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Artimi Advances Near Field Communication for Secure High Throughput Wireless Connectivity

Artimi’s Integration of NFC and UWB Offers Simple, Secure Association and Data Rates of More Than 120Mbps Over Certified Wireless USB, Next-Generation Bluetooth and WiMedia Logical Link Control Protocol (WLP)

TAIPEI, TAIWAN, June 6, 2007–Computex Taipei–Artimi, Inc., developer of wireless semiconductors for portable consumer electronics, brings leading edge Near Field Communication (NFC) technology to multi-protocol ultra wideband (UWB) wireless connectivity. With the addition of NFC for simple, secure association, portable devices using Certified Wireless USB, next-generation Bluetooth or WLP connectivity can be secured for high data rate transfer and file sharing. Artimi’s integrated NFC and multi-protocol UWB technology is being showcased this week at Computex Taipei.

As the world becomes more digitized, the need to transfer information quickly and accurately between people and devices is increasingly important. With the proliferation of wireless devices, secure association between two devices is paramount, and NFC promises to do that as easily as possible. To use NFC with UWB protocols, such as Certified Wireless USB, next-generation Bluetooth or WLP, two devices are either touched together or passed closely and a secure wireless pairing is made with no user intervention, allowing consumers to transfer data and share files easily and securely. Artimi’s multi-protocol WiMedia-based UWB wireless semiconductors integrated with NFC for secure association offer more than 120Mbps user throughput across all protocols.

“Pairing of wireless devices should be ultra simple and ultra secure,” says Colin Macnab, CEO of Artimi. “By integrating NFC, Artimi is delivering ultra simple, and ultra secure wireless connectivity, and in particular further strengthening our lead in next-generation Bluetooth and Certified Wireless USB. Our key advantage is that there is no need to install host or device drivers, it just works. We’re leading the effort in next-generation wireless association to ensure ease of use not only for product developers–but ultimately consumers.”

Artimi is also demonstrating other UWB technologies this week at Computex, including ultra simple wireless file transfer between portable consumer devices over WiMedia-based protocols. Consumers can take pictures on a digital camera and transfer these to a standard PC over Wireless USB. Files can then be transferred from PC to a storage device using Wireless USB, and from PC to PC using WiMedia Logical Link Control Protocol (WLP–formerly called WiNet). This diversity of connectivity options, further enhanced by NFC for secure association, shows the maturity of Artimi’s production-ready A-150 MAC and applications processor for ultra simple and ultra secure connectivity.

About Artimi

Artimi®, Inc. provides semiconductors, software and reference designs for high data rate wireless connectivity, including Certified Wireless USB, next-generation Bluetooth® and WiMedia Logical Link Control Protocol (WLP). Artimi’s products employ WiMedia-based ultra wideband (UWB) radio techniques to enable high-speed wireless bulk data transfer between portable consumer electronics products. Content rich portable consumer electronics devices benefit from Artimi’s technology, including digital cameras and camcorders, personal media players, and mobile handsets. Artimi, founded in 2002, is headquartered in Santa Clara, California, with research and development in Cambridge, UK, and sales offices in Japan and Taiwan. For more information, see http://www.artimi.com.

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INSIDE’s MicroPass Reaches New Milestone with 20 Million Units Sold

Increasing Adoption by Leading Issuers Establishes MicroPass® as the Dominant Platform for Contactless Bank Cards in the US

AIX EN PROVENCE, France–INSIDE Contactless, the leading provider of advanced, open standard contactless chip technologies, today announced that sales of its revolutionary MicroPass® contactless platform have exceeded 20 million units, since it was announced in November of 2005. The majority of MicroPass shipments have been in the US market but have also included units for deployment in Asia, Latin America and Canada, establishing MicroPass as the single dominant platform, with the greatest market share for open standard contactless payments.

MicroPass is the leading platform used by multiple card manufacturers as the basis for card product approvals with Visa and MasterCard and has been the basis for the first Discover Network approval. MicroPass has been adopted by more than a dozen leading issuers in the United States, used as the basis for credit, debit and pre-paid rollouts.

