May 2014 Alliance Member Bulletin
Executive Director’s Corner
Prime Time for Payments Industry
Dear Members and Friends of the Alliance,
To “strike while the iron is hot” means to act while the best results can be obtained. It originated from the blacksmithing trades when blacksmiths would heat iron-stock in a furnace until it was malleable and could be beaten into the shape desired. The heat would only last seconds, so to “strike while the iron is hot” meant to do as much as possible before reheating the iron. The same thing could be said about the smart card industry right now.
The payments market is ramping up to produce up to 1 billion new EMV chip cards in the next three to five years. Although the U.S. is two years into a planned four year EMV migration, we expect to only reach 10% market deployment, or 100 million cards by year end. That means another 400 to 500 million cards are needed just to get to the halfway mark by the October 2015 liability shift dates. To put these numbers into context, by this time next year, the U.S. market will have issued more EMV chip cards than the UK and Canada combined.
The healthcare market may be the sleeping giant for the government-issued smart identity card market. The Medicare Common Access Card Act of 2013 (H.R. 3024) is making its way through the House Ways and Means Committee; the Act calls on the Centers for Medicare and Medicaid Services (CMS) to fund pilots to use smart card technology to modernize the government Medicare ID card and address an estimated $30 billion fraud problem. More recently, the Workgroup for Electronic Data Interchange (WEDI) partnered with the Smart Card Alliance on a white paper to educate healthcare providers on the benefits of smart ID cards to reduce fraud. We have also seen the New Jersey Medicaid program propose legislation to issue smart card tokens to health services providers to reduce the number of phantom billing claims.
On the government FICAM market front, it is not just smart cards that are in demand, but the complex secure access systems and readers that can accept PIV cards. With more than 5 million PIV cards in circulation, the Office of Management and Budget (OMB) has mandated that agencies begin them to access secure federal facilities. OMB was slow to enforce this mandate while agencies were issuing cards; now that more than 90% of federal employees and contractors have received PIV cards, OMB is stepping up this requirement. The GSA will soon issue a blanket procurement agreement to install new or upgraded ePACS systems for all GSA-maintained secure buildings by December 2015. GSA also recently advised vendors of a June 9th deadline to submit systems for testing for the government’s Approved Products List (APL).
The mobile network operators are procuring tens of millions of mobile handsets equipped with NFC chip sets and UICCs, the secure SIMs that provide the secure element technology that goes with most NFC mobile wallets. With the national roll-out of the Isis wallet, Isis is now reporting significant increases in consumer usage, with merchants adding innovative loyalty programs to attract even more consumers. The potential threat introduced by Google’s support for Host Card Emulation (HCE) in newer Android models is being offset by rumors that Apple will include NFC in its next iPhone model. So the mobile SIM market is still very strong.
Come and support the 2014 NFC Solutions Summit, on June 3-4 in Austin, Texas and find out just how hot things will get in the future.
In The Spotlight
A 2013 Smart Card Alliance Company of Excellence (COE) recipient, Capgemini is one of the world’s foremost providers of consulting, technology, outsourcing services and local professional services. Present in over 40 countries with more than 130,000 employees, the Capgemini Group helps its clients transform in order to improve their performance and competitive positioning
What are your company’s business profile and its offerings?
Capgemini is one of the world’s foremost providers of consulting, technology, outsourcing and local professional services with presence in 44 countries with more than 130,000 employees. With a network of 21,000 professionals serving over 900 clients worldwide, Capgemini collaborates with leading banks to deliver business and IT solutions with thought leadership which create tangible value. Capgemini is serving the global cards industry for more than 17 years by offering services and expertise on all leading platforms and technologies across the Americas, Europe, Asia and Australia.
What role does smart card technology play in your business?
Capgemini collaborates with leading banks worldwide to provide leading edge thought leadership and solutions. Capgemini’s offerings spans across the entire gamut of cards management processes such as marketing, acquisitions, originations to write-offs, portfolio re-organization, sell-offs, etc. With worldwide adoption of smart card technology voluntarily or via government regulations or mandates from organizations (Visa, MasterCard, Europay, etc.), financial institutions have to adapt to these and change their approach, strategies and systems to ensure compliance and customer expectations within geography.
As a leading partner/solution provider to banks and issuers worldwide, we are consistently focusing on the leading edge of technological advancements in the cards arena, is it virtual payments or various cards and payments channels. Considering the above and the emphasis on various new methods evolving, we see smart card technology as a key driver for us to become the leaders in providing client satisfactory offerings in the market.
With our experience in consulting and development services on mobile payment solutions and smart card payments, we see good potential for growth in this area. Capgemini works closely with its clients in providing market leading services such as developing a brand identity, platform selection, platform transitioning, business transformation, testing and knowledge management, etc. These key aspects are considered when clients choose to migrate to smart card technology platforms and we are keen to support them in fulfilling their technology aspirations by providing dependable services.
What trends do you see developing in your market?
