas, as communications is our priority.

It is my privilege and pleasure to accept the role of Chairman of the Board for ACT Canada and I look forward to the exciting year ahead."
3. ACT CANADA: MAKING SOLUTIONS POSSIBLE
Source: ACT Canada (11/04)
The Advanced Card Technology Association of Canada hosted a sell out crowd October 29th for its first Market Intelligence Roundtable. Issuers and suppliers met to hear the results of the market survey conducted by ACT Canada over the past month. The survey was a snapshot view of concerns that might impede advanced card rollouts. The moderator, Paul Gooderham of the Gooderham Group, gave an analysis of the results.

Four of the concerns were discussed as members of ACT's National Issuer and Infrastructure Committee introduced white papers to the audience. Each paper defined the issue and its current status, identified desired solutions and currently available areas of help, as well as steps that would diminish or eliminate the problem.

The assembly then rolled up their sleeves and set to work on the 8 top issues as identified by the survey. By the end of the day they had made substantial progress on papers, and presented their findings to the group.

Each participant received the market survey results including more than 100 charts, the 4 white papers (Privacy, Consumer and Corporate User Awareness, Business Rationales and a Partnership Approach to Infrastructure and Application Development), the 8 new issue papers and a record of the questions and answers from the day.

Plans are underway for the second roundtable, February 17th, 2003. At that time a progress report will be made on the implementation of the solutions for the first four issues. ACT Canada members will work on the new papers over the coming months, for presentation at that meeting. Catherine Johnston, President & CEO of ACT Canada said, "This has been a great day. People have been very generous with their knowledge and it shows in the results. We have some ideas for making the next event even more interesting and will talk to our members about them over the coming weeks. Mark February 17th on your calendar."

For more information about ACT Canada's programs or events, please visit our web site at http://www.actcda.com.
CardTech/SecurTech ID: "Identification Technologies for a Secure World", is scheduled for November 18-20, 2002, at the Renaissance Hotel in Washington, DC.

CardTech/SecurTech ID will focus on the critical ID initiatives facing the government community committed to heightening homeland security, as well as the smart card, biometrics, and IT vendor communities that support these government efforts.

For more information about the event, please see the attached brochure, or visit http://www.ctst.com for online registration and agenda details.
4. SMART CARD SHIPMENTS TO U.S. & CANADA DOUBLES IN 1st HALF OF 2002
 Source: PRNewswire via COMTEX (10/07)
Smart Card Alliance Annual Conference - Smart card shipments to the U.S. and Canada from January through June 2002 were 31.2 million cards, more than double the same period last year according to new research announced at the Smart Card Alliance 10th Annual Conference.

The total number of smart cards shipped for use in the United States and Canada in the first half of 2002 was 31,200,000. This represents a 111% increase from the same period in 2001, during which 14,770,000 cards were shipped. Of the total, microprocessor cards accounted for 24,950,000 in 2002, up 87% from 13,310,000 a year earlier. Memory card shipments in 2002 jumped to 6,240,000 compared to 1,460,000 in the same period last year, more than a threefold increase.

"The growth in smart card shipments is accelerating, bringing total shipments to the U.S. and Canada to over 122 million smart cards since 1999," said Randy Vanderhoof, president and CEO of the Smart Card Alliance. "The change we are seeing is that the volume is more evenly spread across several sectors including financial, retail, pay TV and government. This is very positive because it makes the industry less dependent on telecom, although that sector remains among the largest."

Dan Cunningham, chairman of the Market Research Committee for the Alliance and president and CEO of Potomac Systems & Technologies, added, "The rapid growth in shipments we are seeing today is built on a solid foundation. The smart card-based systems already deployed will combine with developing sectors like transit and access control to keep industry growth strong for years to come."

The Smart Card Alliance is a member of ACT Canada. For more information, please visit their web site at http://www.smartcardalliance.org.
 
5. DATACARD SOLUTION ALLOWS SUMITOMO MITSUI TO BECOME THE WORLD'S FIRST ISSUER TO DOWNLOAD NEW APPLICATIONS TO VISA SMART CARDS POST ISSUANCE VIA THE INTERNET
Source: ICMA Daily News (11/05)
The Datacard(R) Affina(TM) Life Cycle Management System enables Japanese cardholders to download applications to their Visa smart cards.

The Affina system enables SMCC's launch of an innovative new service that allows cardholders to download PC network access functions to GlobalPlatform(TM) multi-application Visa smart cards. To download an application, SMCC cardholders need only insert the Visa smart card into a reader connected to their PC and enter an ID and password for cardholder identification. SMCC expects strong demand for this type of card and plans to issue at least 100,000 such cards within one year.

