February 26, 2004
Welcome to the February 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. CATSA Pilot Project Awarded
3. Smart Card Program Receives $2M Omnibus Appropriation
4. Ingenico Sets Record In Terminal Sales
5. E-Money Becomes Smart Way to Pay in Japan
6. G&D To Deliver Ground Breaking Smart Visa Card
7. Site Smart Cards are a Step Closer
8. GlobalPlatform & STIP Consortium Plan Merger
9. ActivCard Secure Remote Access Solution Shifts Paradigm
10. Americans' Payment Card Preferences Survey
11. Frankfurt Airport Uses Biometrics to Speed Security Checks
12. Honduras Orders 400,000 Chip Cards for Weapons Control


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

PRINCIPAL
Axalto ~ member since 2001

GENERAL:
CUETS ~ member since 1990
Global Identity Solutions ~ new member
Keycorp - member since 1998
SCM Microsystems ~ new member
1. EDITORIAL
Source: Catherine Johnston, President & CEO, ACT Canada (01/26)
Last month we talked about the importance of information to the market this year, but equally important will be the dialogue among advanced card stakeholders.

We have reached a stage where card infrastructure is emerging to support a number of applications and we need to understand the implications of sharing that infrastructure in the future. If the public and private sectors, as well as consumers, all proceed with implementation, how will we reap the benefits of an Internet – modeled infrastructure?

- How does government use it for PKI and additional authentication and verification needs?
- Will the financial sector find it secure enough for their transactions?
- How do retailers benefit, directly and indirectly?
- Are there regulatory issues or impediments?
- What role is there for acquirers in this broader market?

Each of the above groups has started to look at these and other questions. ACT Canada recognizes the value in bringing them together through our National Issuers and Infrastructure Committee. The NIIC will provide a forum for stakeholders and has already looked at issues of Infrastructure Partnerships, Consumer and Corporate Awareness, Business Rationales and Privacy. They have produced progress papers on these topics and started work on related issues of Interoperability, Standards, Costs, Skilled Resources, Security and Concept Development.

All ACT Canada members may now participate in the NIIC and its sub-committees. The NIIC papers are available to members through the new member’s only section of our web site. Passwords to that site will be issued next week.

We encourage you to join the dialogue. We collectively need to ask questions and look for answers. We need to understand the timelines and tasks. Most of all, we seek to plan our successes.
2. CATSA PILOT PROJECT AWARDED
Source: PRNewswire (02/23)
The Canadian Air Transport Security Authority (CATSA) has chosen ACME~Future Security Controls to develop a comprehensive solution for the operational trials of CATSA's restricted area identification card (RAIC) project to improve security at Canadian airports.

ACME~Future Security Controls will incorporate technologies from Bioscrypt, Cross Match Technologies, HID and LG Electronics to develop a comprehensive solution for the operational trials of CATSA's RAIC project. The RAIC will be using biometric technologies to create a secure credential card for individuals accessing restricted areas of airports. The RAIC initiative will also involve a central database to verify the validity of any card issued in Canada.

The first phase of the RAIC program will be implemented as an operational trial deployed at selected airports and will involve approximately 40,000 workers. The program will scale up to 150,000 workers.
3. FIRST FRENCH EMV BANKING CARDS DEPLOYED
Source: Gemplus (02/18)
Gemplus announced that it had become the first company to begin personalisation of EMV payment cards for the French financial market with the production of EMV-compliant payment cards for Société Générale, one of the largest financial services suppliers in the Euro zone.

Working closely with Société Générale and GIE Cartes Bancaires, Gemplus began production of B0'-EMV cards for Société Générale on 6th January 2004.

In 2000, Gemplus was selected by GIE Cartes Bancaires, a consortium of all major French banks charged with the security and standardization of French payment card infrastructure, to develop a new card that would bear both domestic and standard EMV applications. The card would also include the French e-purse application, Moneo, should this be required by individual banks.

For more information about the above mentioned company please visit their web site at http://www.gemplus.com.
4. SMART CARD PROGRAM RECEIVES $2M OMNIBUS APPROPRIATION
Source: ICMA Daily News (02/04)
As part of the $873 billion Omnibus Bill passed by the Senate, California-based The Community College Foundation received a $2 million appropriation to implement its ePassport(TM) Smart Card technology to assist in the management of foster youth programs throughout the state of Ohio. The funding award is the result of a two-year effort by The Community College Foundation and Ohio U.S. Representative Ralph Regula.

