May 26, 2005
Welcome to the May 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.

IN THIS ISSUE:
1. Editorial Comment
2. Chase To Roll Out Next Generation Payment Product
3. Debit Card Shopping Coming To The Web
4. UK Retailers Slow To Adopt IP-Enabled Networks
5. Prepaid Cards Allow Banks To Tap New Markets
6. Gift Card Study Confirms Growing Impact
7. Card Security Programs Gaining Among Retailers
8. Restaurateurs To Increase POS Spending In 2005
9. Giesecke & Devrient and KNC Establish Russian Joint Venture
10. Police Use Smart Cards To Increase Security To Comply With Emerging National Standards
11. Credit Union Service Corp. Selects eFunds For Back-Office Processing
12. LaserCard Announces $1.8 Million Follow-On Order For Canadian Permanent Resident Cards
13. Sagem To Take Part In Thailand's E-Purse Launch
14. Additional Stories Available In Members Only Section

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

GENERAL:
Bank of Montreal ~ member since 1990


UPCOMING EVENTS:

identech
June 7 - 9, 2005
Marseille, France
ACT Canada members receive a 10% discount - contact andrea (AT)actcda.com for details
http://www.identech-online.com/conference/

 Cardware 05: Smart Moves
June 27th, 2005
OBA Conference Centre, Toronto, Canada
ACT members receive discounts on registrations & exhibitions rates
This multi-track event brings together stakeholders in the financial services, government and retail sectors. Conference program and registration details are available at http://www.actcda.com/calendar/symposium.htm

 Smartcards in Transport
September 29 & 20, 2005
Paris, France
ACT Canada members receive a 20% discount - contact andrea(AT)actcda.com for discount code
http://www.lerail.com
1. EDITORIAL COMMENT
Source: Catherine Johnston, President & CEO, ACT Canada (05/26)
Never before has so much information been so accessible. There are few places or times in our day where we aren't faced with information, forcing us to change the way we think and process that deluge. To cope, we've adopted parameters. A Google search on "identity theft Canada 2005" found 841,000 sites. I only have time for the top 20. Not only do we set time limits, but we also set emotional parameters.

Recently 676,000 Americans were put at risk in a single identity theft scam. Numbers like that have little or no meaning for us; they're just too big. We're told this crime costs the Canadian economy more than $2.5 billion a year. That too is an almost meaningless number.

Let's make it personal. You pay part of that $2.5 billion. You likely know someone who has been a direct victim of identity fraud. You may be one of the millions of victims whose identity has been compromised but are unaware of the problem, because this is like having a serious disease that hasn't yet been diagnosed.

You need to support all levels of government that are working on better identity management and all companies working to protect your personal data. You need to seriously question any that aren't.

50 years ago we installed locks on doors to protect ourselves from robbers although statistically the risk was low. This risk is high, but the use of chip and optical cards to protect data and identities is a viable solution employed by many countries and corporations. We must join them.
2. CHASE TO ROLL OUT NEXT GENERATION PAYMENT PRODUCT THIS SUMMER
 Source: ICMA Daily News (05/19)
Chase Bank U.S.A., a division of JPMorgan Chase & Co. announced that it will increase the speed and convenience of a credit card by broadly rolling out consumer cards with contactless functionality, called blink. Chase will begin a market-by-market rollout of the "Chase credit cards with blink" this summer, after working closely with merchants in each market to ensure the broadest possible acceptance at launch.

Working in conjunction with Visa U.S.A. and MasterCard International, Chase has identified merchants where speed and convenience are important to consumers, and has been actively building a roster of merchants in each market. Initially, Chase cardmembers will be able to blink at well-known movie theaters, convenience and specialty retailers such as 7-Eleven, quick service restaurants and drug stores. Chase will announce additional lists of specific merchants when they issue cards with blink in each market. Sheetz, Inc. - one of America's fastest-growing, family owned and operated convenience store chains - will be Chase's first partner to launch their co-branded credit card with blink functionality, allowing customers the ability to use Chase cards that blink at all of their locations.

