January 28, 2004
Welcome to the January edition of ACTion News. This complimentary service is provided by ACT Canada; "building an informed marketplace". It is also available in the Resource Centre of our web site. Please feel free to forward this to your colleagues.

If you would prefer to receive this newsletter in plain text please email your request to andrea(AT)actcda.com.

This newsletter has been sponsored by ACT Canada's 2004 Partner:

A Coinamatic Company

IN THIS ISSUE:
1. Editorial Comment
2. Canada Plans Smart Card ID For Airport Workers
3. GO Transit Takes First Step Toward GTA Smart-Card Fare System
4. Toronto Parking Authority selects Mint Inc. for new TPA Corporate Parking Card
5. Philips & Visa Showcase Potential Of Contactless Payment & Connectivity
6. New Report Reveals Wide-Ranging Opportunities For Smart Cards In The Healthcare Market
7. MasterCard Plans Big Contactless Push In 2004
8. UK Develops A Smart Card 'Starter Pack' For Local Governments
9. Thales E-Security Updates EMV Migration Guide
10. Italy Orders $3.8 Million Lasercards For National ID Card Program
11. NASA Plans Smart-Card Pilot, Agencywide Rollout
12. Keycorp's New Smartcard Snapped Up By Global Card Issuer


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

PRINCIPAL
 Coinamatic ~ member since 1995
MasterCard ~ member since 1999

GENERAL:
 Canadian Bank Note Company ~ new member
1. EDITORIAL
Source: Catherine Johnston, President & CEO, ACT Canada (01/28)
How many times have I told you that advanced cards are moving into the Canadian market? Well, it's time to stop saying that, because we've passed the starting line and the race is on!

With each emerging technology, one or two sectors lead the way. With smart cards it has been telecommunications, followed by the financial and government sectors. Governments have also championed optical cards. Then there comes a point where multiple sectors start to look at the technology for their own needs.

Within 10 days in January, ACT Canada received calls from an unprecedented number of organizations planning to issue advanced card applications. Each was from a different sector and I am very pleased to say that each treated the technology as no more than an appropriate platform to support a need or opportunity.

This is a very important development in our market. We will keep ACT Canada members advised of opportunities as they develop. Information will be a critical success factor this year. Whether you issue cards, acquire transactions or supply technology; you will be challenged to keep track of activities that could impact your plans.

To help our members with that challenge, we will activate our members' only section of our web site next month to allow ACT Canada members access to privileged information. This is one of many items we plan to introduce this year to ensure that members benefit, regardless of their geographic locations. I'll have more to report next month.

Please mark September 23 & 24 on your calendar for Cardware 2004, our annual conference. We have a full agenda for this year as we work to help members and the market develop. After the last 10 days, I can only imagine how many more calls we'll get. Clearly people have been thinking about card technology over the past year and are now moving forward with their plans. It's going to be a good year!
2. CANADA PLANS SMART CARD ID FOR AIRPORT WORKERS
Source: CardTechnology Magazine (01/09)
Canada announced plans for a smart card ID for some 130,000 workers at 29 major airports. The chip card will carry two kinds of biometric data, fingerprint and iris, to identify the workers as they access restricted areas. The Canadian Air Transport Authority asked for bids on the project, saying it planned an initial order of 200,000 smart cards for the Restricted Area Identification Card (RAIC) program. The agency, established in April 2002 in the wake of the Sept. 11 terrorist attacks, says the successful bidder will be expected to begin pilot tests in the first quarter at the Vancouver and Montreal airports and at two smaller airfields at Kelowna, British Columbia, and Charlottetown, Prince Edward Island. For the pilots, the agency says the contractor will have to supply 20 fingerprint readers and 20 iris-recognition readers and 30 enrollment devices for each biometric.

