- Email: [email protected]
UK card fraud jumps by 25%
TECHNOLOGY TECHNOLOG Y
www.smartcards-today.com
ISSN 0965-2590 March 2008
company news
Contents
Oberthur on course to become market number two
O
berthur Technologies is executing plans to take over XPonCard, a move that would create the second largest player in the global smart card industry, after Gemalto, with sales in the order of 735 million. Oberthur Technologies is aiming to acquire all shares in XPonCard, which are listed on OMX Nordic Exchange Stockholm. The company is offering SEK157 in cash for each share in XPonCard, a premium of 34% compared to the closing price of the XPonCard share of SEK117.50 on 18 February 2008. The Board of Directors of XPonCard has unanimously recommended XPonCard’s shareholders to accept the offer, which in total amounts to approximately 76 million. “XPonCard provides a perfect geographical fit in the Nordic and Baltic countries for Oberthur and we are impressed with XPonCard’s successful development of value added services. Jointly we can improve our
customer offering and our competitiveness and the transaction will generate significant synergies,” said Jean-Pierre Savare, chairman of the Board of Directors of Oberthur. Geographically, Oberthur and XPonCard complement each other in Europe in the banking and loyalty card segment. XPonCard provides a sales, service and personalisation infrastructure in the Nordics, the Baltics and Poland to complement Oberthur’s extensive network throughout the rest of Europe. Outside of Europe, the combined resources will add scale and critical mass, the companies claim. Oberthur says its intention is to retain a significant part of XPonCard’s workforce as part of the enlarged group going forward. Publication of the offer document occurred on 7 March 2008, while the acceptance period will run from 12 March – 4 April 2008. Settlement would begin on or about 16 April 2008, the company said.
chip and pin
UK card fraud jumps by 25%
F
ollowing a two year decline in card fraud losses in the UK, figures just released by payments association APACS show a severe turnaround, with 2007 experiencing a 25% rise in fraud. The increase takes fraud levels up to £535.2 million in 2007, well beyond the total in 2004 (£504.8 million), which is when Chip and PIN cards began to take effect. A key driver behind this rise in fraud is the 77 per cent increase (up £90.5m) in fraud committed overseas by criminals using stolen UK card details – which typically occurs in those countries yet to upgrade to chip and PIN. Fraud abroad now accounts for over one third (39 per cent) of total card fraud losses (see Table on page 3).
TODAY
card
Encouragingly, Chip and PIN continues to have a hugely positive effect on card fraud committed in the UK. Over the past three years losses on face-to-face transactions on the UK high street have fallen by two-thirds from £218.8 million in 2004, to £73.0 million last year. Thanks to chip and PIN the 2007 figures also show that fraud on lost and stolen cards (£56.2 million), and mail non-receipt fraud (£10.2 million), are at their lowest levels for 10 years. Counterfeit fraud losses have increased by 46% but the vast majority of this fraud is due to criminals stealing card details in the UK to make counterfeit magnetic stripe cards for use in countries yet to upgrade to chip and PIN. Continued on Page 3...
NEWS Oberthur on course to become market number two
1
UK card fraud jumps by 25%
1
Slovenia welcomes new e-Health insurance cards
3
Refreshed ID card plans for UK
4
E-business application for European Citizen Card
4
German ID card allows pseudonyms
5
MasterCard ships 300 million EMV cards
5
Mayday implements single sign-on with smartcard and PIN
6
sQuid signs agreement with Manchester transport bosses
7
Sagem Morpho tops Match-On-Card test 7 BIOMETRIC BYTES Breaking news from the Biometrics Industry
8
CHIP TALK Banking on identity
9
FEATURES Card fraud – will PCI-DSS have the desired impact?