Consumers can use cards with blink everywhere they currently use credit cards - anywhere Visa and MasterCard are accepted - plus, use the new blink functionality wherever contactless payments are accepted. By the end of 2005, Chase plans to have thousands of merchant locations accepting Chase cards with blink across the country.

7-Eleven, Inc. will be an early adopter of the Chase cards with blink, testing the card in 170 of its stores. The new Chase cards with blink provide customers with a faster, easier transaction. Contactless payment fits well with 7-Eleven's strategy of providing consumers convenient, quick service.

More information is available at http://www.chaseblink.com/national.

MasterCard and Visa Canada Association are members of ACT Canada. For more information please visit: http://www.mastercard.com & http://www.visa.ca.

3. DEBIT CARD SHOPPING COMING TO THE WEB
Source: CBC News (05/05)
Canada's major banks are finalizing details for a service that will allow consumers to use their debit cards to make purchases on the web, the Toronto Star reports.

Interac Online will allow online shoppers to buy products from participating retailer websites, in much the same manner that credit card users follow. Customers will be able to access their personal online banking account from the retailer's site, where they will be asked to confirm and approve the transaction. Customers are then returned to the retailer's site where the product purchase is completed.

None of the customer's personal information is shared with the retailer during the transaction.

The Royal Bank of Canada plans to be the first to offer the new service to its customers by the end of May. The Bank of Nova Scotia and Bank of Montreal are planning to implement the service later this summer, with the Toronto Dominion Bank with Canadian Imperial Bank of Commerce coming on board later this year and early 2006.

Bank of Montreal; Canadian Imperial Bank of Commerce; Interac Association; The Bank of Nova Scotia; Toronto Dominion Bank & are members of ACT Canada. For more information about the above listed companies please visit their web site: http://www.bmo.com; http://www.cibc.com; http://www.interac.org; http://www.rbc.com; http://www.scotiabank.com & http://www.td.com.
4. UK RETAILERS SLOW TO ADOPT IP-ENABLED NETWORKS
Source: The Retail Bulletin (05/19)
Most UK retailers have adapted their POS systems for EMV chip and PIN payments but over 80 per cent are still using legacy communication networks, according to the Logic Group. If retailers migrate to IP-based networks in place of X.25 systems or dial-up lines however, cost savings of up to 20 per cent for communications are feasible. Fast credit and debit card processing is still the primary motive for retailers to install IP networks, but as multi-channel retail volume grows, retailers will welcome the ability to network POS terminals with in-store kiosks and self-checkouts.

UK-based liquor seller Majestic Wine Warehouses for instance has converged its payments and non-payments data onto an IP-based ADSL network. The solution also gives Majestic Wine stores faster access to product and customer data and the Internet. Chip and PIN migration also led retailers such as Paperchase to build a new business systems architecture to eliminate manual processes and improve efficiency. A key priority for Paperchase is to complete its chip and PIN rollout and store systems replacement by late 2005 before the year-end trading peak.

Paperchase has already gained three benefits from its systems upgrade, namely reduced queuing time, a modern POS system that can scale to future requirements and real-time data-flow to head office. Further benefits of the integrated store system and supply chain include purchase order management, allocations, replenishment and inventory planning. UK retailers are increasingly connecting retail operations across stores, to establish integrated POS infrastructures, supply and sales chains for fast response to trading conditions.

5. PREPAID CARDS ALLOW BANKS TO TAP NEW MARKETS
Source: Bank Administration Institute (05/25)
In 2003, USD 157 billion was loaded onto all prepaid products, according to Mercator Advisory Group, and stored-value cards comprised 15 per cent, or USD 23.5 billion, of this total. By end-2005, Pelorus Group predicts 34 million prepaid debit cards to be issued, with general-purpose prepaid cards accounting for 35 per cent of this total, or 12 million cards. The potential of stored-value cards is confirmed in that MasterCard operates over 200 prepaid card programs with more than 100 issuers, which use its processing networks to maximize the potential for interoperability.

