July 27, 2005
Welcome to the July 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. Moneris Demonstrates Canada's First Visa Certified Chip Transaction
3. Oberthur & Metaca Announce Partnership to Deliver Smart Cards to Canadian Banks
4. Finnish Mobile ID to Secure Transactions
5. G&D Ready to Deliver the Speed and Flexibility of Contactless
6. Contactless Credit Card Transactions Displayed at Cardware Show
7. Smart Card Alliance Announces Opening of Latin American Chapter
8. Chip Cards Predicted to Reduce Global ATM Fraud
9. Dexit Confirms UK Transit Bid
10. South Africa's EMV Delay Increases Risk of Fraud
11. Washable Smart Card Readers Introduced
12. Fare Cards Reduce Fraud, Build Efficiencies
13. G&D to Deliver Smart Cards for New Public Transport Ticketing System in the State of Victoria
14. Toppan Develops Paper that Blocks Smart-Card Skimming
15. Additional Stories Available In Members Only Section

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

PRINCIPAL:
Royal Canadian Mint ~ new member

GENERAL:
ACI Worldwide (Canada) Inc. ~ member since 1998
Dexit Inc. ~ new member
EWA-Canada ~ member since 2004
Infineon Technologies ~ member since 1998
Interac Association ~ member since 1995

GOVERNMENT:
Public Works & Government Services Canada ~ new member

ASSOCIATE:
Lifecycle Integrity Inc. ~ new member


UPCOMING EVENTS:

 Smartcards in Transport
September 29 & 30, 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 (07/27)
Funnel Vision

Do your remember the old joke about the light at the end of the tunnel? One might think of the emerging advanced card market in Canada, as being a 16-year-old tunnel, and from time to time the light at the end has been an oncoming train. I'm pleased to say that we have finally emerged and we are now entering the next phase - the funnel.

If you are a buyer or supplier, this is a very interesting stage, and not without its frustrations. Everyone is seeking information, human resources and contacts. Gering exactly what you need is a challenge, but there are synergies that can work for you.

As the advanced card association in Canada since 1989, we have access to a wealth of resources and have committed to organizational changes to support our members and the market in this phase. Our goals are to:
~ Stimulate market creation and end-user demand and acceptance
~ Appeal to the interests of our members; public and private sector, market and industry
~ Ensure that we are structured to deliver value to the interests of our members
~ Meet the demands of an accelerating marketplace
~ Together with our members, represent advanced card marketplace thought leadership in Canada

This starts with Strategic Leadership Teams where ACT members, together with invited experts, will devise strategies to stimulate specific market activities of interest to our members. A new Members' Council will review strategic plans put forward by each team, and pass them with recommendations to the Board of Directors.

By combining the assets of the association, with those of our members, we will be in a position to ensure that ACT Canada members have the access they need to information, contacts and other resources.

We have, in the past, launched initiatives to discover that we were ahead of the market. That is no longer the case. These new plans are in response to requests and we are currently in discussions with all members to establish our teams and councils.

Recently one company told me the primary value of an association is to introduce them to people in the market and once that was done there was no need for the association. Introductions are only the first step in a journey.

ACT Canada provides a neutral forum where domestic and international members and stakeholders share information, learn and pursue their goals. Building on that foundation we will move into the funnel stage to drive activity, to continue our work in advocacy and building awareness and to support members with an unparalleled knowledge of this market and the players. You see, we have funnel vision! If you would like to know more about our plans and how they could help you as a card issuer, technology supplier, acquirer, processor or regulator, give us a call.
2. MONERIS DEMONSTRATES CANADA'S FIRST VISA CERTIFIED CHIP TRANSACTION
Source: Canada Newswire (06/27)
Moneris Solutions Corporation announced the company has successfully demonstrated Canada's first full data EMV chip transaction under Visa Canada's Chip Migration Program - setting the stage for merchants to migrate to chip-based payment platforms.