10
From EMV to NFC: the contactless trail? 12 SURVEY This month, in the second of a two-part feature looking at the growth of standards, we examine some of the specifications now being applied to the industry’s most high-profile sectors and technologies. 14 REGULARS News Extra
2
News In Brief
3–6
Telecoms News
7,16
Events Calendar Viewpoint
6 16
ISSN 0965-2590/08 © 2008 Elsevier Ltd. All rights reserved This journal and the individual contributions contained in it are protected under copyright by Elsevier Ltd, and the following terms and conditions apply to their use: Photocopying Single photocopies of single articles may be made for personal use as allowed by national copyright laws. Permission of the publisher and payment of a fee is required for all other photocopying, including multiple or systematic copying, copying for advertising or promotional purposes, resale, and all forms of document delivery. Special rates are available for educational institutions that wish to make photocopies for non-profit educational classroom use.
NEWS ...continued from front page
of huge increases in the amount of people shopping online and over the phone, and the numbers of shops offering telephone or online shopping - from 2001 to 2006 card-not-present fraud losses rose by 122%; over the same time period, the total value of online shopping transactions alone increased by 358% (up from £6.6 billion in 2001 to £30.2 billion in 2006). APACS says that tackling card-not-present fraud is a priority and the industry continues to encourage cardholder and retailer take-up of MasterCard SecureCode and Verified by Visa. Online banking fraud losses totalled £22.6 million in 2007 – a 33% decrease on 2006 losses. This year-on-year decrease is impressive given that phishing incidents almost doubled from 14 156 in 2006 to 25 796 last year. Following significant year-on-year reductions in 2005 and 2006, cheque fraud losses in 2007 rose 10 per cent to £33.5 million. However, these losses still remain relatively low compared with other fraud types.
The UK banking industry continues to encourage other countries around the world to upgrade to chip and PIN. This type of fraud will also become more difficult when the European banking industry meets its target to complete its chip card rollout by 2010. Sandra Quinn, director of communications at APACS, commented: “Although card fraud levels have now begun to go up again due to fraud abroad and card-not-present fraud losses, chip and PIN has proven to be an undoubted success in reducing card fraud on the UK high street. And, as more countries follow our lead and upgrade to chip and PIN, the opportunities for criminals to use our stolen magnetic stripe details overseas will decrease.” Quinn continued: “The banking industry continues to work with law enforcement, the retail sector, the Home Office and organisations such as the charity Crimestoppers to identify ways of actively protecting against all types of banking fraud. This reflects the multi-layered approach needed – an approach that has recently seen the creation of the Payments Industry and Police Joint Intelligence Unit – a vital addition to the UK’s fraud-fighting arsenal.” The launch of the new Payments Industry and Police Joint Intelligence Unit (PIPJIU) is expected to enhance the work of the Dedicated Cheque and Plastic Crime Unit (DCPCU) – a specialist police unit fully sponsored by the banking industry. Card-not-present fraud losses have increased by 37% and account for more than half of all card fraud losses. However, as APACS points out, these losses have to be seen in the context
healthcare
Slovenia welcomes new e-Health insurance cards
G
emalto is to provide the Health Insurance Institute of Slovenia, ZZZS, with a new electronic health card solution for Slovenian citizens. This new electronic health card is claimed to be the first of its kind in Europe to
Credit and debit card fraud losses on UK-issued cards Fraud Type
2004
2005
2006*
2007
+/- (06/07)
Phone, internet and mail order fraud (Card-not-present fraud)
£150.8m
£183.2m
£212.7m
£290.5m
+37%
Counterfeit (skimmed/cloned) card fraud
£129.7m
£96.8m
£98.6m
£144.3m
+46%
Fraud on lost or stolen cards
£114. 4m
£89.0m
£68.5m
£56.2m
-18%
Card ID theft
£36.9m
£30.5m
£31.9m
£34.1m
+7%
Mail non-receipt
£72.9m
£40.0m
£15.4 m
£10.2m
-34%
UK retailer (face-to-face transactions)
£218.8m
£135.9m
£72.1m
£73.0m
+1%
UK cash machine fraud
£74.6m
£65.8m
£62.0m
£35.0m
-44%
Contained within this total:
Domestic/International split of total figure: UK fraud
£412.3m
£356.6m
£309.9m
£327.6m
+6%
Fraud abroad
£92.5m
£82.8m
£117.1m
£207.6m
+77%
* Total plastic card fraud losses for 2006 were revised to include restated figures reported after the annual figure for 2006 was made public. The adjusted annual fraud loss figure for 2006 is £427.0m and not £428.0m, as previously reported.