Banks similarly can use their payment systems infrastructure to solicit business from third-party prepaid card program providers and to establish further revenue streams from processing fees. South Dakota-based Bank First was an early starter in issuing cards for third-party prepaid providers, and in showing how banks can use prepaid cards to extend their brand. New York Central Bank sells Visa-branded gift cards and MasterCard prepaid debit cards at its branches, and offers direct deposit reloads for free as an incentive for customers to open an account. If banks merge stored-value cards with savings products, consumer loans and mortgages, the cards can entice new cardholders to consider the benefits of using additional banking services. While the FDIC is still deciding whether funds loaded onto prepaid cards constitute deposits and are FDIC-insurable, some card categories, such as payroll cards, may be subject to Regulation E requirements. Banks that add cash reloads, bill payments, savings and other functions to stored-value cards are however best placed to differentiate themselves and deliver increased value.
6. GIFT CARD STUDY CONFIRMS GROWING IMPACT
Source: CBC Business News (05/25)
The use of gift cards is growing so rapidly it's causing a shift in retail spending patterns, according to a study by Statistics Canada.

The agency surveyed 80 of Canada's largest retailers, accounting for more than 11,000 stores selling everything from electronics to home furnishings.

During the last Christmas season, the survey found that 68 per cent of those retailers offered gift cards, up 15 percentage points in just one year.

Gift cards are plastic cards that look like credit cards with a magnetic strip on the back. They're electronically "loaded" at a cash register with a specific cash value.
7. CARD SECURITY PROGRAMS GAINING AMONG RETAILERS
Source: Internet Retailer (05/05)
In today's multi-channel retail environment, payment security is an issue for retailers, customers and the card schemes, whose security programs are said to be gaining buy-in from retailers. To improve data security at all online entities that handle payments, Visa launched its Cardholder Information Security Program and MasterCard, its Site Data Protection Program. Both stipulated two compliance deadlines for on-site data security, with priority assigned to the largest merchants and those suffering an online attack, and regular network scans and audits to ensure compliance.

June 30, 2005 is also the deadline for merchant compliance with The Payment Card Industry Data Security Standard (PCI), which was developed by Visa and MasterCard and is endorsed by Amex, Discover, Diners Club and JCB. PCI is the universal data security standard for MasterCard and Visa's site data security programs, and has encouraged compliance among merchants, who are becoming aware that cardholder data held on store systems may be more at risk to fraud than payment data that is handled by online retailers, as the example of Polo Ralph Lauren shows.

Visa's Verified by Visa and MasterCard's SecureCode authenticated online payment programs have been promoted in the past few years, but have had less success than PCI and the card schemes' data security programs. To date MasterCard has signed up 50,888 merchants to its SecureCode program, up from 9,000 in 2004, and 11.3 million of its 679.5 million cardholders globally have enrolled in the scheme. Verified by Visa is meanwhile backed by 56,000 retailers and 4 million cardholders, and 38 per cent of transactions at affiliated retailers are authenticated.

MasterCard and Visa Canada Association are members of ACT Canada. For more information please visit: http://www.mastercard.com & http://www.visa.ca.
8. RESTAURATEURS TO INCREASE POS SPENDING IN 2005
 Source: Business Wire (05/13)
In 2004, restaurants and hospitality providers in North America spent USD 2.9 billion on point-of-sale systems and this spending will increase through 2005, according to IHL Consulting Group. Table service and quick-serve / fast food restaurants accounted for most POS systems growth in 2004, when an 11 per cent annual unit growth rate was recorded. During 2005, POS purchases will focus on integrated and user-friendly systems as hospitality providers adopt next-generation technologies in a trend that will create opportunity for POS vendors in the next two to three years.

Restaurants operating in today's competitive environment are expected to run integrated front- and back-end business systems to enhance productivity and efficiency levels. Enterprise-wide platforms are replacing automated POS software and accounting or inventory-management applications as restaurant managers build a value chain to support cost-efficient operations. Inventory data for example can interface to accounting software that integrates POS data while managing payments and invoices to be sent to the restaurant's vendors and suppliers.

