Smart Card Talk, February Issue

Smart Card Talk February 2012

•

a Smart Card Alliance ePublication

• Volume 13 : Issue 2

In This Issue: ② Executive Director Letter >>

A Year of Progress

③ Latin America Letter >>

Dear members and friends of the Alliance, Around this time last year, the Smart Card Alliance was coming off a very successful 2011 Mobile and Transit Payments Summit in Salt Lake City, where industry leaders envisioned what the market might look like in a few years. We looked at videos of Seinfeld TV series character George Costanza’s “fat wallet” and imagined what a mobile wallet would mean for people. At this year’s 2012 Payments Summit, also in Salt Lake City, we debated whether the Google wallet or the Isis wallet schemes

have the right stuff, or if the PayPal wallet in the cloud will capture the market’s imagination. Our first “all payments” conference saw a record number of attendees, with thoughtful conversations, lively debates and dynamic workshops that surpassed all expectations. You can read more about the event in February’s newsletter. I know that as I sat down to write a recap, I began to wonder what exciting things would come out of the NFC Solutions Summit in May at the San Francisco Hyatt Regency.

Please feel free to contact me if you have questions or simply want to talk about all the activity the industry is experiencing. Thank you for your support of the Alliance.

Click to Read More …

④ Member Profile >> ⑥ Latin America Member Profile >> ⑧ Feature Article >> ⑬ From the Alliance Office >> ⑭ Council Reports >> ⑯ Members in the News >> ⑱ Events Calendar >> About Smart Card Talk Smart Card Talk is the monthly e-newsletter published by the Smart Card Alliance to report on industry news, information and events and to provide highlights of Alliance activities and membership.

About the Smart Card Alliance Feature Article:

Implementation of Contactless Open Payments for Transit Transit agencies in the United States are starting to migrate to accept contactless open bank cards for fare payment directly at the customer’s point of entry/exit to the transit system. This month’s article profiles the Utah Transit Authority full system deployment and the New York/New Jersey pilots.

Click to Read More …

Member Profile:

American Express This month Smart Card Talk spoke with Patricia Partelow, Vice President/General Manager of Innovative Payment Solutions for American Express. Ms. Partelow is an innovative business leader with over 20 years of experience in leveraging new technologies and identifying growth opportunities.

Click to Read More …

The Smart Card Alliance is a not-for-profit, multi-industry association working to stimulate the understanding, adoption, use and widespread application of smart card technology.

191 Clarksville Road Princeton Junction, New Jersey 08550 1.800.556.6828 Fax: 1.609.799.7032 info@smartcardalliance.org www.smartcardalliance.org

executive director’s corner

A Year of Progress Dear members and friends of the Alliance, What a difference a year makes. The 2012 Payments Summit in Salt Lake City was held last week and we continue to digest and interpret all the information about the next generation of payments that we saw and heard. Our expanded “all payments” format and multiple tracks covering EMV payments, mobile/NFC payments, and transit payments pushed the limits of the hotel venue in Salt Lake City as the number of attendees swelled to 530 people (a 50% increase from 2011).

Last year, the major transportation operators in Chicago, Philadelphia, and New York City sat tight-lipped on their panels unable to speak openly about their open payments procurements or give any reasonable timelines for adoption. This year we heard them proudly speak about contracts and transitional infrastructure procurements underway worth hundreds of millions of dollars per year for the next five years, with additional cities queuing up closely behind them.

This time last year there was no EMV migration in the United States. The Smart Card Alliance was just completing its new white paper, Card Payments Roadmap in the U.S.: How Will EMV Impact the Future Payments Infrastructure? This year, we saw both Visa and MasterCard announcing their EMV and mobile payments acceleration plans and counterfeit fraud liability shift dates.

Six of the top ten card issuers have begun issuing or announced plans to issue EMV-enabled bank cards for their portfolios that serve their international traveler customers, and Visa announced that they had passed one million EMV cards already issued in the United States. Walmart, the largest retailer in the country, has completed its in-store EMV terminalization project and has started processing EMV payments in some of its stores that border on Canada.

Should anyone conclude that because this next generation payments model has been revealed to be the payments brands’ common roadmap for the future (which has become the catch phrase for everything including EMV, contactless payments, NFC, mobile cloud-based payments, peer-to-peer payments, eCommerce payments, ATMs, and new prepaid products), that everything is now

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in focus for the merchants, issuers, mobile operators, and consumers? Clearly, the answer to that question is NOT YET. It was very evident from the roundtable discussions with key analysts, consultants, merchants, and other stakeholders, including some financial institutions, that dissenting opinions abound on key issues facing the U.S. market -- like chip & PIN, offline card authentication, contactless EMV cards and mobile wallet schemes. It was even questioned if perhaps NFC really stands for “Not For Commerce.”

In fact, some merchants are not embracing the current mobile wallet solutions being proposed. They feel that mobile presents an opportunity to change the payments economic model, rather that perpetuate the existing model. The real winners in the mobile payments arms race may be someone who starts out with a completely different payments delivery approach – if that is possible.

It’s fair to say there is a lot of optimism in the air that the U.S. market has finally broken free from the chains that bound it to the legacy magnetic stripe infrastructure. As I mentioned earlier, just look at the progress we have made since last year. The 2012 Payments Summit was a shining example that the entire EMV payments, mobile payments, and transit payments ecosystems are engaged in the process of moving forward. There is also some healthy skepticism that the next generation of payments roadmap that some have prescribed is not exactly how it is going to turn out. Issuers have been given the freedom to choose from a seemingly endless number of options, which is not necessarily a good situation for a market that has over 8,000 banks and nearly 10,000 credit unions who issue payment cards. Merchants don’t get to choose which cards and mobile devices their customers will carry in the next ten years and what payments features they will have to accept, nor do they have much control over costs associated with the payments they will accept, but those norms may change as well. What is clear is that we are in for some uncertain times ahead as we progress to the next generation of more secure payments.

Perhaps now is the time for the Smart Card Alliance organization to be the facilitator for the industry collaboration that is needed to bridge the divide among all of the industry stakeholders that could slow or stall implementing the massive changes that support the next generation payments infrastructure. We’re certainly up for it, and have the resources, knowledge and educational material to support such an endeavor. Just another topic to think about as we review last week’s incredible display of talent, innovation and leadership.

Sincerely, Randy Vanderhoof Executive Director rvanderhoof@smartcardalliance.org

Dear members and friends of the Smart Card Alliance Latin America and the Caribbean, As I returned to a tropical climate after participating in last week’s 2012 Payments Summit in Salt Lake City, Utah, I was glad to see the interest of the U.S. financial payments industry toward EMV migration in Latin America and the Caribbean. The event also gave us the opportunity to bring two SCALA leadership council member representatives from Visa Inc. and MasterCard Worldwide to exchange experiences in the LAC region with their U.S. and international counterparts.

The event showcased many topics of interest that I know to be relevant to Latin American and Caribbean audiences, such as U.S. EMV migration, EMV contactless payments, mobile payments, and open payments for transit. SCALA and the Alliance leadership clearly found the experience beneficial and have opened the door to greater interaction between both groups to increase awareness.

Another industry that could benefit from these types of regional interactions is the identity and security industry. A case that would be of interest to our audience is the U.S. PIV program, which is considered to be a best practice for issuance of government IDs for government employees. On a related note, Brazil’s RIC (Registro de Identidade Civil, Civilian Identity Registry)card is also considered to be a best-in-class solution for government ID credentials.