March 2008
IN BRIEF • ASK and Neowave are teaming up to deliver new media for secure transactions in mass transit applications. Under the terms of the agreement, ASK will distribute the Weneo range of Neowave Smart Objects including versions based on the ASK TanGO operating system, providing Calypso compliance. Offering the same functionalities and security as contactless smart cards, Weneo Smart Objects are portable and secure e-medias providing users with connectivity to PC and Web and which enable online token reloading, on-line profile and rights update, direct access to operators’ websites and secure data mass storage. • Visa Europe has signed an exclusive five year agreement with AEG Europe, owners of The O2 in London, to become one of the venue’s founding partners as the ‘Official Payment Partner’. Recently crowned the world’s most popular venue and named best international arena, The O2 attracts millions of visitors from across Europe. The agreement is expected to benefit Visa by creating strong exposure for its payment brand and providing a platform to create greater awareness of payment innovations such as Visa payWave. The agreement takes effect immediately. • GlobalPlatform, the international smart card specifications body, has extended public access to previously restricted GlobalPlatform card specifications and documentation. Until now, the GlobalPlatform Card version (v)2.1.1 to v2.2 Mapping Guidelines of Existing v2.1.1 Implementations and the GlobalPlatform Card Benchmark v1.0 Specifications could only be accessed by GlobalPlatform member organizations. According to the body, the decision has been taken to release the documents to the general public in light of the rapid global growth of GlobalPlatform technology and exponential increase in the number of implementations. • A contactless payment solution for self-service vending machines is being introduced by Thales’ e-Transactions business line. The solution is based on use of the company’s Artema Modular product, which is integrated in vending and ticketing machines, as well as other self-service kiosks in several countries worldwide. The solution is currently in the approvals process with the main international card schemes. Following this process, the new contactless payment solution will be deployed in a threemonth internal pilot with one of the UK’s largest acquiring banks, prior to volume deployment nationwide.
Card Technology Today
3
www.smartcards-today.com
ISSN 0965-2590 March 2008
company news
Contents
Oberthur on course to become market number two
O
berthur Technologies is executing plans to take over XPonCard, a move that would create the second largest player in the global smart card industry, after Gemalto, with sales in the order of 735 million. Oberthur Technologies is aiming to acquire all shares in XPonCard, which are listed on OMX Nordic Exchange Stockholm. The company is offering SEK157 in cash for each share in XPonCard, a premium of 34% compared to the closing price of the XPonCard share of SEK117.50 on 18 February 2008. The Board of Directors of XPonCard has unanimously recommended XPonCard’s shareholders to accept the offer, which in total amounts to approximately 76 million. “XPonCard provides a perfect geographical fit in the Nordic and Baltic countries for Oberthur and we are impressed with XPonCard’s successful development of value added services. Jointly we can improve our
customer offering and our competitiveness and the transaction will generate significant synergies,” said Jean-Pierre Savare, chairman of the Board of Directors of Oberthur. Geographically, Oberthur and XPonCard complement each other in Europe in the banking and loyalty card segment. XPonCard provides a sales, service and personalisation infrastructure in the Nordics, the Baltics and Poland to complement Oberthur’s extensive network throughout the rest of Europe. Outside of Europe, the combined resources will add scale and critical mass, the companies claim. Oberthur says its intention is to retain a significant part of XPonCard’s workforce as part of the enlarged group going forward. Publication of the offer document occurred on 7 March 2008, while the acceptance period will run from 12 March – 4 April 2008. Settlement would begin on or about 16 April 2008, the company said.
chip and pin
UK card fraud jumps by 25%
F
ollowing a two year decline in card fraud losses in the UK, figures just released by payments association APACS show a severe turnaround, with 2007 experiencing a 25% rise in fraud. The increase takes fraud levels up to £535.2 million in 2007, well beyond the total in 2004 (£504.8 million), which is when Chip and PIN cards began to take effect. A key driver behind this rise in fraud is the 77 per cent increase (up £90.5m) in fraud committed overseas by criminals using stolen UK card details – which typically occurs in those countries yet to upgrade to chip and PIN. Fraud abroad now accounts for over one third (39 per cent) of total card fraud losses (see Table on page 3).