The latest POS devices for restaurants simplify order-taking and processing by providing built-in interfaces for table-service, quick-service, take-out and food delivery. Most support fast credit card authorization and printing, in addition to gift and loyalty cards and will link to accounting systems for financial reporting and payment reconciliation. Restaurant chains that issue gift or stored-value cards may need a reporting tool to handle inter-store redemption and reconciliation, especially if their cards are sold by third-party retailers, which take a discount off the card's value.
9. GIESECKE & DEVRIENT AND KNC ESTABLISH RUSSIAN JOINT VENTURE
Giesecke & Devrient (G&D) is expanding its smart card activities in Russia as well as neighboring countries that belong to the Commonwealth of Independent States (CIS) by entering into a joint venture with Russia's Concern Nauchny Center (KNC).

Representatives from both companies gathered in Moscow to sign the cooperation agreement.

Before the end of this month, joint operations will begin in Zelenograd/Moscow. In addition to production and personalization of smart cards, the enterprise will develop and market smart card-based applications and system solutions. Its product portfolio will comprise SIM cards for mobile telephones, payment cards, and identification cards for industry and government projects.

"G&D has been doing successful business on the Russian market for more than five years now. Together with our partner KNC, we intend to expand our position further and become the leading provider of smart card solutions in Russia and the CIS nations," says Franz Haniel, member of Giesecke & Devrient's management board, commenting on the conclusion of the agreement establishing the joint venture.

IN OTHER NEWS - Fiscal 2004 was another successful year for Giesecke & Devrient (G&D). The Munich-based international technology group increased its sales by 10.5 percent, to EUR 1.16 billion. This was the highest revenue ever achieved by the G&D Group. Earnings rose by 40 percent, reaching EUR 69.7 million. Net profit was EUR 38.4 million, equivalent to an increase of 36 percent over the previous year's EUR 28.2 million. (Source: CNW May 17, 2005)

Giesecke & Devrient is a member of ACT Canada. For more information please visit their web site at http://www.gdai.com.
10. POLICE USE SMART CARDS TO INCREASE SECURITY TO COMPLY WITH EMERGING NATIONAL STANDARDS
Source: Security News on www.securitypark.co.uk (05/11))
Police officers, staff and partner agencies from the Criminal Justice System within Hampshire Constabulary are using the ActivCard® Enterprise Access Card solution for integrated physical and logical access. Hampshire Constabulary serves a population of over 1.8 million people and covers 1,500 square miles of Hampshire and the Isle of Wight.

By consolidating the user credentials onto a single, secure smart card, Hampshire Constabulary is able to dramatically improve IT security while reducing costs and increasing the productivityo of its workforce. The 6,000 employees are also using ActivCard Single Sign-On to gain secure, seamless access to network resources. Implementing logical access controls also enables Hampshire Constabulary to comply with emerging standards and national police guidelines such as the Unified Police Security Architecture (UPSA) standard.

Hampshire Constabulary recognized that legacy usernames and passwords were difficult to manage and would not meet the requirements of the UPSA standard. In addition, the Constabulary needed to deploy a Record Management System to aid efficient operational policing while reviewing its security policies and business processes around network, remote, physical, and application access. By selecting identity assurance solutions from ActivCard, Hampshire Constabulary is able to manage the administration, issuance and revocation of credentials in a user-friendly manner and provide single sign-on capabilities to its key systems, including the Record Management System.
11. CREDIT UNION SERVICE CORP. SELECTS EFUNDS DATANAVIGATOR SOFTWARE FOR BACK-OFFICE PROCESSING
Source: Market Wire (05/16)
USA: eFunds Corporation announced that Credit Union Service Corporation (CUSC) has selected DataNavigator(R) for Windows(R), eFunds' open platform back-office management solution, for use at more than 630 member credit union locations.

CUSC has also renewed its eFunds shared branching and gateway processing agreement for an additional three years, and currently licenses eFunds' IST(R)/Switch software to manage its next generation shared branching network. eFunds and CUSC will continue to work together to enhance the IST/Switch transaction processing solution, while ensuring ongoing business continuity through eFunds processing services.