With more than a half million foster youth currently in the United States child welfare system, Ohio's foster youth population of approximately 21,000 youth ranks eighth nationally, according to the U.S. Department of Health and Human Services. Implementation of the Foundation's ePassport Smart Card technology will allow Ohio state agencies to effectively collect, track and maintain foster youth information such as health records, school admissions activity and grade history, and vital statistics.

The ePassport Smart Card system provides a much needed and long-overdue solution to perhaps one of the largest challenges facing foster youth. It is estimated that more than a third of foster youth will move between care givers at least 3 times annually, and not uncommonly, upwards of 30 times during their term in the foster care system. In many cases, a child is sent off with little more than a grocery bag of personal effects.

The lack of personal data results in a number of problems, most notably health risks resulting from over-immunization, school enrollment delays that prevent a child from timely progression to the next grade and repetition of courses or even entire grade levels, and in the worst scenario, children who become "lost" in the system. As reported last April by NBC News in Columbus, accountability for children's whereabouts is the biggest problem with Ohio's foster system. In that report, according to Ohio Family Services Director Barbara Riley, Ohio's current system is often unable to accurately pinpoint the location of a child, but, she said, "We at least have a tracking system that tells us the kids aren't where they're supposed to be." The Community College Foundation president, Dr. David Springett, responded to the news report by saying, "This is more than concerning; these issues are unacceptable, which is why we are proud to provide this hi-tech, yet simple solution that will have an immediate and positive impact on the lives of thousands of Ohio's foster youth, and their care system as a whole. Further, we are excited to have this opportunity in Ohio and look forward to the expansion of the ePassport Smart Card program throughout the country in the future, which if implemented nationally, could potentially save taxpayers $1.7 billion annually."

ePassport's Smart Card technology is a comprehensive and confidential information tracking system using patented technology. The stored data is accessible and easily shared between state, county and local social service agencies using the proprietary technology and the Internet. Program partners for the ePassport system include schools, hospitals, physicians, group homes and government agencies.
5. INGENICO SHIPS 100,000 I5100 TERMINALS IN LESS THAN 4 MONTHS
Source: Ingenico (02/20)
Ingenico has set a new record in payment terminal sales. The company has reported the sale of its 100 000th I5100 EMV 4.0 compliant terminal, going well beyond previous industry records set for payment terminal sales. The I5100 is part of the newly released I Series. These 100 000 I5100 have already been sold in 15 countries on 4 continents. In the future, the I5100 should be sold in the 80 countries where Ingenico is present.

The I series, a next generation of payment terminals launched by Ingenico in 2003, accounted for 35% of company revenue in December 2003. The I series is based on IngeCoreTM, Ingenico's secure platform that combines the proven and robust UNICAPTTM 32 operating system with the High Security Core (HSC) processor. The UNICAPT 32 platform, common to all I Series terminals, provides secure fire walling between applications while guaranteeing application portability across the entire range

Ingenico is a member of ACT Canada. For more information please visit their web site at http://www.ingenico-ca.com.
6. E-MONEY BECOMES THE SMART WAY TO PAY IN JAPAN
Source: ICMA Daily News (02/12)
More and more Japanese are using e-money systems when paying for train tickets, buying things at stores and making other payments. An increasing number of convenience stores are letting customers use smart cards. East Japan Railway Co. introduced its "Suica" cards in 2002 to replace buying tickets.

Bitwallet, a joint venture between Sony Corp, NTT DoCoMo Inc., banks and other interested players, introduced the "Edy" contactless card-based e-money system in 2001. Owners can use the cards to purchase items from establishments that have card readers, which are made by Sony.

About 3.4 million people use the cards. As of the end of last year, 3,400 stores were accepting them, including nationwide convenience store chain "am/pm." The number is expected to rise to 10,000 stores by the summer.

Industry sources say vending and videogame makers are also keeping a close eye on Edy cards. Sega Corp. is converting 100 game machines at a Tokyo game arcade to allow people to pay with Edy cards.

The Asano supermarket chain in Miyagi Prefecture issues "Osaifu (wallet) cards" to members using Edy cards, and gives them discounts based on the amount they spent the previous month.

Starting next month, people who use JR East's Suica cards to buy tickets will be also able to use them at shops in stations. The railway company plans to gradually change the 7.5 million Suica cards which already double as credit cards.