MicroPass is valued by card manufacturers and issuers because of its multi-brand support for Visa, MasterCard, and Discover. It provides card manufacturers with superior flexibility in terms of packaging & delivery model, and provides support for value-added functions including MicroLoyalty applications. Issuers prefer MicroPass enabled cards because they deliver the best possible card holder experience, in terms of transaction processing speeds and read distance, which provides a successful card holder experience the first time, every time. With the advantages of MicroPass plus the flexibility and support provided by the INSIDE support team, MicroPass has been a natural choice of card manufacturers and issuers.

“MicroPass continues to gain favor as the contactless platform of choice because of its performance and overall value, said Charles Walton, EVP of Payments for INSIDE Contactless. “Our ongoing technical innovation, best-in-class support, and flexibility enable us to effectively meet the needs of issuers and card manufacturers. MicroPass is the most cost-effective contactless platform in the industry, and we’re committed to keeping it that way–so that we can continue to deliver value to our customers and partners.”

INSIDE is conducting a webinar on “Implementing Contactless Bank Card Payments with INSIDE’s MicroPass Intelligent Hardware Platform” that will take place on June 13th 12:00PM EST, 9:00 AM PST.

Direct Meeting Access is hosted by www.livemeeting.com.

Audio Information is available at +1 718 354 1390 for North America Access, and +33 (0)1 70 99 42 96 for Europe.

About INSIDE Contactless

As the only fabless semiconductor company focused exclusively upon contactless chip platforms, INSIDE Contactless is a market leader in Near Field Communication (NFC), contactless payments, and access control. Innovation in contactless technology has led to essential NFC technology patents granted to INSIDE along with more than 55 other patents. INSIDE is the #1 market share company in contactless payment market in the US with more than 20 million chip platforms delivered to bank card issuers through card manufacturer partners and more than 12 leading bank card issuers. More than 25 key partners around the global, including HID, Giesecke & Devrient, and SAGEM, have successfully delivered contactless products such as payment & access cards, point of sale terminals, NFC enabled mobile handsets, and other products which are ‘powered by INSIDE’. INSIDE Contactless is headquartered in Aix-en-Provence, France, with offices in Shanghai, Singapore, Poland, San Francisco, and Boston. For more information, please visit http://www.insidecontactless.com.

About MicroPass™

MicroPass is a family of intelligent hardware platforms designed to power open standard contactless and dual interface bank card payments in all global regions. Based upon a RISC architecture and optimized to the demanding requirements of contactless transactions, each of the MicroPass family of products feature low power consumption, fast transaction processing, and overall performance meeting the demands of issuer organizations in the bank card payments, transit, and access control markets. MicroPass is the platform of choice for card manufacturers and issuers in the US market with more than 20 million bank cards deployed which are MicroPass powered. INSIDE’s MicroPass L4-2G is an enhanced, next-generation microprocessor-based contactless chip platform designed specifically to meet multi-payment brand and multi-application requirements within the US contactless payment market. With very low power requirements, MicroPass also remains the most suitable core platform for key fob and alternative form factor deployments.

NFC’s industry association, the NFC Forum, defines the technology as “a standards-based, short-range (a few centimeters) wireless connectivity technology that enables simple and safe two-way interactions among electronic devices, allowing consumers to perform contactless transactions, access digital content and connect electronic devices with a single touch.”

Put another way, it is a standard that enables contactless, bi-directional communication between devices. These devices can be NFC-equipped mobile phones, computers, consumer electronics, cards, tags, signs, posters, washing machines … virtually anything that can be tagged.

NFC standards are the result of work conducted by Ecma International, a global industry association dedicated to the standardization of technology and consumer electronics. The NFC effort was initiated within Ecma by the creators of the technology, Sony and Philips (now NXP). The standard created by Ecma was titled ECMA-340 and it was subsequently submitted to the International Organization for Standardization (ISO) for consideration. ISO adopted it as ISO/IEC 18092 in October 2003.

ISO/IEC 18092 details the modulation, coding, data transfer speeds, anti-collision, data exchange, and other technical operations that enable standardized operation across NFC devices.