Using DataNavigator on Windows for the back office, CUSC will be able to increase responsiveness to customer service inquiries, enhance exception item processing, and provide additional tools that enable credit union members to research and report on their customer transactions. Since CUSC also runs its shared branching network through a combination of eFunds' software and processing services, it will also be able to avoid costly system and vendor conversions as business needs expand in the future.

eFunds is a member of ACT Canada. For more information visit their web site at http://www.efunds.com.
12. LASERCARD ANNOUNCES $1.8 MILLION FOLLOW-ON ORDER FOR OPTICAL MEMORY-BASED CANADIAN PERMANENT RESIDENT CARDS
Source: LaserCard (05/16)
LaserCard announced receipt of a $1.8 million purchase order for highly secure optical memory-based Canadian Permanent Resident Cards expected to be delivered over a 13-month period beginning July 2005 at a rate of approximately $135,000 per month.

The purchase order is part of a 2002 contract awarded by the Canadian government to Canadian Bank Note Company, Ltd. (CBN) of Ottawa that included the issuance of a minimum of 2.3 million cards over five years. With this order, LCRD has received orders for 2.35 million cards under this contract.

"We are very pleased to see the continuing success of this program, which enjoys a very high profile in the secure ID world," said Richard Haddock, CEO of LaserCard Corporation. "The Canadian "Maple Leaf Card" has received significant accolades from the card industry and experts in forensic science. We believe this is one of the most secure ID cards available anywhere."

The Canadian Permanent Resident Card was the world's first optical card to be in full compliance with International Civil Aviation Organization (ICAO) Machine Readable Travel Document standards which define layout, topology and interoperability of data stored on optical memory. The card has been referred to as "the most secure publicly issued ID document in the world" by renowned forensic document expert Dave Myers and was an original component of the 2002 US/Canada Smart Border Action Plan.

LaserCard and Canadian Banknote are members of ACT Canada. For more information please visit: http://www.lasercard.com & http://www.cbnco.com.
13. SAGEM TO TAKE PART IN THAILAND'S E-PURSE LAUNCH
Source: ICMA Daily News (05/10)
French electronic payment solutions developer Sagem Monetel, part of telecoms and defence group Sagem, will participate in the launch of Thailand's electronic purse, slated for early September 2005.

The system will use contact or contactless smart cards that will interface with Sagem Monetel's EFT Smart payment terminal. This terminal processes electronic transactions in less than four seconds when in contactless mode. Payments will be made in Touch and Pay mode.

The e-purse, called Smart Purse, will be used by at least 5.0 million card holders on 40,000 terminals over two to three years. Fast food outlets, bookshops, theatres, concert halls and train stations are the first to be equipped with the new payment mode.

Developer of the overall solution is Thai Smart Card company. In addition to its e-purse function, Smart Purse can integrate a number of value-added services, such as loyalty programmes, analysis of consumer behaviour for promotional campaigns, e-vouchers, e-ticketing, as well as Money Transfer Applications (MTAs), a new application to be launched in May 2005.
15. ADDITIONAL STORIES AVAILABLE IN ACT CANADA MEMBERS ONLY SECTION
These additional stories are available to ACT Canada members via the Members Only section of our web site. Click on the link below to access this section. If you are a member of ACT Canada but do not have your login details please contact me - andrea(AT)actcda.com.
http://www.actcda.com/members-only/news.htm


CITY OF GLASGOW TO BRING IN ALL-PURPOSE SMART CARDS

People in Glasgow will soon be able to pay their council tax, go swimming and take out library books with one multi-purpose smart card. The card could also allow motorists to pay for parking in council car parks…


US PIN DEBIT KEEPS EMV IN THE DARK

The roll-out of EMV-compliant chip cards is now gathering pace across the globe, but the US remains the significant exception. Even as neighbouring countries such as Canada put migration plans in place, the US remains as uninterested in chip as ever. What will it take to get US banks on board…
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