These are two solid examples of the capabilities of smart card technology.

This month SCALA partnered with Magicard and Oberthur to conduct a training program on smart cards and related technologies for end users and solution integrators in the LAC region. The training was conducted on Thursday, February 16, and provided

an opportunity for SCALA to present information about membership and the benefits of joining the Alliance to organizations in the industry value chain. It was also an excellent opportunity for SCALA to become more familiar with member solutions, innovations, and representatives in each of the regional markets.

In the area of education, SCALA will be conducting a live Smart Card Fundamentals course on February 27th, 2012 in the Banking Association of Panama conference room. The course has become a prerequisite for organizations in Latin America and the Caribbean to enter to the Leadership Education, and Advancement Program (LEAP) and train to become a Certified Smart Card Industry Professional (CSCIP). While our training programs are close to the dates of the official carnival, we have been able to enroll nine participants thus far to attend the courses. This shows the strong support the industry and vertical markets have given SCALA’s educational programs.

Moreover, we have also opened registration for our first CSCIP training program in Latin America and the Caribbean. So far we have received ten registrations for the preparatory course and the CSCIP exam. In order to ensure that the first group has a higher probability of passing the exam and has in-depth understanding of the subject matter being covered in our course materials, SCALA will have a study session with the registered participants on February 28th, 2012. This will allow our registered group to discuss the materials in their native language and clarify any questions they have. On March 20th, 2012 the group will then be attending the English-language CSCIP preparatory course to help them with the exam, which will be held on March 21st, 2012.

In conclusion, I wanted to call your attention to our first SCALA member profile of 2012; we will be featuring a different member each quarter in the Alliance Smart Card Talk newsletter. This month we feature the perspective of IntelCav’s CEO Fernando Castejon in the newsletter. I encourage all of you to read this month’s SCALA member profile and follow our activities for 2012.

Wishing all of you a joyful carnival, Edgar Betts Associate Director, Smart Card Alliance Latin America (SCALA) Direct Line: +507-225-9089, email: ebetts@smartcardalliance.org

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latin america corner

U.S. and LAC Cooperation and Interaction

member profile

This month Smart Card Talk spoke with Patricia Partelow, Vice President/General Manager of Innovative Payment Solutions for American Express. Ms. Partelow is an innovative business leader with over 20 years of experience in leveraging new technologies and identifying growth opportunities.

In her role, Ms. Partelow is responsible for the development of emerging technologies to drive digital payment capabilities as well as the monetization of network assets. She leads the digital strategy and industry standardization for the American Express network and merchant businesses. Additionally, she and her team support the development and deployment of emerging-payments capabilities in key markets where American Express and its partners operate.

Prior to joining American Express in 2008, Ms. Partelow held numerous positions during a 20-year career at PepsiCo. In her last role, as Senior Director - Strategic Initiatives, for PepsiCo’s Business Solutions group, she led the Global Capabilities Office that oversaw all IT transformation initiatives and process improvements.

Ms. Partelow also held positions at AGS Consulting Services, Bank of New York, Frank B. Hall and W. Gamby & Co.

Member point of contact

Jo Ann Lengua Davaris Director, Industry Standards American Express Innovative Payment Solutions Phone: 212-640-9982 E-mail: joann.l.davaris@aexp.com

1. What are American Express’ main business profile and payment offerings?

2. What trends do you see developing in the market that you hope to capitalize on?

American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. Established in 1850 as an express delivery service, American Express has consistently reinvented itself and is currently evolving and expanding the business to focus on new technologies that will revolutionize the way people make payments globally.

We’re experiencing an unprecedented convergence of online and offline experiences in the lives of our customers. As a result, this is generating opportunities for the payments industry to create an enhanced value for both consumers and merchants. As consumers increasingly use mobile devices, they are looking for new experiences, terrific deals, and easier ways to pay for goods (tap and pay, NFC, remote payments), their bills, and each other (P2P, prepaid).

At the forefront of new development is our wish to be embedded in the digital lifestyles of our cardmembers. Our customers are becoming ever more internet savvy and staying connected wherever they are. They go out with smartphones in hand looking for new experiences, terrific deals, and the easiest way to pay for goods, bills or each other at any moment.

At the same time, merchants are trying to refine and maximize their marketing spend (location based services, smart posters, digital coupons, loyalty programs).

Global Merchant Services, the organization which I work within, acquires and maintains relationships with millions of merchants around the globe, developing technologies that will enable the next generation of payments tools.

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As a trusted payments partner, American Express works to create an ecosystem where merchants and consumers can transact seamlessly and securely, using the tools that best fit their preferences.

3. What role does smart card technology play in supporting your business?

American Express is very committed to enabling the next generation of payments. Smart card technology is a key growth driver for our company as it facilitates the EMV, contactless card, contactless transit, and mobile payments that our customers are increasingly seeking.

For example: • The American Express network is EMV-enabled globally and processes millions of EMV transactions around the world.

• In the fall of 2011, American Express released the latest specifications for our ExpressPay contactless cards and terminals.

• The platform allows merchants and issuers to enable EMV contactless transactions to be processed online rather than the transaction being processed using the “contact chip.”

• Additionally, the next generation of ExpressPay will incorporate requirements to support mobile consumer device proximity payments.

• American Express launched a pilot program with New Jersey Transit in October 2011 for ExpressPay contactless products to be used.

• American Express also established the Enterprise Growth Group in 2010, which is responsible for developing alternative payments to match the rapidly changing commerce environment and technological advancement in emerging markets.

4. What obstacles to growth do you see that must be overcome to capitalize on these opportunities?

The complexity presented to our industry and our customers in the four key areas of interoperability, security, scalability and the unique local requirements of consumers, networks and service providers, are important factors.

There are other important issues to be considered: for example, how we can make these new programs affordable for merchants of all shapes and sizes to incorporate into their point of sale systems.

I believe that the competition in this space will lead to efficiencies that will eventually translate to affordability.

5. What do you see are the key factors driving smart card technology in government and commercial markets in the U.S.?

In my opinion, the greatest driving factor for U.S. issuers and merchants will be the increased adoption of smart phones in the commercial market.

According to the Gartner Group, there are 4.6 billion mobile users worldwide and 174 million smart phone users in the U.S. alone.

Approximately 141 million of those smart phone users have used a mobile handset to make a payment. Clearly, the trajectory for mobile commerce is only going vertical with mobile shopping expected to reach $119 billion by 2015. If merchants aren’t offering m-commerce options now, they are going to hear more and more that they should.

A second key factor will be the knowledge that the industry gains from the six major metropolitan transit systems that are implementing or planning to implement open bank card fare payments around the world this year. For example, the Transit for London’s (TfL) Phase 1 pilot runs through March 2012. This deployment presents some unique challenges as it includes buses, which require extremely fast transactions so customers are not backed up in the queue. As a result, issuers and networks are testing different delayed online risk/transaction models with TfL that could be informative for other projects in both transit and commercial applications.

In addition, American Express is working with Isis in the U.S. and the Utah Transit Authority (UTA) on a six- month pilot program for mobile payment acceptance in Salt Lake City. Just this past October 2011, New Jersey Transit launched its partnership with Google to test the Google Wallet, the mobile app that turns an Android-based smart phone into a virtual credit card.

These are all significant steps forward, and will provide vendors, issuers, networks and transit systems with major new learnings.