NFC is closely related and complementary to other contactless technologies with which it shares the 13.56 MHz frequency band. Specifically, the popular ISO 14443 standard is a key building block for much of the Near Field operations. NFC is compatible with the ISO 14443 Type A and B standards, NXP’s Mifare, and Sony’s FeliCa technologies.

Initiators and targets

NFC splits the components of a communication session into initiators and targets. The initiator is the device that begins and manages the communication and exchange of data. The target responds to requests from the initiator. This is where one of the key qualities of NFC comes to light: devices can act as either an initiator or a target.

In traditional RF systems, a device is either an initiator (called a reader or interrogator) or a target (called a card, token, or transponder).

Establishing protocols for devices to act in either role enables bi-directional establishment of communication and enables devices to function as what is commonly referred to as ‘either the card or the reader.’

The significance of this dual-role capability is best explained with an example. Imagine a restaurant scenario where a diner and waiter are settling the check. The diner holds out his contactless card and the waiter simply touches it with his NFC-equipped device (e.g. PDA, point of sale add-on, mobile phone) that is functioning as a ‘reader.’ The waiter captures the payment info and the customer verifies it on the device and adds a gratuity. The waiter walks back to the main counter and touches the device to the central point of sale (POS) reader. The waiter’s device then switches to ‘card’ mode as the central POS reads the payment information for processing.

The same device, the waiter’s handheld, has functioned as both a contactless reader and a contactless token to complete the transaction. This is one of the elegant features of NFC that open doors for functionality never before possible.

As the NFC Forum describes it, “an NFC-enabled device can operate in reader/writer and peer-to-peer mode, and may operate in card emulation mode.”

Passive and active NFC modes

Another important feature of NFC is that it defines two distinct modes of communication. In the active mode, both devices are responsible for creating the RF field to carry data. In the passive mode, only the initiating device creates the RF field. This enables battery-powered devices, such as mobile phones, to avoid power consumption at the RF level during periods of inactivity.

The benefit of ease of use

According to Ecma, the short-range nature of NFC is optimal for its application. Because NFC devices must be no more than 20 centimeters apart for operation (most agree actual distance is smaller in operation), the “touch” metaphor applies. This means that devices must, in essence, touch each other to establish communication. Ecma notes the following benefits:

• “Devices can rely on the protocol to be inherently secured since the devices must be placed very close to each other. It is easy to control whether the two devices communicate by simply placing them next to each other or keeping them apart.”
• “The procedure of establishing the protocol is inherently familiar to people: you want something to communicate–touch it. This allows for the establishment of the network connection between the devices to be completely automated and happen in a transparent manner. ”

Initial applications

NFC developer Innovision cites peer-to-peer, payment and ticketing, and service initiation as the three initial applications that will drive NFC’s growth. It describes these applications as follows:

In peer-to-peer applications, NFC can set up a separate wireless connection via Bluetooth or WiFi. Typical peer-to-peer applications are printing photos straight from a digital camera, establishing an Internet or network connection, transferring files between devices, or sharing electronic business cards.

Initially, NFC-enabled devices are likely to be used for low-fraud, limited-value payment situations, such as quick-serve restaurants, kiosks, vending machines and parking meters.

Service initiation applications use NFC to transfer a small amount of information to the NFC device (e.g. text, a web address (URL), phone number). Smart posters direct the device to a web site for info, to book tickets, or access video or audio files without the need to key anything into the phone to open the browser or input the URL.

USA: Citi, MasterCard, Cingular, and Nokia conduct NFC payment trial using phones with PayPass in New York City. Start date: January 2007.

Austria: University of Applied Sciences of Upper Austria conducted a trial of 100 students and staff using NFC phones for payment at vending machines, peer to peer transfer, and access. Start date: November 2006.

Malaysia: Visa, Maybank, Maxis and Nokia trial Visa Wave payments with 200 participants. Dates: April 2006 - Aug 2006

Germany: Nokia, Philips, Rhein-Main Verkehrsverbund trial NFC ticketing for public transport in Hanau/Frankfurt. Start date: April 2005

USA: Visa tests delivery of coupons and rewards to NFC-equipped phones with 500 of its employees in California. Start date: November 2006.