But cell phones are said to be the next big market for this technology. In the summer, DoCoMo is will introduce mobile phones that use the Edy system. Currently, cell phone users have to make payments at exclusive terminals. There are about 45 million DoCoMo cell phones now in Japan, and the market potential is huge.
7. GIESECKE & DEVRIENT IN CANADA DELIVER GROUND BREAKING SMART VISA CARD
 Source: Giesecke & Devrient
G&D is proud to work with one of North America's premier financial institutions, Scotiabank, to deliver the first Canadian PIN-protected, multi-application smart card to comply with EMV (Europay, MasterCard, Visa) standards. A PIN is a personal identification number used to validate a cardholder. The multi-application smart chip embedded in the Scotiabank VISA card will provide consumers with increased security, convenience and new payment options.

The new EMV smart card manufactured by G&D hosts a variety of applications, with the ability to upgrade the card with additional capabilities at a later date.

"Visa is pleased to see this strong step towards realizing the benefits of a national smart card payment infrastructure," said Allen Wright, Director, Emerging Technology & Chip Initiatives, Visa Canada Association. "We congratulate Scotiabank and their partner, G&D, for joining forces to deliver this new and convenient payment smart card solution to Canadians."

Giesecke & Devrient is a member of ACT Canada. For more information please visit their web site at http://www.gdai.com.
8. SITE SMART CARDS ARE A STEP CLOSER
Source: ICMA Daily News (02/12)
United Kingdom: The engineering services sector is taking an interest in site smart cards. Representatives of the electrical contracting and plumbing Joint Industry Boards and the heating and ventilating industry heard a presentation on the concept from their US counterparts. In the US, the cards have a particular security slant following September 11th. Geoff Whitlow, national secretary of Amicus with responsibility for plumbing, said: "We believe this idea is worth exploring and taking forward. There is, for example, an increasing demand for security clearance in this country. "The smart card can contain a lot more detailed information on training, and funding need not be a problem. The costs are not enormous." Last year, the Construction Skills Certification Scheme proposed the idea of smart cards that hold extra information on the cardholder's skills and health and safety training.
9. GLOBALPLATFORM AND STIP CONSORTIUM PLAN MERGER
Source: ContactlessNews Weekly Digest (02/02)
GlobalPlatform and the Small Terminal Interoperability Platform (STIP) Consortium have signed a Memorandum of Understanding (MoU), which expresses a joint intention to explore an acceptable means by which GlobalPlatform can integrate with STIP and continue its current work.

The intention is to merge the operations, administration and membership of the two bodies, which have worked together closely since 2001, in order to improve communication and avoid any legal complications which may arise in the future due to joint intellectual property ownership.

The GlobalPlatform Device Committee and the STIP Consortium have worked together since 2001 and during that time the organizations have jointly developed a comprehensive specification for smart card accepting devices - GPD/STIP. This has resulted in the convergence to a single Application Programming Interface (API) providing a new standard that simplifies deployment of multi-application smart card devices.

As a result of these collaborative efforts, STIP technology is the basis of the GlobalPlatform Device (GPD) Framework. This technology is currently implemented on a number of EFT-POS terminals from various global manufacturers.

For more information about either organization, please visit their web site: http://www.globalplatform.org & http://www.stip.org.
10. ACTIVCARD SECURE REMOTE ACCESS SOLUTION SHIFTS THE PARADIGM FROM LEGACY AND LEASED AUTHENTICATION TOKENS
Source: ActivCard (02/23)
ActivCard Corp. announced availability of ActivCard Tokens starting at $15 with a Lifetime Replacement option*. Historically, one of the primary obstacles to deploying strong authentication has been the high introductory and ongoing costs associated with expensive leased token products that require renewal, re-licensing, and repayment every few years. ActivCard is now introducing this business model to reduce the cost and complexity of implementing two-factor authentication.

"Unlike authenticators from other vendors that can easily reach $70 for each device with no added functionality, our perpetual-license tokens with lifetime replacement start at an affordable price per user," stated Andy Smith, ActivCard Solutions Marketing Manager. "The convenience and strength of ActivCard one-time-password technology allows organizations to identify users with confidence and certainty."

With this lower priced token from ActivCard, the cost of the authentication device is reduced substantially for enterprise and government organizations. In addition, ActivCard Secure Remote Access customers purchasing the advanced maintenance option are entitled to lifetime replacement of tokens. Starting at $15, this initial token savings, coupled with the long-term benefits of lifetime replacement, furthers ActivCard's commitment to cost-efficient digital identity solutions with proven return on investment (ROI).

* Detail on lifetime replacement terms and token pricing is available from ActivCard Corp.