"What Affina provides for our customers is the ability to improve customer loyalty, increase security and react quickly to changing market conditions," said Chris Lomax, VP of Datacard's solutions group. "The capability of systems enabled by Affina to download applications onto a smart card after it has been issued provides a unique flexibility that not only meets the changing needs of card holders but does so without the time, effort and expense of re-making and re-issuing cards," he added.

The Affina system is designed to manage multi-application smart card programs. It manages the entire life cycle of each smart card--including all phases of pre-issuance, as well as post-issuance after cards reach consumers' hands. Applications can be loaded, blocked or deleted at any time, and new card-based services can be made instantly available via the Internet or private network. The Affina system maintains information on every smart card issued, making it fast and simple to replace lost or stolen cards.

Datacard and Visa Canada Association are members of ACT Canada. For more information about either of the above mentioned companies, please visit their web site: http://www.datacard.com and http://www.visa.com.
6. KEYCORP TO PROVIDE 1.2 MLN SMART ID CARDS TO HONG KONG
 Source: AsiaPulse via COMTEX (10/14)
Keycorp Ltd has signed a subcontracting deal with PCCW Business eSolutions to provide 1.2 million smart cards for Hong Kong's planned smart identity card system.

Keycorp said it expected to get more than $A5 million ($US2.73 million) for the deal.

Business eSolutions will use Keycorp's MULTOS operating system to keep personal data stored by Hong Kong's immigration department private and secure.

"Projects such as this one provide a firm foothold for Keycorp into these emerging markets as governments around the world grapple with the growing problems of identity fraud," Keycorp chief executive Bruce Thompson said.

Keycorp Canada is a member of ACT Canada. For more information about Keycorp, please visit their website at http://www.keycorp.net.
7. INGENICO & COGENT SYSTEMS ENTER INTO BIOMETRICS PARTNERSHIP FOR ID CARD APPLICATIONS
 Source: Ingenico (11/04)
Groupe Ingenico has entered into a strategic partnership with Cogent Systems Inc. to co-develop a biometric authentication module using digital fingerprint technologies.

The partnership positions both companies to present a common solution for authentication and identification, leveraging the biometric authentication module with Ingenico's smart card technology leadership for identity applications within emerging markets such as Nigeria, Hong Kong and others. The biometric authentication module will also serve the growing needs for secure electronic payment and document identity verification in existing marketing such as Spain, France and the United States.

Ingenico is a member of ACT Canada. For more information about either of the above mentioned companies, please visit their web site: http://www.cogentsystems.com and http://www.ingenico.com.
8. LOYALTY PROVIDERS WORK TOWARD INTEROPERABILITY
 Source: CardTechnology Magazine (11/05)
Visa U.S.A. and loyalty software developers Welcome Real-time and Catuity demonstrated their Multi-Network Rewards Solution at the Cartes 2002 smart card show in Paris. The technology makes the different loyalty software available interoperable, says Aneace Haadad, president and CEO of Welcome Real-time. For example, chip-based credit cards that have the Catuity loyalty application can be read by point-of-sale terminals loaded with Welcome Real-time's loyalty software, and vice versa, says Haadad. The technology also enables issuers using Welcome Real-time to upload a cardholder's loyalty data stored on a POS terminal using Catuity's application onto their host servers. "If a cardholder went to McDonald's, for example, and did not receive his free Big Mac, all of his loyalty information, no matter which format it was originally written in, will be available on the issuer's host server for customer service to check," says Haadad. The Rewards technology will be available to U.S. Visa member banks by the first quarter of 2003.

Visa Canada Association is a member of ACT Canada. For more information about any of the above mentioned companies, please visit their web site: http://www.catuity.com; http://www.welcome-rt.com; and http://www.visa.com.
9. NBS CARD TECHNOLOGY & ACI WORLDWIDE SIGN CO-OPERATIVE
 Source: ICMA Daily News (11/06)
NBS Card Technology, a division of MIST Inc., announced that it has signed a joint marketing agreement with ACI Worldwide to promote and market ACI's card production management products and NBS Card Technology's card issuance products as a "total solution" to customers worldwide.

The new solution will include modules from the ACI Smart Chip Manager(TM) and NBS EMV card personalization systems to provide a complete and flexible solution to personalize any type of smart card. NBS and ACI will work together to develop interfaces between their products, and to ensure that the solution will integrate with numerous commercially available card management systems and data preparation systems. Smart cards personalized by the system are typically used in EMV-compatible financial applications, consumer loyalty applications, and multiple-application secure government identification environments.