TODAY
card
Encouragingly, Chip and PIN continues to have a hugely positive effect on card fraud committed in the UK. Over the past three years losses on face-to-face transactions on the UK high street have fallen by two-thirds from £218.8 million in 2004, to £73.0 million last year. Thanks to chip and PIN the 2007 figures also show that fraud on lost and stolen cards (£56.2 million), and mail non-receipt fraud (£10.2 million), are at their lowest levels for 10 years. Counterfeit fraud losses have increased by 46% but the vast majority of this fraud is due to criminals stealing card details in the UK to make counterfeit magnetic stripe cards for use in countries yet to upgrade to chip and PIN. Continued on Page 3...
NEWS Oberthur on course to become market number two
1
UK card fraud jumps by 25%
1
Slovenia welcomes new e-Health insurance cards
3
Refreshed ID card plans for UK
4
E-business application for European Citizen Card
4
German ID card allows pseudonyms
5
MasterCard ships 300 million EMV cards
5
Mayday implements single sign-on with smartcard and PIN
6
sQuid signs agreement with Manchester transport bosses
7
Sagem Morpho tops Match-On-Card test 7 BIOMETRIC BYTES Breaking news from the Biometrics Industry
8
CHIP TALK Banking on identity
9
FEATURES Card fraud – will PCI-DSS have the desired impact?
10
From EMV to NFC: the contactless trail? 12 SURVEY This month, in the second of a two-part feature looking at the growth of standards, we examine some of the specifications now being applied to the industry’s most high-profile sectors and technologies. 14 REGULARS News Extra
2
News In Brief
3–6
Telecoms News
7,16
Events Calendar Viewpoint
6 16
ISSN 0965-2590/08 © 2008 Elsevier Ltd. All rights reserved This journal and the individual contributions contained in it are protected under copyright by Elsevier Ltd, and the following terms and conditions apply to their use: Photocopying Single photocopies of single articles may be made for personal use as allowed by national copyright laws. Permission of the publisher and payment of a fee is required for all other photocopying, including multiple or systematic copying, copying for advertising or promotional purposes, resale, and all forms of document delivery. Special rates are available for educational institutions that wish to make photocopies for non-profit educational classroom use.
NEWS ...continued from front page
of huge increases in the amount of people shopping online and over the phone, and the numbers of shops offering telephone or online shopping - from 2001 to 2006 card-not-present fraud losses rose by 122%; over the same time period, the total value of online shopping transactions alone increased by 358% (up from £6.6 billion in 2001 to £30.2 billion in 2006). APACS says that tackling card-not-present fraud is a priority and the industry continues to encourage cardholder and retailer take-up of MasterCard SecureCode and Verified by Visa. Online banking fraud losses totalled £22.6 million in 2007 – a 33% decrease on 2006 losses. This year-on-year decrease is impressive given that phishing incidents almost doubled from 14 156 in 2006 to 25 796 last year. Following significant year-on-year reductions in 2005 and 2006, cheque fraud losses in 2007 rose 10 per cent to £33.5 million. However, these losses still remain relatively low compared with other fraud types.