The chip cards will be contactless, meaning that the cardholder need only tap the card on a reader or pass it nearby, and not insert the card into a reader. The card will conform to Type B, one of two variants of the international ISO 14443 standard for contactless cards. It will also carry a magnetic stripe and support the existing proximity readers at some airports which require a less sophisticated chip that operates at a lower frequency than contactless smart cards. The bid document says it must be able to hold two fingerprint and two iris templates. Templates are digitized versions of a physical feature, such as a fingerprint or iris. The pilots are scheduled to run from late January through May.

"This is a program that certainly will have high visibility and I think will serve as a model for other departments," says Catherine Johnston, president & CEO of Advanced Card Technologies Canada. "A lot of the lessons learned here will not only be used by the federal government but the provisional governments." Canada is moving forward with an airport worker ID as the United States tests a similar ID with biometric features for U.S. workers.
3. GO TRANSIT TAKES FIRST STEP TOWARD GTA SMART-CARD FARE SYSTEM; PROJECT MANAGER HIRED TO DEVISE PLAN
Source: ICMA Daily News (12/12)
With $40 million in the bank, GO Transit has now hired the man to lead the GTA's various transit systems toward integrated, smart-card service.

Robert Hollis, previously was part of the Mondex Canada pilot, was introduced to GO's board. He said in an interview later that as project manager he's got one year to "get the design done, get the business case, get the municipalities to sign on, so we're able to go to market ... to get these type of smart-card systems."

"It's a very clean design," said Hollis. "The hard part isn't in the design. It's working out all the fare policies that each of the municipalities wants to implement and be able to code that into the system."

But transit officials believe commuters will now welcome smart-card technology. GO is tracking the areas around the world that have introduced it. Asia and Europe have employed the technology for years, and it's taken off recently in the U.S.

GO is leading the way on the smart-card system because its current fare collection system is aging and difficult to maintain. Hamilton Street Railway, York Region Transit and Ajax-Pickering Transit are also planning to switch fare systems. Others, such as Mississauga, Brampton, Oakville, Burlington and Oshawa, would join GO's system as they decide to replace current fare collection systems.

The big stumbling block is the TTC, which carries almost 90% of all transit users in the GTA. The cost of converting from the low-tech "gravity" boxes on all buses, streetcars and subway stations has been estimated at between $120 million and $150 million, money the TTC doesn't have.

Rick Ducharme, the TTC's chief GM, said the TTC will only put smart-card technology in limited locations, such as Union Station, for use by inter-regional commuters.

The Ernie Eves' Tory government earmarked $40 million last summer for GO to implement smart cards while the Dalton McGuinty Liberal government has pledged that smart cards would be the cornerstone of a GTA-wide fare system.
4. TORONTO PARKING AUTHORITY SELECTS MINT INC. FOR NEW TPA CORPORATE PARKING CARD
Source: Mint Inc. (01/22)
The Toronto Parking Authority (TPA has signed an agreement with Canadian mobile payment firm Mint Inc. to launch and implement TPA's new Corporate Parking Card program, expected to roll out in early 2004.

The Corporate Card marks an important first in the parking industry - customers will be able to use a card that is transferable between specified parking lots at any time. Under this particular program, customers will be able to park in any of the 200 TPA off-street carparks or 18,000 on-street spaces and pay simply by tendering their activated TPA parking card.

"Supporting the Toronto Parking Authority is an extension of our core technology," says Frank Maduri, President of Mint Inc. "Mint's main business is to securely acquire and store customer profile information, track transactions, and manage the payment process between banks, customers and merchants -- in this case the TPA," he says

"The chief benefit of the card and its corresponding expense management service is that it increases convenience and reduces costs for businesses for which parking is a significant part of their day," explains Maduri. "Salespeople, mobile professionals and mobile service businesses will all benefit from having a single card that gives them access to all of TPA's parking spaces, thus reducing the need for cash. Furthermore, the consolidated statements and Web views will enable businesses to more efficiently submit and reconcile business related parking expenses," he comments.