6. How do you see your involvement in the Alliance and the industry councils helping your company?

Our participation in various industry bodies like the Smart Card Alliance allows American Express to provide expertise in developing and aligning standards that lead to interoperability across the payments industry and spur country-level migration efforts.

It also provides us with direct involvement and access into industry thought leadership. As a member of the Smart Card Alliance Transportation Council, we were able to participate in the development and publication of a white paper on the benefits and challenges of open bank card payments in November 2011. The Council will also publish – in coordination with the February Payments Summit – another white paper on NFC and transit.

American Express is also a member of the Smart Card Alliance Payments Council which published two white papers in 2011, including one on mobile payments and the second on the EMV payments roadmap.

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member profile

We’re pleased to introduce a new quarterly feature in the Smart Card Talk newsletter, where we will profile a member company from the Smart Card Alliance Latin America chapter. Our inaugural profile focuses on Fernando Castejon, CEO of IntelCav.

IntelCav is currently the 8th largest producer of payment cards in the world, with a production capacity of 200 million cards per year, and the ability to personalize approximately 60 million cards each year. IntelCav has revolutionized quality standards for the card manufacturing industry in Brazil. Working with some of the most respected banking, financial and retail institutions in Brazil and abroad producing, recording, manipulating and remitting their plastic cards, IntelCav has established quality standards for the card manufacturing industry in Brazil. They are among the largest manufacturers of bank cards in the world, and offer the most modern and safest solutions in different segments.

Fernando Castejon CEO of IntelCav

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Prior to joining the company, Fernando Castejon worked at Visa for 12 years in areas including products, risk, operations and systems, and business development. During that time, he coordinated Brazil’s EMV migration and the introduction of new products such as Visa Electron and Visa Vale. Mr. Castejon’s mission at IntelCav is to achieve new levels in the payment cards ranking, as well as other markets including identification, authentication, transport and telecom.

1. What is the key focus of IntelCav’s business and products?

IntelCav has established itself as one of the main card manufacturers for large financial and retail institutions in Brazil and Latin America, and is currently a solutions provider for the payment, authentication, identification, transportation and telecom markets.

During the 11 years since its founding, the company has produced over one billion cards, becoming a pioneer in producing unique cards. Some of the highlights are the Display Card, a tool used for authenticating electronic transactions and social network users; the “Dual Interface,” a card that can be used for electronic ticketing and payment systems in commercial establishments, with and without contact; and the eco-friendly cards such post-consumption recycled PET cards, among others.

2. What is the importance of smart card technology for your company?

IntelCav was the pioneer and one of the main suppliers of the migration process from the magnetic stripe to chips in the Brazilian card market. The country is one of the most advanced users of smart card technology in the world, and this experience allowed the company to develop efficient, modern, competitive and completely secure practices, both in the manufacturing process for the plastic used as well as in the personalization of the cards. The company identified several opportunities, both in the Brazilian market as well as in other countries, for smart cards usage and is investing to apply the expertise acquired over the years as a competitive edge to become a key player in any opportunity that may arise worldwide.

3. Which market trends do you see coming up that you hope to capitalize on?

In most countries, increasing fraud is a growing concern. In others, the natural evolution of the industry has led to the move to smart cards. Whatever the reason, IntelCav is prepared to offer a full solution. That’s why we are participating more and more in international events and prospecting clients with different needs.

Also, the different needs of telecom operators and financial institutions seem to converge towards Near Field Communication (NFC). We see NFC rapidly becoming the chosen technology in initiatives from both markets, especially but not exclusively for micro-payments (also known as tap & pay or tap & go), as NFC addresses the market needs and is an enabler of this convergence.

We also see increased customer interest in electronic ticketing and micropayments, which we address with our dual interface card product, which is a card that is characterized by a single chip on

the card for contact and contactless communication. This solution allows convergence of applications such as the electronic ticketing and micro-payments. It makes life easier for the user, increases customer loyalty and expands the possibilities of partnerships.

4. What are the main obstacles to be overcome in order to capitalize on market opportunities?

In referring specifically to EMV migration, there are many obstacles, but the main one is to discover a model that meets the demands of the entire card industry in each country. The adoption of EMV standards is an initiative that requires significant investment, for example, in updating the Point-of-Sale (POS) equipment used to capture the transaction.

In some countries, this investment is solely up to the acquirers. If these companies do not understand that the change will be successful and lucrative, they will redirect their resources elsewhere, making the change impossible. The same thing can happen with the issuers who need to renew the entire card base in circulation, and so on and so forth. All players involved need to be convinced that the migration is positive and try to find a way to work in partnership to reach that goal.

5. How do you evaluate your participation at SCALA? IntelCav considers participation in SCALA as fundamental to its strategy is to be established as a key player in providing solutions for smart card implementations and EMV migration. SCALA is an icon of best practices knowledge in this industry and brings the main professionals from the sector together. Whether for technical updates or for making or maintaining contacts, IntelCav considers active participation in the organization a basic condition for achieving its goals in the industry.

Industrial councils have the role of concentrating technical information, promoting contacts to facilitate business deals, and serving as a link between the private sector and governmental regulating bodies. For such a strategic market to the global economy as the electronic payments industry is, this role is of utmost importance and is carried out very efficiently by the Smart Card Alliance Latin America and Caribbean chapter (SCALA).

Member point of contact Soraya Rodrigues Marketing Manager IntelCav +55 (11) 2169=0770 soraya@intelcav.com.br

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feature article

Implementation of Contactless Open Payments for Transit The Utah Transit Authority has fully implemented and launched a new electronic fare collection system that accepts contactless bank cards for payment of transit fares at the point of entry. MTA New York City Transit, Port Authority Trans Hudson (PATH) and NJ TRANSIT conducted an extensive pilot exploring the use of bankissued contactless credit and debit cards for payments on subways and buses. These agency implementations illustrate the benefits of contactless bank card acceptance and provide perspectives on how challenges can be addressed.

Utah Transit Authority Full System Deployment The Utah Transit Authority (UTA) is the regional transit provider for the primary urbanized areas of Utah. Its service area primarily consists of a 100 by 20 mile corridor bounded by the west face of the Wasatch Mountains and the Great Salt Lake and Utah Lake. A population of 1.8 million is served. UTA operates 520 buses out of four garages, 80 paratransit vehicles, four light rail lines over 35 miles, and a 44mile commuter rail line. Two additional light rail lines and a doubling of commuter rail mileage will be added by 2015.

When UTA began its investigation of electronic fare collection systems in 2005, its primary concerns were, and continue to be: the convenience and ease of use for its customers; the efficiency and effectiveness of revenue collection; and the data that could be gleaned to understand transit system use and guide service planning. UTA started its effort with virtually no legacy in automated fare collection systems, and was therefore free to explore the latest advances and opportunities in fare collection technology. At that time, the payments industry had just announced its launch of contactless media under the brands of American Express ExpressPay, MasterCard PayPass and Visa payWave.