Using a VISA chip card, Moneris President and CEO Jim Baumgartner carried out the transaction at CreArtive Custom Framing in Toronto, Ontario.

"I'm pleased to report that Moneris Solutions is ready for Canada's migration to chip," said Jim Baumgartner, President and CEO, Moneris. "The move to chip is truly a major evolution in the way businesses will accept payments from their customers, and Moneris is proud to be Canada's first payment provider to receive Visa's chip certification. We look forward to working with our merchant customers as they prepare to shift from magnetic stripe to chip technology."

"Visa has taken a leadership role in bringing chip technology to the Canadian marketplace and we're delighted with the progress and leadership Moneris has demonstrated to bring this advanced technology to Canadian merchants," said Derek Fry, President, Visa Canada. "Chip technology will ensure the future integrity of electronic payments providing cardholders and merchants with significant benefits, enhanced security, and greater piece of mind."

Visa Canada Association is a member of ACT Canada. For more information please visit their web site at http://www.visa.ca.
3. OBERTHUR & METACA ANNOUNCE PARTNERSHIP TO DELIVER SMART CARDS TO CANADIAN BANKS
Source: Oberthur (07/05)
Oberthur Card Systems and Metaca have agreed to an exclusive partnership to bring EMV smart card solutions and personalization services to Canadian banks.

In addition to delivering its personalization systems and software to Metaca, Oberthur will provide its microprocessor chips (in micro module format) for Metaca to embed into plastic cards. Metaca will produce the cards and run the personalization programs for their banking customers using the well-respected and proven Oberthur technology.

With a market of approximately 55 million cards, it is anticipated that issuers will start deploying smart cards in 2006 with critical mass expected by 2010, after which the liability in case of fraud will shift from issuers to acquirers.

Oberthur Card Systems and Metaca are members of ACT Canada. For more information please visit their web sites at http://www.oberthurusa.com & http://www.metaca.com.
4. FINNISH MOBILE ID TO SECURE TRANSACTIONS
Source: CardTechnology (07/13)
A digital certificate carried on a smart card in a mobile telephone now can act as a national identification document and payment device in Finland, says SmartTrust, a Swedish electronic security company. SmartTrust has signed agreements with three Finnish mobile operators, which will issue the SIM cards containing the government-authorized digital certificate. With their mobile phones, Finns will be able to authenticate themselves when electronically filing tax returns, registering for social security and paying for goods online, SmartTrust says. The handset acts as the card reader, requesting the user to punch in a personal identification number on the keypad, which then sends an electronic digital signature to the service provider. SmartTrust says about 90% of Finns carry mobile phones. The Finnish national ID, FinEID, is voluntary. About 78,000 of the electronic IDs have been issued since 1999 in the form of a smart card.
5. GIESECKE & DEVRIENT IS READY TO DELIVER THE SPEED AND FLEXIBILITY OF CONTACTLESS
Source: ICMA Daily News (06/23)
Giesecke & Devrient (G&D) announced the availability of their Contactless Implementation Solution in Canada. Their custom-designed solution will enable customers to quickly deploy contactless payment cards into the marketplace. With major issuers and merchants keen to participate in the value offered by contactless cards, G&D is working closely with key strategic partners to help incorporate this convenient form of payment into everyday life.

Visa, MasterCard and Amex have all planned large scale roll outs of the contactless delivery method.. The U.S. contactless market is poised for high growth with industry sources predicting that 35-50 million contactless cards should be in circulation by the end of 2006. Given the powerful cross-border influence of the U.S., Canadian cardholders and merchants are also asking for this convenience.

Giesecke & Devrient is a member of ACT Canada. For more information please visit their web site at http://www.gi-de.com.
6. CONTACTLESS CREDIT CARD TRANSACTIONS DISPLAYED AT ACT CANADA'S CARDWARE SHOW
Source: Mint (06/28)
Mint Technology Corp. announced that they distributed Prepaid MasterCard PayPass cards to delegates at ACT Canada's Cardware 2005 Show on Monday, June 27. Select participants were able to trial the MasterCard PayPass card and transactions on site.