Mint Inc is a member of ACT Canada. Fro more information please visit their web site at http://www.mintinc.ca.
5. PHILIPS & VISA SHOWCASE POTENTIAL OF CONTACTLESS PAYMENT & CONNECTIVITY AT THE CONSUMER ELECTRONICS SHOW (CES)
 Source: Visa International (01/08)
Royal Philips Electronics and Visa International have joined forces to show how the latest contactless technology can change the way digital content and services are distributed, paid for and accessed by today's universally connected consumer.

The two organizations showcased proofs of concept at CES, highlighting the unique value derived from combining the latest consumer electronics, wireless connectivity and secure, universal payment. In one scenario, music lovers can download the right to listen to a song to their PDA or their Visa payment card either by holding the PDA near a smart poster of their favorite Universal Music pop star or by holding their contactless Visa card near a store kiosk selling songs. The smart poster contains an embedded microchip that sends the information to the PDA using Philips' Near Field Communications (NFC) technology. Payment is secured using the Verified by Visa solution and the song rights can be stored utilizing Visa Smart Secure Storage (VS3). The kiosk is enabled with RFID technology to capture payment information from the card and transfer the rights to be stored in VS3. In both cases to hear the song, the user simply transfers the song rights to a Philips Streamium Internet radio using NFC, and the song is then played over the Internet. Other scenarios demonstrate ticketing and travel applications.

Visa is a member of ACT Canada. For more information about either of the above listed organizations, please visit their web site: http://www.philips.com and http://www.visa.com.
6. NEW REPORT REVEALS WIDE-RANGING OPPORTUNITIES FOR SMART CARDS IN THE HEALTHCARE MARKET
Source: ICMA Daily News (01/13)
A publication from HBS Consulting reveals not only the opportunities in the Healthcare Market for Smart Cards, but identifies the size and nature of the available market. It reveals that more than two-thirds of the schemes planned for Europe in the next 5 years do not yet have defined suppliers - and highlights which.

Against a background where the use of IT has become ubiquitous in all areas of healthcare, from medical records to patient management, smart cards have rapidly emerged as a key component of the system. These cards, combining both storage and processing capability, can be used for storing medical data, proving entitlement to services and giving access to healthcare networks. Extensive research by HBS Consulting shows that while data storage was originally assumed to be the major opportunity in the healthcare market, in fact proof of entitlement has become the dominant role for smart cards in Europe.

A second emerging trend detailed in the report is the use of Public Key Infrastructures (PKI) to allow controlled access to data stored on networks. In this model the smart card contains encrypted keys and pointers allowing healthcare professionals to access patient data, which may be stored on a variety of different networks. This usage could be extended to patient health cards, an option which is already under active consideration in France.

Patient record storage has found a place in some medical specialities, the Parkinson Pass in the Netherlands is one example that is examined in the report.

Smart cards are in use, or about to be introduced, in many European Countries, and this publication lists the schemes that are currently in place, with detailed information on each. The operational, technical and organisational aspects of these schemes are explored in detail, as are the obstacles, lessons learned and ultimate benefits realised by each one. The report also details the political and commercial implications of these initiatives, revealing emerging trends and discussing the realities of the timescales in some of the planned schemes.

The report also takes a global view of the market, detailing some non-European schemes that are viewed as particularly significant. These include reports from the USA, where the addition of commercial applications to health insurance cards is being considered and Thailand where a healthcare function may well be added to the new Thai ID card. Canadian and Australian initiatives are also examined in depth.

The European market will be given added impetus by a recent mandate of the European Commission. The E111 form, which provides entitlement to healthcare for Europeans traveling throughout the EU, will be issued in card form from 2004. With the population of Europe reaching a high of 450million in the near future, what form this card will take is a crucial issue with massive commercial implications. HBS Consulting has examined the options and predicts a potential market size of over 220 million cards within the next five years.