Acceptance of contactless credit and debit cards issued by banks and other financial institutions for direct payment of transit 8

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fares was appealing to UTA for the following factors: • Issuance of payment media by other organizations • Integration with the payments mainstream: payment at the fare box, gate or platform as a merchant POS transaction • Automatic interagency interoperability • Customer service with issuers • Security standards • Flexible architecture for product development • Robustness of the open payments ecosystem • Commoditization of devices • Potential for a pathway to eliminate cash • Speed of deployment • Cost • Co-promotion by issuers In 2006, UTA began an electronic fare collection pilot on 41 ski service buses. The purpose of the pilot was to learn about the development and deployment of such a system by actually operating it on a manageable number of buses. The pilot objectives were to: (1) solve an immediate problem – accounting for the use of resort customer season and employee passes issued by and paid for by ski resorts; and (2) learn whether transit fares could be collected using the new contactless open credit and debit cards being issued under the open payment brands. As partners in the pilot, each of four ski resorts issued picture passes with contactless technology embedded. Based on its concurrent experience on open payments in the first New York City Transit pilot, MasterCard agreed to participate in the Utah pilot. American Express and Visa also agreed to participate.

The pilot was deemed a success. UTA was able to learn about most of the processes that it would need to manage in a full system deployment. All of the internal and external stakeholders interested in the system were able to get real-world exposure to the technology. The pilot was continued for another year. UTA decided to aggres-

sively proceed to build and deploy an open payments fare collection system on all of its fixed route bus and rail service. Included would be support for its third party paid pass program associated with employers, universities and ski resorts.

On January 1, 2009, UTA launched the new system. It included: an infrastructure of readers at all doors of 520 fixed route buses and 170 validators installed on 35 TRAX light rail and FrontRunner commuter rail platforms; wireless communications gateways on buses with both 3G connectivity and WiFi connections at garages and optical fiber to all platforms; and Internet links from each device to a hosted back office.

The initial fare products were contactless bank card acceptance for single adult fares, including honor of transfer rules and use of third party paid passes (ECO Pass for employers, Ed Pass for colleges and universities, and Ski Pass for five ski resorts within the UTA service area).

Special characteristics of the UTA system architecture include: • Tap-on/tap-off. Tapping at the entrance and exit of each bus or rail trip segment allows collection of linked origin/destination data that is invaluable for service planning. It also provides information necessary for calculating distance-based fares for commuter services and possible migration to such fare pricing systemwide.

• Account based architecture. Fares are calculated and transactions are processed in the back office easing implementation of fare changes and creation and launch of new fare products.

• Open payments acceptance. The system and card acceptance devices are certified and process contactless cards issued under the American Express ExpressPay, Discover Zip, MasterCard PayPass and Visa payWave brands.

• Hosted back office. The back office is connected through the Internet to

each device, enabling flexibility and portability and easing PCI compliance. • Cold and hot lists. A list of third-party pass card numbers to be accepted are maintained on each validator and in the back office as submitted or modified by the ECO, Ed and Ski pass card issuers. Bank cards that are declined by issuers are placed on hot lists that speed their rejection. • Near-real-time and real-time authentication. In the initial launch with bank cards, the price of each trip is calculated as the tap-on/tapoff actions are received and then submitted for full authorization and settlement. If the card is declined, it is hot listed and will not be accepted by the system going forward unless and until the customer arranges for payment for the unpaid trip and card acceptance is restored. Real-time authentication will be added as the technical viability and business case

for that approach is demonstrated. • Inspection. Inspection devices for proof-of-payment rail services are using NFC and 3G smart phones to interrogate payment cards and determine through the back office that they had been previously presented and accepted by the platform validators.

UTA is unusual as a merchant accepting open payment brand products directly for access to its transit vehicles in that it accepts contactless media only. It requires transaction speeds of 300 milliseconds from presentation of a card to the green or red light response. The price of the trip is determined in the back office only after completion of the trip with tap-on/tapoff. Ultimately, it must assure that media for use in its system are available to all of its customers, including those who do not have banking relationships with credit and debit cards.

Privacy has been a priority and has been addressed from the initial planning of the electronic fare collection system. UTA values the linked origination-destination data enabled by this system for service evaluation and planning, but does not need nor want to know who is traveling. Thirdparty payers keep the identities of those individuals who are authorized to ride and provide UTA only with the card numbers.

UTA provides information about system use by third party employees or students in an aggregated form. For open payment bank card acceptance, the hosted back office contractor separately maintains records and processes for the application of business rules and credit/debit processing.

Customer security is also assured by contractor and agency compliance with PCI DSS. Additional fare products and functions are now in the process of development, including:

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• Special fares for seniors and disabled individuals • Gift card or closed loop prepaid programs • Open loop prepaid partnerships • Contactless co-branded cards • Acceptance of government benefits distribution cards • Federal Personal Identity Verification (PIV) card use for administering employee transportation benefits • Use of third-party access and identity media for prepaid or post-paid payment per trip • System-wide pay-per-trip distancebased fares

New York/New Jersey Pilots In 2010, New York City Transit (NYC Transit), an operating agency of the New York Metropolitan Transportation Authority (MTA), along with the Port Authority Trans Hudson (PATH) train and NJ TRANSIT, completed Phase 2 of an ongoing initiative to explore the use of open standard, bank-issued contactless smart card devices to pay transit fares directly at the point of entry (i.e., at turnstiles in subway stations and on boarding buses) with-

out the need to purchase separate, transitonly fare media. The 2010 initiative was an extension of a successful pilot of contactless payments and open standards completed by NYC Transit with MasterCard and Citigroup that began in July 2006 and included contactless readers at 30 stations on the Lexington Avenue train line.

A key goal of the initiative was to develop a solution that built on existing financial payment systems and on customer relationships and expectations when using credit and debit cards for purchases. From the agency’s perspective, it was important to verify that acceptance of a contactless device at a fare gate or point of entry did not interfere with customer flow and in fact could possibly enhance it, especially on buses. It was also essential that customers be provided with an easily accessible, convenient, and self-directed support mechanism to allow for general information, fare media purchases, and other account management functions.

NYC Transit and its partners also wanted to ensure the integrity and security of the system and enable full reconciliation of fares paid and rides taken. Funds were required to be processed and cleared as with any other electronic fare payment transaction. At a minimum, systems developed to support the initiative needed to replicate all data and controls used by the agency to report on and reconcile sales transactions, payment of funds, and travel usage associated with the current fare payment system (MetroCard).

Phase 1 offered fare policy choices that allowed the customer to pay for one trip at a time or take advantage of NYC Transit’s bonus percentage for prepaid rides. Phase 2 included a wider array of fare policy options, while also offering bus/subway transfers and time-based passes. The prime overall objective of the initiative, however, was to validate the technical and operational approach rather than maximize customer acceptance.

Phase 1 For Phase 1, the objectives of NYC Transit included the following: 10

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• Test the contactless equipment/devices in a simplified, “retail” approach to fare payment at the point of entry.

• Demonstrate that NYC Transit’s fare policy could be processed in accordance with agency business rules (payment processing, financial reporting, data requirements, audit).

• Validate the performance of contactless readers as payment devices in a transit environment.

• Test the application of payment brand rules and procedures for transit fare payment.

• Acquire customer feedback on contactless payments.

The Phase 1 pilot ran from July 2006 through December 2006 and was implemented at 30 subway stations along NYC Transit’s heavily traveled Lexington Avenue line. At least one turnstile at each station was equipped with an industry certified smart card reader that could accept MasterCard PayPass™ devices issued by Citibank. These turnstiles continued to accept NYC Transit’s current fare media, the MetroCard.

In addition to the external operating and support system provided by MasterCard, NYC Transit adapted its internal systems to enable full review and reporting on the trial. NYC Transit implemented functionality that generated financial reports to establish revenue accountability, and ridership and revenue reports for budgeting and planning purposes, as well as reconciliation of ride information for each payment transaction.