Mint Inc. has announced plans to deploy and distribute Prepaid MasterCard cards in the Canadian marketplace. Peoples Trust of Vancouver is responsible for card issuance under its agency agreement with Horizon Plus Card Services Limited Partnership. The percentage of cards that will be MasterCard PayPass-enabled has not yet been publicly disclosed.

"It's encouraging to see that Mint has been a pioneer with these trials in Canada, and I look forward to seeing mass rollouts as retailers and consumers fully understand the value of contactless payments," said Catherine Johnston, President & CEO, ACT Canada.

Mint is a member of ACT Canada. For information visit their web site at http://www.mintinc.com.
7. SMART CARD ALLIANCE ANNOUNCES OPENING OF LATIN AMERICAN CHAPTER
Source: Smart Card Alliance (07/19)
The Latin American smart card market is growing, due to many market factors including the migration of mobile telecommunications operators to GSM, the financial sector migration to EMV, the move to smart transit fare cards and new government and commercial secure identification initiatives. Responding to these market factors, the Smart Card Alliance announced the formation of a new Latin American chapter to bring together smart card suppliers, partners and customers in order to address the challenges facing smart card deployment in the region.

"The Latin American smart card market is now emerging and could develop more rapidly than other markets by effectively learning from similar smart card initiatives and by forming business partnerships that can quickly deliver successful implementations," said Randy Vanderhoof, executive director of the Smart Card Alliance.

The main mission of the Smart Card Alliance Latin American chapter is in line with the overall goal of the Alliance: to stimulate the understanding, adoption, use and widespread application of smart cards. The Alliance plans to use specific projects such as bi-lingual education programs, market research, advocacy, industry relations and open forums to keep Latin American chapter organization members connected to industry leaders and innovative thought.

The Smart Card Alliance is a member of ACT Canada and a founding member of the International Smart Card Associations Network (ISCAN). For more information please visit their web site at http://www.smartcardalliance.org.
8. CHIP CARDS PREDICTED TO REDUCE GLOBAL ATM FRAUD
 Source: ATMMarketplace (07/08)
Global annual ATM fraud losses are estimated at about USD 2.5 million, according to ATM maker Diebold, while in the UK, ATM losses are running at about USD 107 million per year. In the US, magnetic-stripe payment card compromises at the ATM have risen sharply in the past 6 to 8 months, with executives at Diebold and NCR predicting the hike to increase before tailing off. As EMV cards are deployed in Europe, Asia Pacific and Latin America, and ATMs are upgraded to read the chip cards, both Diebold and NCR expect criminals to move on to 'softer' targets that are not yet chip-enabled.

ATM- and POS-based card fraud in Europe has dropped since EMV chip cards were first issued, with Diebold indicating that ATM fraud in France has fallen by about 90 per cent in the decade since smart cards were first issued. Industry experts are warning that while EMV chips are one solution for ATM skimming, the reluctance of the US to migrate to EMV creates a risk in that mag-stripe cards will have to be used for another decade. For this reason, ATM vendors are devising security solutions to protect transactions from start to finish while supporting channel integration.

Banks' ATM networks typically run on siloed architectures, but Celent Communications predicts financial institutions to spend between USD 5 million and USD 70 million on channel integration in projects that could last through 2010. Channel integration will enable banks to save 10 to 25 per cent on annual IT and operating costs, Celent notes, and can roll out in incremental or enterprise-wide projects, depending on financial resources. From a solutions viewpoint, channel integration applications may include extra functions for the quick addition of new channels to a project.
9. DEXIT CONFIRMS UK TRANSIT BID
Source: Dexit (07/22)
Dexit confirmed that it is part of a consortium that has been placed on a short list to extend the use of Transport for London's smart card ticket payment system.

Transport for London (TfL), the integrated body responsible for the City of London's transport system, including the London Underground, issued a news release confirming that a consortium including Dexit was one of seven finalists from a group of 20 companies that had submitted proposals to develop an emoney solution for Oyster, TfL's existing smart card ticketing payment system.