For more information please visit their web site at http://www.hbs-consulting.com.
7. MASTERCARD PLANS BIG CONTACTLESS PUSH IN 2004
Source: CardTechnology Magazine (12/02)
MasterCard International plans to launch its PayPass contactless payment service in several U.S. cities early next summer, says Art Kranzley, chief e-business officer. MasterCard issuers in those cities will have the opportunity to issue the PayPass chip in other forms besides a card, such as a keychain fob or embedded in the back of a cell phone. By the end of 2004, Kranzley says he expect there will be millions of PayPass cards or devices in use. While planning a phased rollout for PayPass, which allows cardholders to pay by tapping their chip card or device on or near a reader, Kranzley says MasterCard also plans to approach national merchants about accepting PayPass. He says recent MasterCard trials in Orlando and Dallas suggest PayPass will mainly appeal to high-volume merchants whose average ticket is low, such as fast-food restaurants, gas stations, parking lots, mass transit, movie theaters and convenience stores.

MasterCard is a member of ACT Canada. For more information please visit their web site at http://www.mastercard.com.
8. UK DEVELOPS A SMART CARD 'STARTER PACK' FOR LOCAL GOVERNMENTS
Source: CardTechnology Magazine (01/19)
The government-funded National Smartcard Project plans to release in late March a "Starter Pack" of technology designed to enable local governments to get up and running quickly with multipurpose local use smart cards. Of the 468 local authorities in the United Kingdom, 150 have expressed "extreme interest" in issuing such a card, Gavin Grace, project mgr of the National Smartcard Project, tells Card Technology. If 50 of those local government go forward with a smart card, that could lead to some 5 million smart cards being issued within the next few years, Grace says. The aim is for each local area to issue a chip card that can be used for a variety of purposes, including paying mass transit fares, accessing libraries and recreational facilities, payment and loyalty programs at local merchants, secure online access to government services and recording student attendance at school. To reduce the cost for local governments, the national government has invested 4.1 million pounds (US$7.4 million) in the National Smartcard Project over the past year.

The project's starter pack will offer the local authorities free software they can use with their smart cards, including a range of applications and database software for storing information about cards issued. Among the applications developed are a stored value feature conforming with the international Common Electronic Purse Specifications, a transit application based on the UK's ITSO specifications for mass transit smart cards, an online authentication applet, a loyalty scheme and a carrier of personal data. The model is based on Java Card software and GlobalPlatform technology for controlling the data added to or deleted from the smart card.

The project also has a work group that is negotiating with smart card suppliers a joint procurement agreement, so that the orders from local authorities can be grouped together to gain volume discounts. Grace says he expects local governments will pay between 3 and 4 pounds apiece for the dual-interface cards that can work both in contact mode-that is, inserted into a reader-or as a contactless card that is waved near a reader. Local authorities are likely to order cards with 16 kilobytes of rewriteable EEPROM memory and 24K of fixed ROM, says Simon Bennetts, technical architect for the National Smartcard Project. To save space, he says the project has also developed technology to allow some of the applications to be stored in the less expensive ROM, saving space in the costly EEPROM.
9. THALES E-SECURITY WORKS WITH CARD INDUSTRY LEADERS TO PRODUCE UPDATE TO EMV MIGRATION GUIDE
Source: ICMA Daily News (01/14)
Thales e-Security announced the launch of the new EMV - Easy Migration Guide, in partnership with all the major card industry leaders and VISA. The guide provides impartial advice to issuers on key challenges that need to be addressed before migrating to EMV. It also explores essential acquiring and terminal network issues upon which decisions must be made and lists critical questions that card issuers and acquirers need to ask. In addition, the EMV guide provides further information to support the decision-making process, including details of providers of relevant products and services.

The guide addresses the many issues card issuers have to be aware of before migrating to EMV. With the European migration date fast approaching and with other regions also beginning their migration process, the guide provides important information on migration timetables, testing periods, as well as which vendors they should choose to help facilitate the move. The guide also makes clear the legal requirements banks face when migrating to EMV. The EMV guide is available to download from www.thales-esecurity.com/p3.