A dedicated web site developed for the pilot provided customers with secure access to their transit account activity and detailed information about the program, and a staffed customer service center permitted customers to interact directly with an agent over the telephone.

MasterCard and Citibank solicited customers with a PayPass payment device to participate in the Phase 1 trial. Two transit fare payment options were offered: pay as you go, and prefunded fares. To use the pay-as-you-go option, riders tapped the

Citibank payment device on the specially equipped turnstile. The rider was charged the regular full fare for each trip taken.

To support this option, MasterCard and Citibank implemented a transaction aggregation process. To use the prefunded fare option, riders registered either on the pilot web site or at the customer service center and purchased value-based fares in advance, much as they do today with the MetroCard. Prefunded fares were automatically replenished when the balance fell below a predetermined amount.

Phase 1 of the initiative met its primary general objective: to test the basic technology of accepting contactless payment cards to enter the transit system. The positive feedback from customers further reinforced the case to move forward with the Phase 2 pilot.

Phase 2 The objectives of the Phase 2 pilot included the following: • Test real-time authentication and processing of transactions directly from the point of entry, including the use of a wireless solution for buses.

• Demonstrate that a wide array of fare policy components, including bus/subway transfers and unlimited ride passes, could be processed in accordance with business rules.

• Validate that contactless devices issued by various financial institutions and linked with multiple brands would work in a predictable, consistent manner.

• Demonstrate the ability of a single open-standards contactless device to be used on different regional transit modes and systems to provide a more seamless and convenient journey.

• Better understand risk management issues for the open standard payment card/device approach.

• Acquire and evaluate customer feedback.

Key to meeting these objectives was the ability to authenticate a card in real-time and ensure that a feasible solution could be

demonstrated using wireless communication on buses (as opposed to in a subway, where a wired communications network was available).

The Phase 2 pilot ran from June 2010 through November 2010 and was the first system to replace the need for riders to carry specific fare cards for three separate transit systems – NYC Transit, NJ TRANSIT and PATH. Commuters transferring between the partner agencies only needed one type of payment device, improving the overall customer experience through increased speed and convenience. The three agencies coordinated linkages between their systems in the Phase 2 trial, such as NJ TRANSIT bus routes that provide feeder service to the PATH system.

For the first two months, any MasterCard PayPass-enabled card or device from any issuer was accepted; starting in the third month, Visa payWave™ cards and devices could also be used. Riders could choose from prefunded or pay-as-you-go fare options. Prefund options for MTA fares were expanded from Phase 1 to include timebased unlimited ride passes with automatic replenishment and discounted fares (e.g., senior citizen reduced fares).

In coordination with the trial partners, several employers participated in a pretax transit benefit pilot conducted by TransitCenter. TransitCenter recruited employees whose commutes aligned with the pilot locations and issued new payment cards with contactless capabilities to replace their magnetic stripe cards. The pilot successfully allowed pretax benefits to be used with no unique issues and virtually no back-office customization.

Because real-time authentication processing was an essential component of the trial, NYC Transit and PATH stations used either wired or 3G wireless communications, and all buses used 3G wireless communications for data transmissions to and from the central system.

The central back office systems developed for Phase 2 provided a variety of key functions, including account authentication,

financial authorization/clearing, fare calculations, device and risk management, and self-directed customer support applications. These back office systems also fed information into NYC Transit’s sophisticated DataMart facility, which enabled a comprehensive information management capability supporting all of NYC Transit’s reporting and reconciliation needs. Similar to the first pilot, a dedicated web site and staffed customer call center with interactive voice response (IVR) capability was specifically set up for Phase 2.

For Phase 2, pay-as-you-go rides required initial authentication by the back office and real-time authorization by the card issuer.

The initial authorization was performed after a decision to allow entry, resulting in “first tap” financial risk to the transit agency. Individual rides (taps) were then aggregated according to each agency’s business rules, with the back office providing a realtime “yes” or “no” message to the customer for each tap. Prefunded rides also required that each tap be authenticated at the back office but did not require additional authorization from issuers.

An “orphan mode” and localized hot list provided for secondary processing by the point of entry terminal in the event that a response could not be obtained from the back office in a timely manner. The system also provided for velocity checks at both the terminal/reader and the back office, which provided an additional layer of risk management.

Phase 2 provided agency-specific daily/ monthly reporting and raw data feeds.

Agency employee online access to customer ride history was available for dispute resolution, while each agency was able to customize specific policies for refunds and customer issues.

Participating transit agencies shared a common back office that allowed a single customer account to be used by all three agencies. No transit agency integration or regional fare policy was required. Customers could purchase fare products for each of the agencies from a single web site.

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All MTA pilot objectives were met. The operational requirements for speed and real-time authentication were measured and validated. The potential to utilize wireless communications to complement the wired subway infrastructure in a manner that was transparent to customers and agencies was successfully demonstrated.

Customers were able to use standard contactless payment cards from issuers around the world at the turnstiles, gates, and fare boxes. Agencies were able to validate the use of comprehensive fare policies, from stored value and transfers to time-based unlimited ride passes and reduced fares. The solution provided a high degree of data security while allowing for significant business and technical flexibility. Finally, customers could conveniently and seamlessly use common fare media across multiple modes and agencies while also having access to a comprehensive suite of customer support functions.

The trial provided valuable experience regarding the risks and benefits of aggregating customer transactions and of the various potential alternatives for processing pay-as-you-go transactions.

Issuers employ a variety of risk decisioning models that may lead to different authorization responses to transactions with seemingly similar profiles. Key to the viability of the solution will be a flexible transaction processing approach that balances and manages risk across the various players in the payments ecosystem while providing maximum protection for transit agency revenue.

The MTA continues to plan towards implementing a new fare payment system for NYC Transit that utilizes open standard contactless payment cards and other ISO/IEC 14443 media, such as identification cards and mobile phones. MTA published a concept of operations for a new fare payment system in April 2011.

About the Article This article is an extract from the white paper, Transit and Contactless Open Payments: An Emerging Approach for Fare Collection, was developed to inform the transit industry of the opportunities, benefits and challenges of accepting contactless open bank cards for fare payment and to inform the bank card industry of unique requirements for transit fare collection.

Smart Card Alliance Transportation Council members involved in the development of this white paper included: Accenture; ACS, a Xerox company; American Express; Booz Allen Hamilton; Bell Identification B.V.; CH2M; Chicago Transit Authority; Collis; Connexem Consulting; Cubic Transportation Systems; Dallas Area Rapid Transit (DART); Discover Financial Services; epay North America; Gemalto; Giesecke & Devrient; HID Global; Identive Group–SCM Microsystems; IDmachines; Infineon Technologies; INSIDE Secure; JC Simonetti & Associates; JPMorgan Chase; Keville Enterprises; LF Consulting; LTK Engineering Services; MasterCard Worldwide; MTA NYC Transit; NJ TRANSIT; NXP Semiconductors; Oberthur Technologies; OTI America; Parkeon; Payment Strategy, LLC; Quadagno & Associates; Scheidt & Bachmann; Southeastern Pennsylvania Transportation Authority (SEPTA); Thales Transport and Security Inc.; U.S. Department of Transportation (DOT)/Volpe Center; Utah Transit Authority (UTA); VeriFone; Visa Inc.; Washington Metropolitan Area Transit Authority (WMATA).