According to TfL, with 2.2 million users, Oyster has the largest customer base of all smart cards in the United Kingdom. The Oyster e-money initiative is designed to extend the use of Oyster cards beyond the transit system to include everyday payments for goods and services at newsagents, parking machines, quick service restaurants, supermarkets and other locations.

TfL has stated that it expects to confirm a partner for the Oyster emoney project by the end of the year and commence trials in late 2005 or early 2006.

Dexit is a member of ACT Canada. For more information please visit their web site at http://www.dexit.com.
10. SOUTH AFRICA'S EMV DELAY INCREASES RISK OF FRAUD
Source: ITWeb (07/05)
South Africa's R 1 billion investment in EMV infrastructure has hit a speed bump in that the major banks are not ready to support the shift. EMV migration is the responsibility of the big four banks, which set up an EMV Forum for this purpose, but to date, the banks are at various stages of preparation. Absa aimed to issue a million EMV cards in 2004, but had to delay its plans due to the lack of merchant terminalization. Standard Bank has begun its terminal deployment and is ready to issue EMV cards, but First National Bank is said to be taking a wait-and-see approach on EMV migration.

The fourth bank, Nedcor, has indicated that it is testing EMV cards internally until more chip card-reading terminals are installed at merchants. Absa subsequently asked South Africa's Banking Council to put pressure on the two rivals that it sees as impeding the national EMV deployment, which involves the conversion of banks' processing systems, ATMs and 12,000 POS terminals. Absa claims that FNB, with a substantially large merchant base, represents a particular challenge to South Africa's EMV readiness, but FNB has countered that it is not impeding EMV progress.

Like the UK, South Africa passed its EMV compliance deadline on January 1, 2005, which means the banks are currently bearing liability for any card fraud that occurs on non-compliant systems. Absa voiced its concerns over the EMV delay to the national Banking Council out of fears that South Africa could become a 'soft' target for international card fraud syndicates. To this end MasterCard southern Africa GM Eddie Grobler has cited evidence that credit card fraud has risen in the US since European countries began deploying chip cards in the past two years.
11. WASHABLE SMART CARD READERS INTRODUCED
Source: CardTechnology (07/15)
More companies and government agencies are installing smart card readers on employees' personal computers so that the employees can use smart cards to sign on to networks and digitally sign documents. But what happens when a busy worker spills his coffee on the reader, or a colleague touches the reader with greasy hands while eating lunch at her desk? To solve that problem, UK-based Unotron inc. has unveiled two new smart card readers in which the electronic components are sealed to protect from spilled liquids. The readers also can be cleaned under running water. The products are largely aimed at U.S. government agencies, which face a mandate to issue smart card ID cards to all workers, and to health care organizations that are also using smart cards for identification. The retail price of the readers is US$19.99, but volume discounts are available, says Brad Whitchurch, VP of government relations for Unotron Inc.
12. FARE CARDS REDUCE FRAUD, BUILD EFFICIENCIES
Source: HeraldToday.com (07/13)
Over 200 mass-transit systems in the US are using electronic fare cards to reduce fraud and optimize efficiencies, according to the American Public Transportation Association. Chicago's Transit Authority (CTA) is using ATM-style dispensers to issue stored-value cards with integrated payment applications for CTA transit, CTA and PACE buses, Metro trains and local retailers. CTA expects to save millions in its shift to cashless payments and is already offering a chip-based Chicago Card, to which value can be added at CTA transit card vending machines.

Another CTA transit card, the Chicago Card Plus, is a stored-value card that is automatically recharged with a credit card when commuters open a transit account with the CTA. Evidence shows that at least two customers using electronic fare cards can board a bus for every customer that pays with cash or a transit card. On this basis the CTA was keen to deploy smart card-enabled POS devices at existing ticket retailers to widen the replenishment network for its transit cards after assessments concluded that ATM-based recharging was not economically viable.