For more information please visit their web site at http://www.thales-esecurity.com.
10. ITALY ORDERS $3.8 MILLION OF LASERCARD® OPTICAL MEMORY CARDS FOR NATIONAL ID CARD PROGRAM
Source: LaserCard Systems (12/16)
LaserCard Systems announced the receipt of an order valued at $3.8 million for LaserCard® optical memory cards slated for use as Italy's new national ID card, called the Carta d'Identita Elettronica (CIE).

Deliveries under the new order are scheduled to be completed by June 2004. For an earlier, $2.4 million CIE card order announced on July 28 of this year, deliveries began in November and should be completed by the end of March 2004.

The $3.8 million purchase order was placed by Laser Memory Card SRL, of Rome, Italy, a value-added reseller for LaserCard optical memory cards. The national ID card will be distributed in phases, starting with 56 cities in 2004 according to Italian government sources.

The CIE card is a specialized LaserCard optical memory card which contains a 1 megabyte optical memory stripe for security and which is designed so that the Italian government can add an integrated circuit (IC) "smart chip," currently supplied by Siemens. Italy plans to record each citizen's demographics, color photograph, digitized signature, and other biometrics onto the CIE card's optical memory stripe and to undertake an extensive security authorization and personalization process prior to issuing the card to the citizen. This process would include multiple levels of government-controlled approvals between each stage of card production, registration, activation, and issuance. Italy's protocol will be that each of these approval steps generates a digitally signed record of the approval step--including where, when, and by whom it was approved--which is saved as a digital certificate onto the optical memory of each CIE. Each subsequent step would generate a new "digitally signed envelope" over all the previous steps, in addition to the new step. These multiple layers of digital certificates would make this card-issuance process extremely secure.

LaserCard is a member of ACT Canada. For more information please visit their web site at http://www.lasercard.com.
11. NASA PLANS SMART-CARD PILOT, AGENCYWIDE ROLLOUT
Source: ICMA Daily News (01/21)
NASA in May will begin testing a smart-card program for access to facilities and information systems. If successful, the program would be rolled out to the entire agency, officials said. Employees at the Marshall Space Flight Center in Huntsville, Ala., will kick off the first trial.

NASA said it hired Maximus Inc. of Reston, Va., to develop and implement the technology for agency employees and contractors. The $93 million task order went through the General Services Administration's Federal Technology Service's Smart Access Common ID contract.

"If the field trials are successful, and we receive the approval of the Office of Management and Budget, we plan to deploy over 10,000 smart cards before the end of 2005," said David Saleeba, NASA's assistant administrator for Security Management and Safeguards.

The cards will enhance physical and IT security by requiring a higher level of authentication and identity assurance, NASA officials said. Employees and contractors must swipe their card across a reader to enter a center, and also will have to enter their card into a desktop reader to access their PCs.

NASA joins a host of other agencies in using smart cards for physical and system access security. The Defense Department expects to finish rolling out more than 4 million smart cards by the spring and GSA is distributing 14,000 this year.
12. KEYCORP'S NEW SMARTCARD SNAPPED UP BY GLOBAL CARD ISSUER
Source: Keycorp (12/17)
Keycorp Limited announced that a leading card issuer has signed an initial contract for two million Keycorp LiteOS modules, the company's newest smartcard technology.

LiteOS is Keycorp's implementation of the new MULTOS step/one specification recently announced by the MULTOS Consortium. MULTOS step/one is a new entry-level, open smartcard operating system to support the transition of financial organisations to their first EMV (Europay MasterCard Visa) card.

Keycorp LiteOS offers a low-cost EMV solution that retains much of the security, procurement flexibility and interoperability of the original MULTOS platform. It uses Static Data Authentication (SDA) security technology to provide a cost-effective entry-level EMV card. LiteOS also offers a seamless upgrade path to the higher functionality MULTOS platforms.

Keycorp is a member of ACT Canada. For more information about Keycorp, please visit their web site at http://www.keycorp.net.
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.
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, and are for information purposes only.
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