Summary

WEB SITE NEWS

In addition to the UTA implementation and New York/New Jersey pilots, a number of other transit agencies are moving to incorporate acceptance of contactless bank card payments in their AFC systems. The Chicago Transit Authority (CTA) and Southeastern Pennsylvania Transportation Authority (SEPTA) have awarded contracts for new electronic fare collection systems that include acceptance of open bank cards. Agencies in Washington, DC, and Dallas also have active open procurements for fare payment systems that accept open contactless credit and debit card payments, and Toronto is expanding their system to accept contactless credit cards and mobile payments as well as stored value smart cards.

Updated web content: • NFC Solutions Summit 2012 information and registration • New white paper, Near Field Communication (NFC) and Transit • New brief, Smart Card Alliance Discussion of Sykipot Trojan Attack • New slide show, NFC – The Future of Mobile Payment • ISC West workshop, Standards-Based Secure Identity Credentials: Leveraging the Personal Identity Verification (PIV) Specifications for Commercial Credentialing Programs, information and registration • Updates to EMV FAQ and EMV Resources page • New Smart Card Alliance Perspectives: The Expert Series Videos interviews: Commercial Identity Verification (Lars Suneborn, Hirsch-Identive); FICAM (Deborah Gallagher, GSA); First Responder Authentication Credentials (Craig Wilson, DHS / SRA International); Medicare Common Access Card (Michael Magrath, Gemalto); NSTIC (Joni Brennan, Kantara Initiative; Jeremy Grant, NIST; Neville Pattinson, Gemalto; Don Thibeau, Open Identity Exchange)

Increasingly, as shown by the pilot projects conducted in the New York-New Jersey region, the open payments operation of the Utah Transit Authority, and the ongoing procurements among large North American operators, the industry is developing further insights into the opportunities and benefits of open payments and account-based fare payment approaches.

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Smart Card Talk

• • • • • • •

95,680 visitor sessions for the month 3,086 visitor sessions per day 345,340 total page views for the month 136,234 Industry News items viewed 976 Card Reader Catalog items displayed 14,566 PDF downloads 17,288 Product and Service Directory page views

If you have any suggestions on content that you’d like to see on the Alliance web site, please send them to info@smartcardalliance.org.

NEW MEMBERS

• CorFire, Alpharetta, GA Membership Level: Leadership Council Member Contact: Andrea Ariza, Marketing Description: Mobile commerce technology services provider • Eid Passport, Inc., Portland, OR Membership Level: General Member Contact: Abrar Ahmed, Group President Description: integrates leading edge products and services into solutions for identity and access management • Oahu Transit Services, Honolulu, HI Membership Level: Government Member Contact: J. Roger Morton, President & General Manager Description: provides public transportation on the island of Oahu, HI • Verifone, Inc (Latin America), Miami, FL Membership Level: General (SCALA) Member Contact: Alejandro Chirife, Marketing Director, Latin America & the Caribbean Description: Payments point of sale systems and services • Versatile Card Technology, Inc (VCT), Downers Grove, IL Membership Level: General Member Contact: Suresh Kumar, VP Smart Cards Description: one of the major secure plastic card manufacturers in the U.S.

NEW CSCIP/G Members

Orlando Garcia Core Quality Service Derevia Gray U.S. Department of State Tom Greiner Identification Technology Partners Kimberly A Identive Group Michalik James Thomas Thursby Software Systems

Jan. 2012 Jan. 2012 Jan. 2012 Jan. 2012

NEW CSCIP Members Edward Pollan

LTK Engineering Service

Jan. 2012

ALLIANCE IN THE NEWS The Alliance has an active communications program to promote industry messages in business, vertical market, and technology publications. Coverage results from both Alliance press releases and interviews with publications writing articles about smart cards. Selected recent coverage is shown below with links to online articles.

• American Banker, 2 /3 /2012, MC: Pick Any Chip-Card Security You Want, as Long as It’s PIN • ATM Marketplace.com, 1/9/2012, Keynotes announced for Smart Card Alliance 2012 Payments Summit • Bank Systems & Technology, 2 /1 /2012, MasterCard Says U.S. EMV Adoption is Key to Next-Gen Payments • Banking Strategies, 2 /10/2012, Mobile Primer: What Does it All Mean?

• Dow Jones, 1 /30/2012, MasterCard Urging Merchants, Banks To Upgrade Card Technology • Federal News Radio, 1 /19/2012, DoD Common Access Cards vulnerable to new hack?

• Forbes, 1 /30/2012, Hacker’s Demo Shows How Easily Credit Cards Can Be Read Through Clothes And Wallet • ISO & Agent, 2 /1 /2012, MasterCard EMV Liability Standard Leans Toward Chip-And-PIN • Near Field Communications World, 2 /8 /2012, Isis discusses Salt Lake City NFC pilot plans • Near Field Communications World, 2 /7 /2012, Smart Card Alliance publishes NFC transit white paper • NFCNews, 2 /9 /2012, Salt Lake gears up for NFC summer • NFCNews, 2 /7 /2012, Smart Card Alliance releases NFC transit report • NFC News, 1/5/2012, NFC Forum, Smart Card Alliance gear up for 2012 events • RFID News, 2 /9 /2012, Smart Card Alliance White Paper Explores Possibilities for NFC • Salt Lake Tribune, 2 /10/2012, Salt Lake a testing ground for new way to pay • SC Magazine, 1 /18/2012, DoD ID cards under attack • Storefront Backtalk, 2 /2 /2012, The Never-Ending Dance Of Contactless Security • The Green Sheet, 2 /13/2012, Visa says PIN unnecessary for EMV in U.S. • The Green Sheet, 1/9/2012, MC, Visa, Isis, PayPal experts to headline SCA summit • The Green Sheet, 1/5/2012, SCA accepting proposals for speakers, topics at NFC Solutions Summit • VoiceAmerica, 1 /19/2012, Sea Change for Smart Cards and Mobile Payments: How the Pros are Changing the Rules for the Rest of Us • Wall Street Journal, 1 /30/2012, MasterCard Joins Push on New Card Technology

Jan. 2012 Smart Card Talk

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from the alliance office

JANUARY 2012 WEB STATISTICS

council reports

Updates from the Alliance Industry Councils HEALTHCARE • The Healthcare Council is working on two projects: a brief on smart cards vs. biometrics-only solutions for healthcare applications; an update to the smart card technology in healthcare FAQ. • The Council’s LinkedIn group, Healthcare Identity Management, is open for discussion on healthcare identity security and management. The group is open to both members and non-members.

IDENTITY • The Identity Council is currently completing a white paper that includes use cases for non-Federal organizations issuing and using PIV-I credentials. The white paper will be published in late February.

PAYMENTS • The Payments Council held a well-attended in-person meeting at the 2012 Payments Summit, with over 25 members attending. The group brainstormed possible activities for 2012. The Council will be reviewing and defining priorities during February.

• The Payments and Transportation Councils held a successful pre-conference workshop, Contactless Payments: Fundamentals of Bank Card, Mobile, and Transportation Payments, at the 2012 Payments Summit. Video from the workshop will be available on the LEAP and CSCIP member site in March.

• The Council’s LinkedIn group, Smart.Payments, is open for discussion on payments and fraud. The group is open to both members and non-members.

• The Council is defining the statement of work for a brief on mobile devices and identity.

Alliance Members: Participation in all current councils is open to any Smart Card Alliance member who wishes to contribute to the council projects. If you are interested in participating in any of the active councils, please contact Cathy Medich.

