Progressing from Vision to Development

 
What would help you drive your card/business goals forward?  What applications or technologies would you like to see gain market momentum?  Are there issues that need to be managed? 

ACT Canada members are being asked these questions leading up to the September 27^th Cardware Connections meeting.

The questions are timely, because this market is on the move.  It is reminiscent of 1979, as PCs were first moving into corporate Canada.  Many of us wish we had realized that potential and now we have another chance to get in on the ground floor.  We have always had a vision of a national infrastructure for smart and optical cards and now it is time to make plans.

ACT Canada members will likely lead the market, given their history and expertise.  The association believes that we can accelerate market development by bringing together interested members to work with ACT on key initiatives.  Strategic Leadership Teams will choose market initiatives (or issues), identify the stakeholders, decision makers and influencers, determine the appropriate messages and delivery mechanisms for each and build and deliver strategic plans to advance market segments.  By working together we can provide the thought leadership to support public and private sector organizations that would benefit from issuing new card applications.

Members are being invited to attend the Leadership teams formation meeting on September 27^th, following the Cardware Connections (CC) networking and education meeting.  Our guest speaker for the CC is Walt Lemon of Aconite, presenting “EMV, the early bird gets the worm”.  There are a lot of stakeholder questions about individual timetables and benefits and it is our pleasure to bring Walt to this meeting.  His knowledge of this market and the lessons learned from those who have already converted will help our members consider their options. 

Following our guest speaker, we will introduce the new European style state-of-the-art roundtable networking.  In this market we know the players, but it is a great opportunity to find out who is offering specific products and services and to meet new personnel within those companies.  The relationships formed between suppliers and between buyers and suppliers will help all realize their goals in the coming years.

Now, you may think this has become an ad, not an editorial, so let me end with this message.  Now is the time for all vested parties to work together.  There will come a time when competitive interests will drive the agenda, but now we must each bring our strengths to the table.  ACT Canada will pledge all the knowledge and contacts we have built over the last seventeen years.  We promise our neutrality to all stakeholders.  What will you bring?

With over 5 million POS terminals remaining to be EMV-enabled in Europe through 2007, Frost & Sullivan expects the migration of fraud across borders to offset delays in new terminal deployments. At end-2004, less than 10 per cent of POS terminals in most European countries were EMV-capable outside of the UK, where high card fraud drove the migration to EMV. Once the UK tightened its card security, fraud was predicted to displace to neighboring countries in Europe and this did happen in 2004, when cross-border card fraud in France rose by over 50 per cent.

Until now, Germany and Italy were slow to draft EMV migration plans, but increasing card fraud in both countries has prompted a changed stance. Germany designated January 1, 2006 as a local date when liability for card fraud will shift to parties that are not EMV-compliant. Issuers such as Landesbank Berlin are also EMV-enabling part of their card portfolios to prevent card skimming. Italy, whose card fraud rates rose by 48 per cent in 2004, is similarly to EMV-enable all of its debit cards by January 1 2006, when fraud liability shifts to non-EMV compliant issuers and acquirers.

EMV migration is slow in Spain and Holland, where low fraud levels impede the case to convert to a chip-based payment infrastructure. Once increasing card fraud leads more European countries to migrate to EMV, Frost & Sullivan advises that 30 per cent to 40 per cent of a national bankcard base needs to be EMV-compliant for terminal vendors to have a business case in that country. Ultimately, terminal vendors will benefit in that the cost of switching vendors or switching POS equipment for EMV compliance is roughly the same, which will prompt retailers to float tenders.

Malaysia: Bank Negara has said that no Europay-Mastercard-Visa (EMV) chip credit cards have been cloned and that the security feature adopted by banking institutions is very secure.

In a statement on Aug 17, the cental bank said a recent news report that microchip for credit cards had been cloned was "incorrect and misleading". It added that fraudulent credit card transactions involved the use of magnetic stripe of the cloned credit card.

"No EMV chip credit cards have been cloned. Bank Negara would like to inform that the EMV chip credit card security feature adopted by banking institutions is very secure," it said.

As at end-2004, almost all credit cards issued in Malaysia had been replaced with chip cards, and point-of-sale terminals have also been upgraded to accept chip cards," it said.

For the first half of 2005, statistics on credit card fraud showed that the number of cases and losses have declined by 43.2% and 33.5% respectively, compared with the same period in 2004. It added that Malaysia was the leading country in the region adopting EMV chip infrastructure to address counterfeit fraud.

Canadian Tire, Canada’s largest retailer, is spending USD 40 million on replacing its legacy cash registers with a modern POS system. As gift/loyalty card programs, self-checkout and contactless payments infiltrate the oil industry, Canadian Tire is equipping its tire stores, gas stations, car washes and clothing stores for modern convenience.

By mid-November, Canadian Tire’s new POS system should be live after what is seen as the most extensive store renewal program in its trading history. Using an open platform will allow the retailer to interconnect POS hardware and software with devices such as card payment terminals, to automate petroleum and car wash sales, and to issue prepaid cards for refunds or gift-giving. Canadian Tire’s POS project involves the conversion of up to 35 stores per week, but by reducing the number of lanes in each store, the retailer hopes to improve its sales ratio per square foot.

After its POS upgrade, Canadian Tire hopes to cut its lane count by about ten per cent, and to gain a 50 per cent reduction in its POS maintenance costs. In a related project, the retailer rolled out an IP (internet protocol) based WAN (wide area network) to improve its network bandwidth and facilitate high-speed communications.

The introduction of smart chip cards in Australia is expected to accelerate over the next few years as the country cracks down on skimming, a common payment card fraud.

Visa Australia general manager Bruce Mansfield said chip cards, which offer greater security than magnetic stripe cards because of their embedded micro chips, were the best long-term defence against counterfeit fraud.

"One of the keys to fighting fraud is the introduction of chip cards and we expect to see this accelerate in the next few years," he said.

"The Australian market has primarily to date been focusing on upgrading the acquiring infrastructure," Mr Mansfield said.

"And that is to not only upgrade the terminals themselves to be able to accept chip cards... but also to upgrade the computer system to be able to process the additional chip data that comes on the card."

At the same time, the Australian Payments Clearing Association had mandated the move to a higher level of security known as Triple DES - a security algorithm used to more securely process a transaction.

"So combining the need to migrate to Triple DES and also the movement towards chip, we're seeing good progress in replacing many devices out there to be able to accept chip cards," Mr Mansfield said.

He predicted chip cards would be commonplace in Australia by the end of this decade.  Everyone had a role to play in fighting fraud, Mr Mansfield said.

"The simple starting point for fraud prevention is for people to treat their card and information as if it were cash," he said.

Visa Canada Association is a member of ACT Canada; please visit http://www.visa.ca for more information.