The UK banking industry continues to encourage other countries around the world to upgrade to chip and PIN. This type of fraud will also become more difficult when the European banking industry meets its target to complete its chip card rollout by 2010. Sandra Quinn, director of communications at APACS, commented: “Although card fraud levels have now begun to go up again due to fraud abroad and card-not-present fraud losses, chip and PIN has proven to be an undoubted success in reducing card fraud on the UK high street. And, as more countries follow our lead and upgrade to chip and PIN, the opportunities for criminals to use our stolen magnetic stripe details overseas will decrease.” Quinn continued: “The banking industry continues to work with law enforcement, the retail sector, the Home Office and organisations such as the charity Crimestoppers to identify ways of actively protecting against all types of banking fraud. This reflects the multi-layered approach needed – an approach that has recently seen the creation of the Payments Industry and Police Joint Intelligence Unit – a vital addition to the UK’s fraud-fighting arsenal.” The launch of the new Payments Industry and Police Joint Intelligence Unit (PIPJIU) is expected to enhance the work of the Dedicated Cheque and Plastic Crime Unit (DCPCU) – a specialist police unit fully sponsored by the banking industry. Card-not-present fraud losses have increased by 37% and account for more than half of all card fraud losses. However, as APACS points out, these losses have to be seen in the context
healthcare
Slovenia welcomes new e-Health insurance cards
G
emalto is to provide the Health Insurance Institute of Slovenia, ZZZS, with a new electronic health card solution for Slovenian citizens. This new electronic health card is claimed to be the first of its kind in Europe to
Credit and debit card fraud losses on UK-issued cards Fraud Type
2004
2005
2006*
2007
+/- (06/07)
Phone, internet and mail order fraud (Card-not-present fraud)
£150.8m
£183.2m
£212.7m
£290.5m
+37%
Counterfeit (skimmed/cloned) card fraud
£129.7m
£96.8m
£98.6m
£144.3m
+46%
Fraud on lost or stolen cards
£114. 4m
£89.0m
£68.5m
£56.2m
-18%
Card ID theft
£36.9m
£30.5m
£31.9m
£34.1m
+7%
Mail non-receipt
£72.9m
£40.0m
£15.4 m
£10.2m
-34%
UK retailer (face-to-face transactions)
£218.8m
£135.9m
£72.1m
£73.0m
+1%
UK cash machine fraud
£74.6m
£65.8m
£62.0m
£35.0m
-44%
Contained within this total:
Domestic/International split of total figure: UK fraud
£412.3m
£356.6m
£309.9m
£327.6m
+6%
Fraud abroad
£92.5m
£82.8m
£117.1m
£207.6m
+77%
* Total plastic card fraud losses for 2006 were revised to include restated figures reported after the annual figure for 2006 was made public. The adjusted annual fraud loss figure for 2006 is £427.0m and not £428.0m, as previously reported.
March 2008
IN BRIEF • ASK and Neowave are teaming up to deliver new media for secure transactions in mass transit applications. Under the terms of the agreement, ASK will distribute the Weneo range of Neowave Smart Objects including versions based on the ASK TanGO operating system, providing Calypso compliance. Offering the same functionalities and security as contactless smart cards, Weneo Smart Objects are portable and secure e-medias providing users with connectivity to PC and Web and which enable online token reloading, on-line profile and rights update, direct access to operators’ websites and secure data mass storage. • Visa Europe has signed an exclusive five year agreement with AEG Europe, owners of The O2 in London, to become one of the venue’s founding partners as the ‘Official Payment Partner’. Recently crowned the world’s most popular venue and named best international arena, The O2 attracts millions of visitors from across Europe. The agreement is expected to benefit Visa by creating strong exposure for its payment brand and providing a platform to create greater awareness of payment innovations such as Visa payWave. The agreement takes effect immediately. • GlobalPlatform, the international smart card specifications body, has extended public access to previously restricted GlobalPlatform card specifications and documentation. Until now, the GlobalPlatform Card version (v)2.1.1 to v2.2 Mapping Guidelines of Existing v2.1.1 Implementations and the GlobalPlatform Card Benchmark v1.0 Specifications could only be accessed by GlobalPlatform member organizations. According to the body, the decision has been taken to release the documents to the general public in light of the rapid global growth of GlobalPlatform technology and exponential increase in the number of implementations. • A contactless payment solution for self-service vending machines is being introduced by Thales’ e-Transactions business line. The solution is based on use of the company’s Artema Modular product, which is integrated in vending and ticketing machines, as well as other self-service kiosks in several countries worldwide. The solution is currently in the approvals process with the main international card schemes. Following this process, the new contactless payment solution will be deployed in a threemonth internal pilot with one of the UK’s largest acquiring banks, prior to volume deployment nationwide.
Card Technology Today
3