Recommendations in the CTA feasibility study also included a high-level pilot plan to test the use of CTA stored-value cards in purchasing goods from retailers on CTA property. Given that smart cards are expected to proliferate in the banking and credit card industries, the CTA was advised to consider integrating its transit fare application on cards issued by third parties. Management consulting firm DiamondCluster was commissioned to assist the CTA in identifying improvements to its existing smart card program, and ways in which to extend its applications beyond transit.
13. GIESECKE & DEVRIENT TO DELIVER SMART CARDS FOR NEW PUBLIC TRANSPORT TICKETING SYSTEM IN THE STATE OF VICTORIA
Source: Giesecke & Devrient (07/18)
Giesecke & Devrient Australasia (G&D) confirmed the company's role as a member of the Keane Australia Micropayment Consortium Pty Ltd (KAMCO), which was awarded a contract by the State of Victoria to deliver a new, highly innovative public transport ticketing solution.

Melbourne-based KAMCO comprises Keane Australia, G&D, Ascom, and ERG. Keane will build the technology backbone of the smart card system; Ascom will provide all fare collection equipment and the terminal management system; ERG will manage the installation and maintenance of the fare collection equipment and G&D will provide the actual smart cards. The new ticketing solution, built in partnership with the Transport Ticketing Authority, will support Victoria's extensive public transport system of 270 railway stations, 480 trams and 1,650 buses that services more than 410 million journeys each year. The new system is scheduled to go live in 2007, enabling travellers to access all modes of public transport throughout metropolitan Melbourne and regional Victoria using a single plastic smartcard.

Giesecke & Devrient is a member of ACT Canada. For more information please visit their web site at http://www.gi-de.com.
14. TOPPAN DEVELOPS PAPER THAT BLOCKS SMART-CARD SKIMMING
 Source: ICMA Daily News (06/20)
Toppan Printing Co. has developed a kind of paper that protects against the "skimming" of data off contactless smart cards. The company plans to market the paper to credit-card companies for the mounting sheets to which new cards get attached when mailed to customers. Toppan also envisions the paper being integrated into wallets and commuter-pass sleeves.

Made from a thin foil of aluminum sandwiched between to sheets of paper, the material blocks the electromagnetic waves that emanate from the smart card so the information cannot be skimmed using a reader. The paper thus serves to protect against the stealing of information and, in the case of cards carrying e-money, the siphoning off of e-money.
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

EMV SHIFT IS NOT AUSTRALIA'S ONLY SMART CARD DRIVER

Australia's banks have been criticized for being slow to adopt EMV cards, possibly due to card fraud rates reaching a historic low in the Asia-Pacific region, at 3 per cent of transactions. The global fraud rate runs at 7 per cent, but as fraudsters are displaced from neighboring EMV card-using countries, Australia may need to accelerate its migration to reduce the risk of increased fraud. EMV payment infrastructure and applications need to be deployed in Australia to maximize the value of EMV cards, but EMV card readers are being phased in and MasterCard is confident that EMV migration is on track…

UK'S OVERSEAS CARD FRAUD HITS A FIVE-YEAR LOW

UK banking industry entity APACS has advised that total fraud committed abroad on UK-issued payment cards in amounted to Stg 92.5 million, down from a high of Stg 138.4 million in 2001. This total is the lowest for five years, despite a 93 per cent increase in the use of UK-issued cards abroad from 1999 to 2004 and comprises 18 per cent of the UK's 2004 card fraud total of almost Stg 505 million. As European countries adopt chip and PIN technology, APACS expects fraud on UK-issued cards used abroad to drop, given that five of the top ten fraud hotspots are in Europe…

CHINESE BANKS TEST SMART CARDS

Following last month's security breach at U.S.-based card processor CardSystems Solutions, Inc., Chinese banks have decided to accelerate the rollout of chip cards complying with the EMV international payment smart card standard, the Shanghai Daily reports…
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