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ACCESS CONTROL • The Access Control Council has developed its 2012 plan and initial projects, including: an update to the Logical Access Security: The Role of Smart Cards in Strong Authentication white paper published in 2004, and a project to look at the impact of FICAM Part B on physical and logical access control systems.

• The Council is developing a two-page brief comparing Personal Identity Verification (PIV), PIV-interoperable (PIV-I) and Commercial Identity Verification (CIV) credentials. The brief will be published in late February.

TRANSPORTATION • The Transportation Council published the new white paper, NFC and Transit. This white paper discusses mobile applications that are relevant to the transit industry, describes the NFC ecosystem, and provides an overview of the benefits and implementation considerations for NFC applications.

• Transportation Council members involved in the development of this white paper included: Accenture; ACS, a Xerox company; American Express; Ashok Joshi; Collis; Connexem Consulting; Cubic Transportation Systems; Dallas Area Rapid Transit (DART); Giesecke & Devrient; HP Enterprise Services; Identive Group; Infineon Technologies; INSIDE Secure; JPMorgan Chase; LTK Engineering Services; MasterCard Worldwide; MTA NYC Transit; NJ TRANSIT; NXP Semiconductors; OTI America; Quadagno & Associates; Southeastern Pennsylvania Transportation Authority (SEPTA); U.S. Department of Transportation (DOT)/Volpe Center; VeriFone; Visa Inc.; Washington Metropolitan Area Transit Authority (WMATA).

• The Council held a well-attended in-person Council meeting at the 2012 Payments Summit, with 38 members attending and the group brainstorming possible activities for 2012.

The Council will be reviewing and defining priorities during February.

• The Smart.Transit LinkedIn Group is open for discussion on transit payments. The group is open to both members and public transit agencies.

OTHER COUNCIL INFORMATION • A new cross-council National Strategy for Trusted Identities in Cyberspace (NSTIC) Tiger Team has been formed to discuss NSTIC activities and to define projects to assist NIST in the definition of the Identity Ecosystem. The cross-council team discussed the recent malware and Trojan attacks on computers using smart cards with PIN authentication. The Smart Card Alliance has published a brief, Smart Card Alliance Discussion of Sykipot Trojan Attack, describing the attack and approaches to prevent this class of attack.

• Members-only council web pages are available at http:// www.smartcardalliance.org/councils. These are passwordprotected pages that contain council working and background documents and contact lists. Each Council area has a separate password since Councils may have different membership policies. If you are a Smart Card Alliance member and would like access to a council site, please contact Cathy Medich.

• A Council meeting calendar is available on the members-only web site at http://www.smartcardalliance.org/pages/memberscouncil-resources.

• If you are interested in forming or participating in an Alliance council, contact Cathy Medich.

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members in the news

Smart Card Alliance Payments Summit Wraps with EMV, Mobile and Transit Innovators Discussing and Debating the Future of Payments

Gemalto Offers U.S. Banks Seamless EMV Migration with Instant Issuance Operated Services

Princeton Junction, N.J., February 13, 2012–After overflow keynote plenary sessions on Wednesday, the Smart Card Alliance 2012 Payments Summit continued last Thursday and Friday with the “all payments” agenda shifting to individual track sessions. Experts and innovators from payments, mobile and transit industries presented on the state of their industries and debated their futures.

The 2012 Payments Summit, held last week in Salt Lake City, Utah, drew over 500 industry professionals.

Instant issuance generates superior customer satisfaction and brand recognition in EMV deployments worldwide

G&D to Supply Turnkey TSM Solution for NFC based Commercial Mobile Payment Rollout in Australia Munich, February 13, 2012 – Australia’s largest bank, the Commonwealth Bank of Australia, is adding multiple mobile phonebased payment options to its range of mobile banking services.

Giesecke & Devrient (G&D) is providing the technology to allow secure contactless payments using mobile phones featuring Near Field Communication (NFC). The most important of the components to be provided is G&D’s turnkey Trusted Service Manager (TSM) solution. In its role as Trusted Service Manager, the technology provider will be taking responsibility via the mobile network for services including the personalization of the payment function as well as management of the payment application over its entire lifecycle.

Smart Card Alliance Payments Summit: The Time is Now for EMV and Mobile Financial and Transit Payments Executives from Isis, MasterCard, PayPal, Visa Discuss Future of Payments SALT LAKE CITY, UTAH, FEBRUARY 9, 2012–Day one of the Smart Card Alliance Payments Summit brought spirited discussions from experts on the future of payments in the United States, but they all agreed that migrating to EMV chip will be the foundation necessary to move to next level of secure and convenient payments, whether in the form of contact, contactless and/or mobile.

The Summit is being held through February 10th at the Hilton Salt Lake City Center in Salt Lake City, Utah.

Smart Card Alliance White Paper Explores Possibilities for NFC in Transit Industry PRINCETON JUNCTION, N.J., FEBRUARY 6, 2012–With Near Field Communication (NFC)-enabled handsets poised to exceed 100 million in 2012, the Smart Card Alliance Transportation Council today announced a new white paper examining how the transit industry can best make use of this popular new technology.

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Amsterdam, February 9, 2012–Gemalto (Euronext NL0000400653 GTO), the world leader in digital security, has launched its in-branch Dexxis EMV instant issuance card solution for U.S. banks, designed to streamline and accelerate EMV migration. Dexxis instant issuance allows banks to immediately issue and activate initial and replacement cards directly at the physical bank branch location, rather than sending personalized cards to end users via postal mail.

Netsize and CityzenCar Simplify Peer-to-peer Car Sharing with Innovative Use of SMS Amsterdam - Feb 8, 2012 - Netsize, a leading mobile commerce enabler and a Gemalto company (Euronext NL0000400653 GTO), announces that CityzenCar, a peer-to-peer car sharing social network in France, has deployed its SMS-based communication solution to secure and simplify car rental for consumers. CityzenCar enables 12,000 members across 2,000 French cities to rent a vehicle in complete trust and with no commission.

Al Rajhi Bank in Saudi Arabia Issues 15,000 Cards per Day with Gemalto’s Instant EMV Card Issuance Solution Amsterdam, February 7, 2012–Gemalto (Euronext NL0000400653 GTO), the world leader in digital security, announces that Al Rajhi Bank, the largest financial institution in Saudi Arabia, has completed the main phase of the Dexxis Instant Issuance deployment program for on-the-spot EMV card delivery. With more than 500 branches equipped nationwide and over 15,000 cards issued daily, Al Rajhi Bank embarked on the largest rollout of any smart banking card instant issuance solution. Gemalto’s unique offer encompasses highly secure EMV DDA¹ payment cards, a complete, mission-critical issuance solution along with a full set of services: training, end-to-end project management, maintenance and support.

Smart Card Alliance White Paper Explores Possibilities for NFC in Transit Industry PRINCETON JUNCTION, N.J., FEBRUARY 6, 2012–With Near Field Communication (NFC)-enabled handsets poised to exceed 100 million in 2012, the Smart Card Alliance Transportation Council today announced a new white paper examining how the transit industry can best make use of this popular new technology.