- Non-Banks: leveraging newer technology (mPoS, cloud, social) a spate of non-banks are providing more convenient offers to their customers, leveraging their franchise to deliver value products (e.g. prepaid), collaborating with banks to drive scale etc. Telecom, Retail, PoS suppliers, Device franchise are some the dominant non-bank groups at work.
- Regulation: Burden of regulation is constantly on the rise. Regulation is impacting–business model (interchange caps), client information (privacy),
- Customer intimacy imperative: The need to embed ‘payments experience’ into daily lives of customers is driving–search for anywhere ‘origination’ (in-app, twitter, facebook), Mobile PoS, integration with POS and accounting etc.
- Collaborative Vs Competitive: We believe the client value imperative needs sustained investments and players are more than happy to ‘share’ costs by working with other participants (typically non-banks) to drive ‘scale’ / adoption. Some initiatives are also emerging to handle loyalty / offer management.
- Standardization: We observe three types of initiatives to standardize payments :
- Dynamic credentialization
- Public consultation on real time payments.
- Rise of Fraud: With evidence of card data compromise across a range of merchants and banks, the need for fraud management is unprecedented. While EMV would solve part of the problem, larger issues like encryption and tokenization hold the promise of ‘end to end’ security.
And outside of the U.S., trends include real time payments. With real time payments a reality in UK, India and Poland and under consultation in Australia, US–cards will be challenged as the preferred choice of instrument. Overlay services on such real time rails can challenge the share of wallet of cards.
What things must you overcome to leverage those trends?
- Strategy Assessment
- Vision and design
- Cards in a box
- Platform assessment
- Product level assessment (e.g. switch)
- IT remediation
- ‘Run the Bank Vs Change the Bank’ transformation for leaner card operations
- Transformative cards application development & maintenance.
- Point Solutions
- Fraud management
- Portfolio migration
- Frameworks and Accelerators
- Adaptive fraud analyzer
- Merchant on-boarding
Visit Capgemini at http://www.capgemini.com.
The Health & Human Services Council will once again be featured at a key healthcare industry conference, the National Association of Healthcare Access Management (NAHAM) 40th Annual Educational Conference & Exposition. The Council organized a Learning Lab session, “Patient Access: Best Practices and Standards for Patient Authentication,” which will take place on Thursday, May 15th from 3:00-4:15 p.m. ET.
In this Learning Lab, experts and end-users discuss best practices and case studies for enrolling and authenticating patients in a hospital setting and ways to carry that correct identity through the patient’s entire stay, including correctly matching records to procedures. The session will be presented by:
- David Batchelor, Vice Chair, Smart Alliance Health and Human Services Council and CEO, LifeMed ID
- John Stoy, CIO at Mid Coast Hospital
- Roderick Bell, CIO, Resolute, an Innovation Center for Vanguard Health
If you’re not attending the conference in-person, NAHAM will also be providing access to the Learning Lab through a live webcast of the session as part of their Virtual Conference. Webcast registrants can listen to presenters, watch presentations and participate by asking questions in real time. For more information or to register for the Smart Card Alliance Learning Lab session, visit http://www.naham.org/?page=14VirtualConference.
Top 5 Downloaded Council Reports
The Smart Card Alliance and its Councils publish a wide variety of reports and white papers, available to all at no charge. The Payments Council white papers have been especially popular this quarter; the following resources have been the most downloaded from the website:
EMV Webinar Available
The EMV Migration Forum recently presented a third webinar on “EMV 101: Fundamentals of EMV Chip Payments,” featuring Guy Berg of MasterCard. The webinar provided a primer on EMV chip payments for U.S. payments industry participants. If you missed it or would like another opportunity to review, download the recording and presentation here.
NFC Solutions Summit
You can still register for the NFC Solutions Summit to be held June 3-4 at the Renaissance Arboretum Hotel in Austin, TX. The Summit is co-presented with NFC Forum and NFC World Congress.
HSPD-12 10th Anniversary Event
A special one-day event commemorating the 10th anniversary of landmark security directive HSPD-12 will be held on July 31 at the Marriot Metro Center in Washington, DC. Government leaders and current heads of federal agencies are scheduled to speak. The event is free of charge to federal government employees who have a PIV card or Common Access Card (CAC) and is open to non-federal government attendees for a registration fee. Learn more details or register today.
Payments Council CNP White Paper
The Payments Council has produced a new white paper called “Card-Not-Present Fraud: A Primer on Trends and Transaction Authentication Processes.” The white paper outlines, among other things, methods for securely authenticating CNP transactions and preventing fraud. Visit the website to download the white paper.
Upcoming CSCIP/Payments Exam
The next CSCIP/Payments Training and Exam Preparation Course will be held June 16 at Act Canada’s CardWare 2014 in Niagara Falls. The exam will be held on June 17. Registration deadline is May 23, so if you’re planning on taking the training and/or exam, make sure to save the date and set up a reminder in your calendar to register. Visit the CSCIP portion of the website for more information; you can also download the Exam Registration and Documentation Order Form in the following formats: Fillable Word Form or PDF.