ACI Worldwide (Canada) and MIST are members of ACT Canada. For more information about either of the above mentioned companies, please visit their web site: http://www.aciworldwide.com and http://www.mistwireless.com.
10. CARADAS & XIRING'S STRATEGIC PARTNERSHIP PROMOTES SMART CARD-BASED E-PAYMENTS
 Source: PRNewswire via COMTEX (10/15)
Caradas, Inc. and XIRING announced a strategic partnership to further increase consumer and merchant confidence in e-commerce payments through the use of smart cards. As part of the joint sales, marketing and distribution agreement, Caradas will integrate its Connexus(TM) authentication platform with XIRING's range of smart card readers, providing a suite of authentication solutions that meet the diverse needs of a global marketplace.

Initially, Caradas will integrate its Connexus Platform with XIRING's Xi-Sign(TM) cardholder authentication solution to support MasterCard's SecureCode initiative. SecureCode provides a standard, interoperable method of passing accountholder authentication data among issuers, merchants, and acquirers. The combination offers financial institutions a single authentication solution they can deploy to take full advantage of the inherent security of smart cards for securing Internet payments, eBanking financial services and restricted Web-based services. The two companies will then expand their offering to include additional applications.

For more information about either of the above mentioned companies, please visit their website: http://www.caradas.com and http://www.XIRING.com.
11. SMART-CARD IDS A GOOD WAY TO PROTECT INDIVIDUAL PRIVACY
 Source: ICMA Daily News (11/04)
The widespread use of information systems and Internet technology is revolutionising the way that governments and businesses communicate with each other and deliver services to citizens.

However, this convergence has created new types of risks and challenges that traditional ID cards - issued by either governments or enterprises - are unable to solve, due to their limited functionality. Many countries are debating the possibilities of issuing a new type of ID in the form of a smart-card, with or without some form of biometrics functionality such as fingerprint recognition.

The most commonly used argument against deployment of ID cards on a national level is the fear of compromising individual privacy. Civil liberty groups and privacy lobbyists claim that a national ID programme would create a unique way for governments to track citizens, resulting in profiling and discrimination.

The deployment of smart-card-based ID programmes have so far been limited in most countries in Asia. Singapore is one of the few countries in Asia which has pioneered the implementation of national ID cards. Since 1994, Gemplus has been working closely with the Singapore government to establish and deploy the nation's Immigration Automated Clearance System. Under this scheme, trans-border workers and frequent travellers are issued smart-cards - which contain their biometric fingerprints - for secure identification and automated immigration clearance at Singapore's major points of entry.

As for privacy, smart-cards offer a number of advantages compared to any other form of ID document. The technology provides a strong case for reducing privacy concerns by enabling end-users to control their private identification data. Here are two key advantages:

Offline verification: This is one of the strongest advantages that smart-cards possess, compared to other technologies. Using offline verification, smart-card-based ID verification can be cost-effectively deployed at the various physical security checkpoints that require validation of identity - such as at airports, road controls, or other security facilities.

Security officers can verify an individual's identity by prompting him to enter his PIN, or by comparing a scanned biometric - such as a fingerprint - with a template stored on the card. This technology eliminates the need for online access to a central database. It restricts the data shared to an individual entity, thereby controlling citizen privacy.

Moreover, with its ability to store, read, write and update information in a secure environment, a smart-card can easily be connected to multiple databases. This eliminates the need to link these independent legacy systems, hence reducing the possibility of privacy infringement.

Info segregation: A smart-card ID can share only the information required for a specific situation or location. That's because the card's contents are protected against unauthorised access by a unique PIN code, and/or by the owner's fingerprint, and always stays with its owner. Also, the card's unique ability to verify the authority of the information requestor allows it to be the perfect guardian of a citizen's personal information.

All the information in the card does not need to be revealed every time to validate someone's identity. The information shared can vary depending on the specific 'role' of the individual at a given point in time, and only the data necessary for a defined identification purpose would be presented as required. For example, to a police officer at a road control, a smart-card will present information related to the motor vehicle authority. And to a retail shop owner selling alcohol or tobacco, a smart-card will only present information related to the age of the cardholder.

Smart-cards can thus fulfil three jobs. One, they allow authorised and authenticated access only to the information required during a government identification operation. Two, they effectively protect the citizen's privacy. And three, they ensure that the individual is properly identified.

Gemplus is a member of ACT Canada. For more information about Gemplus, please visit their web site at http://www.gemplus.com.
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.
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