Gemalto Supports Diners Club Spain’s EMV Migration Amsterdam - Feb 2, 2012 - Gemalto (Euronext NL0000400653 GTO), a world leader in digital security, announces the availability of an approved EMV application which will be deployed by Diners Club Spain during 2012. Gemalto is providing Diners Club Spain with consulting and personalization services, in addition to Dynamic Data Authentication (DDA) payment cards that are compliant with the Discover Financial Services D-Payment Application Specification (D-PAS). DDA is a highly secure authentication technology whereby the smart card chip creates a unique signature for each transaction that allows banks to authorize transactions more securely. With the addition of Diners Club, Gemalto now supplies EMV solutions to all international payment associations, providing a complete portfolio of secure payment applications.

Credit Agricole Selects Gemalto for Large-Scale Deployment of Contactless EMV Payment in France Banking card that facilitates easier payment and with added security features is also certified by “Groupement d’Intérêt Economique– Carte Bancaire” Amsterdam - Jan 31, 2012 -Gemalto (Euronext NL0000400653 GTO), the world leader in digital security, announces it is behind Crédit Agricole’s large-scale deployment of contactless EMV banking cards in France. The Crédit Agricole group is market leader in full-service retail banking in France and one of the largest banks in Europe. Gemalto is the first to market the highly secure Optelio contactless EMV banking card certified by GIE-CB (“Groupement d’Intérêt Economique–Carte Bancaire”) with optimized EMV risk management features for the French market.

MasterCard Introduces U.S. Roadmap to Enable Next Generation of Electronic Payments January 30, 2012 Framework to Deliver Enhanced Consumer Experience In-Store, Online, at the ATM and with Mobile Phones PURCHASE, N.Y.–(BUSINESS WIRE)–Jan. 30, 2012–MasterCard today introduced a comprehensive roadmap focused on advancing the U.S. electronic payments system.

OTI Receives an Initial $6.9 Million Contract to Supply Electronic Immigration Control System in Panama Contract is OTI’s first in Panama and Builds Upon its Existing Secure ID Footprint in Latin America Iselin, NJ–January 30, 2012 - On Track Innovations Ltd. (“OTI”) (NASDAQ GM: OTIV) today announced that the Ministry of Public Security of Panama has awarded OTI with a contract for the supply, design, installation and integration of systems to monitor and improve immigration verification processes and overall immi-

gration flow. OTI expects to recognize revenues of approximately $6.9 million, with the potential for additional revenue in future years from follow-on contracts.

Cubic’s Bay Area Transit Customer Tops One Million Contactless Smart Cards SAN DIEGO, Calif. - January 19, 2012–The Bay Area-based Metropolitan Transit Commission has surpassed one million active Clipper® cards in circulation just 18 months after rebranding the card from TransLink to Clipper, making the contactless smart card fare collection system one of the fastest growing in the U.S. transit industry. In making the announcement, the agency credited the increasing number of participating transit operators as well as their collective customer education efforts for driving the growth, up 142 percent from the prior year. Cubic Transportation Systems, a subsidiary of San Diego-based Cubic Corporation (NYSE:CUB) delivered and operates the Clipper system.

Smart Card Alliance Now Accepting Speaking Proposals for NFC Solutions Summit 2012 Submissions Accepted Now Through January 23rd PRINCETON JUNCTION, N.J., JANUARY 16, 2012–The Smart Card Alliance is now accepting proposals for speakers and topics for the NFC Solutions Summit 2012. The Summit, held in partnership with the NFC Forum, will be held May 22–24, 2012 at the Hyatt Regency San Francisco Airport in Burlingame, California.

Speaking proposals can be submitted online to the Smart Card Alliance through January 23rd.

Winner of Cubic’s National “I Heart My Card” Video Contest Decided in YouTube Voting SAN DIEGO, Calif., January 13, 2012–Cubic Transportation Systems today announced that Morgan Crossley’s Next Stop: EASY Surfing” video has been voted the national winner in its ”I Heart My Card” transit video contest.The surfer who catches Miami Beach waves by catching the bus with his EASY Card swept all three rounds to earn a total of $8,500 in prize money from the sponsor, Cubic Transportations Systems, which awarded a total of $13,000 to winners. The social media-based contest was open to users of the Atlanta Breeze Card, Los Angeles Tap Card, Miami/ South Florida Easy Card and Minneapolis Go-To Card.

Members submit news each month to the Smart Card Alliance, with news items highlighted on the Alliance web site and in the monthly news letter. Members are invited to submit their news releases (as a Word document) to news@smartcardalliance.org to contribute to the Members in the News content.

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events calendar

Mobile World Congress Feb 27-Mar 1, 2012 Barcelona

RSA Conference 2012 Feb 27-Mar 2, 2012 The Moscone Center San Francisco, CA

Cartes North America March 5-7, 2012 The Mirage Hotel Las Vegas, NV

ISC West

March 27-29, 2012 Sands Expo & Convention Center Las Vegas, NV

NFC Solutions Summit 2012

A joint Smart Card Alliance and NFC Forum event San Francisco, CA May 22-24, 2012

Cardware 2012: Payment Insights June 19-20, 2012 Marriott Gateway on the Falls Niagara Falls, ON, Canada

Smart Card Alliance Government Conference 2012 Walter E. Washington Convention Center Washington, DC November 28-30, 2012

Cartes 2012

November 6-8, 2012 Paris, FRANCE

18

Smart Card Talk

The Industry’s Leaders Join Forces to Present a Comprehensive $POGFSFODF 4IPXDBTF GPS UIF &OUJSF /'$ 7BMVF $IBJO

NFC Solutions Summit 2012

A Joint Presentation by:

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The Smart Card Alliance and the NFC Forum are pleased to present NFC Solutions Summit— the first comprehensive American showcase for the burgeoning technology of Near Field Communications. The NFC Solutions Summit will cover the state of this promising technology, developments in new NFC devices and add-ons, the status of the growing NFC ecosystem, the promise of NFC-enabled payments and other popular applications, NFC implementation, and American and international market forecasts.

In 2012 NFC technology will be widely available in new smart phone handsets, enabling quick transactions, ticketing, digital content exchange, secure identification, social networking and communication between electronic devices. The authoritative expertise of the NFC Forum and Smart Card Alliance will create the interest and momentum necessary bring together a broad base of industry players. The conference will feature leaders from every relevant sector for an interactive, instructive forum on the business issues, implementation milestones, and technology advancements happening in NFC markets.

Conference Agenda Built on a Broad Base of Association Expertise The conference presentations will leverage the extensive experience and resources of Smart Card Alliance and NFC Forum, both widely regarded as leading voices for the application of this technology.

Conference content will include: Standards and Technology: Smart Phones and Devices, NFC System Architectures, Standards for Trusted Service Manager (TSM), and NFC Forum Specifications Security and Applications Management: Security Architectures for NFC, Bank Card Payments Application Security, Identity Credentials Storage in NFC Devices, NFC Secure Element Architectures, NFC Application Download and Management Implementation and Applications Topics: Financial Service Applications, Identity and Security Applications, Ticketing and Fare Collection Applications, Retail Applications

In  the  Technology  Capital  of  the  Americas NFC Solutions Summit will take place at the Hyatt Regency San Francisco Airport, a high-quality, self-contained conference venue with easy access for both domestic and international participants, only 20 minutes from the many attractions of San Francisco, and 30 minutes from the high-tech industry leaders of Silicon Valley.

Market and Business Model Topics: Challenges and Opportunities for Financial Institutions, NFC Business Partnership Opportunities and Challenges, Use Cases for NFC, Reports on Commercial Services and Pilots

Exhibit and Sponsorship Opportunities Available. Contact Bill Rutledge at +1-212-866-2169 | bill@cnxtd.com

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