ActivCard is a member of ACT Canada. Fro more information please visit their web site at http://www.activcard.com.
11. AMERICANS' PAYMENT CARD PREFERENCES REVEALED IN EDGAR DUNN & COMPANY 2004 SURVEY
Source: ICMA Daily News (02/04)
Edgar, Dunn & Company (EDC) announced that debit cards beat out any single type of credit card as consumers' most preferred card in their wallet, according to its newly released PaymentDynamics(SM) 2004 Preferred Card Study. Consumers' preference to pay with their debit card is part of a fundamental shift in attitudes toward price and greater fiscal discipline. The survey also reveals that over half of consumers surveyed hold a debit or some type of credit card today that wasn't in their wallet a year ago with the number of cards in the wallet increasing to 4.3 in 2003 up from 3.3 in 1999.

This is the first consumer survey ever to analyze the entire wallet of cards owned and used, including cobrand, loyalty, affinity, standard credit, debit and smart cards. The study identifies why a payment card reaches the status of "preferred" in a consumer's wallet by benchmarking shifts in consumer attitudes, behavior, card churn, types of purchases and usage patterns. Compiled in late 2003, EDC's consumer study was developed from a survey sampling of more than 6,500 U.S. payment card customers' usage behavior, preferences and attitudes.

For more than one-third of survey participants, card use across all categories continues to be heavily driven by reward programs. As a result, reward-bearing cards, cobrand and loyalty cards, are now preferred by about 2:1 over standard credit cards; nearly the opposite of the ratio seen in 1999. The data shows that consumers are not only more closely assessing price and reward benefits, but are also canceling and adding credit cards in their wallet, adjusting their personal card portfolios, to better reflect their current economic situation.

Key insights in this year's benchmark study include the following data:
Consumer PaymentCard Preference
-- 38% of consumers in 2003 stated they prefer using their debit card for purchases.
-- Shift among consumers who stated they prefer to pay with credit cards:
-- 36% prefer standard credit cards in 2003, down from 57% in 1999.
-- 33% prefer cobrand cards in 2003, up from 25% in 1999.
-- 25% prefer loyalty cards in 2003, up from 10% in 1999.
Payment Card Churn During 2003
-- Almost 40% of consumers report canceling or reducing the use of an average of nearly two payment cards.
-- 56 % of consumers applied for and received an average of 1.5 new payment cards, and 85% of those are actively using the new cards.
Reward Card Preference & Loyalty
-- Six out of ten consumers have chosen rewards-based cards as their preferred credit card.
-- Nearly 90% of these consumers said they would not reduce usage or cancel their preferred reward card.
12. FRANKFURT AIRPORT USES BIOMETRICS TO SPEED SECURITY CHECKS
Source: CardTechnology Magazine (02/17)
Frankfurt/Main airport in Germany launched a test that uses Iris recognition biometrics to speed travelers through customs. The first stage of the six-month test will involve Lufthansa's frequent flyers from European Union countries, says Frank Fitzsimmons, CEO of Iridian, the company whose iris biometric technology will be used in the project. He estimates 10,000 passengers will participate in the voluntary program that will be used at both departure and arrival areas. The system is part of the Automated and Biometrics-based Border Checks initiative, a pilot project involving eighteen countries, led by the German Federal Ministry of the Interior and Federal Border Police. Six iris recognition systems were installed at control gates of the Frankfurt airport. The system scans a passport and calls up the enrolled iris image for that passport from a database; the system then does an iris scan of the individual at the gate and compares it with the enrolled image. The system aims to eliminate the use of fraudulent travel documents and multiple identities and to speed prescreened travelers through customs.
13. HONDURAS ORDERS 400,000 CHIP CARDS FOR WEAPONS CONTROL
Source: CardTechnology Magazine (02/10)
The government of Honduras has ordered 400,000 contactless chip cards that it plans to issue to registered gun owners. The order is part of a plan to better control the use of the estimated 3 million unregistered weapons in the Central America country, according to Enrique Martinez de Velasco, general manager for Latin America for BNC U.S. Holding. He says the Ministry of Security plans to begin issuing the chip cards next month. By July, anyone who uses an unregistered weapon in Honduras will be subject to a two-year prison term, Martinez says. Each card will carry information about the gun owner, the owner's fingerprint data and ballistics information about the weapon. The cards and the handheld card readers that officials will use carry chips from France-based Inside Contactless, Martinez says. The chips communicate via two protocols, and comply with the ISO standards 14443 and 15693. 14443 chips are typically used in transit and retail payment and require that the card be within an inch or so of the reader. 15693 offers a longer read range, which in some cases makes it more convenient for checking an ID card.
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