France: City of Caen trials NFC for payment, parking, tourist / transit information via smart posters. Participants include Philips, France Telecom, Orange, Samsung, Groupe LaSer and Vinci Park (retailers). Dates: Oct 2005-May 2006

France: Grenoble trial sees participants pay fares for public transport. Start date: March 2007.

USA: Philips Arena in Atlanta pilots NFC for payment and poster download with Atlanta Spirit, Chase, Cingular, Nokia, Philips, Visa USA and ViVOtech. Dates: Dec 2005-June 2006

Korea: SKTelecom and Philips trial NFC with 400 SKT employees in Seoul. Applications include access control, smart posters, ringtone download, payment. Start date: June 2006.

USA: Mastercard, Verizon Wireless, and Motorola conducted a trial of NFC phones and PayPass technology in Dallas. Start date: November 2004.

China: China Mobile, Philips, Nokia, and Xiamen e-Tong Card trial NFC payments with 100 participants in the city of Xiamen. Start date: July 2006.

United Kingdom: Manchester City Football Club trials NFC for stadium ticketing and payment. Start: August 2006.

France: Strasbourg trial demonstrates contactless EMV transactions via mobile phones with Groupe Crédit Mutuel, CIC, NRJ Mobile, MasterCard PayPass, and Inside Contactless. Start date: November 2006.

The Netherlands: In Amsterdam, JCB trials NFC payments with 100 participants. Start date: September 2006

France: The Paris Metro, Inside Contactless, and Bouygues Telecom enable pilot participants to use an NFC phone to pay fares as a complement to the contactless Navigo card. Start date: April 2006.

Developed by NXP Semiconductors and Sony, NFC is a standards-based, short-range wireless connectivity technology that enables simple two-way interactions among electronic devices.

While some industry watchers are suggesting that NFC is slow out of the gate, one research firm has gone so far as to speculate this year is “critical for NFC technology.” New York-based ABI Research predicts that five years from now 20% of mobile handsets–nearly 300 million–will have NFC capability. But that’s down sharply from the 25% by 2010 the firm had earlier projected.

Early “enthusiasm for NFC adoption in handsets–fueled by its functionality and flexibility–has been tempered by the complexity of the ecosystem,” the company said in a statement released to promote this latest report.

ABI claims that NFC will not become widely available in handsets until wireless operators are confident that they will see a clear return on their investments, calling mobile operators the “gatekeepers of NFC’s entry into new handsets.”

Others remain upbeat, still bullish on the progress

NXP, one of NFC’s developers, would beg to differ both in the number of handset makers who are getting more involved and in the requisite infrastructure.

“There’s too much on the plate, but that’s fortunate,” said Dave Holmes, NXP business development manager for NFC. “There is so much activity going on with handset integration. There’s been a monumental shift in the level of interest and the work being done. What we’re focused on is the execution stage, making it happen.”

Mr. Holmes said a few “are really pushing, innovating and most likely will be the first out of the gate with NFC handsets. Others are sitting back and waiting to see. The good news is that some of the leaders are some of the biggest names in the business. You’ve seen some of the trial activity, Cingular in Atlanta, and the New York City transit trial.” Many handset makers are beginning to get involved. “It’s kind of a who’s who of handset makers and carriers,” said Mr. Holmes. Added to the mix are Visa in Atlanta and MasterCard in New York, he points out.

He said the first commercial rollout in Hanau, Germany, for transit, “proves that (NFC) works and users really liked it and wanted it. What I think will be the next big thing to make it explode are payment applications in the U.S. and transportation applications in Asia.”

Most of the trial activity so far has been with low-end or mid-tier phones. “That’s designed to test it with mainstream users. It’s not something that requires a professional user,” said Mr. Holmes.

He added, “from my perspective, we don’t need to go much further. Now that it’s chugging away, we’ve settled into our core competency, hardware and software.”

New specs refine tag formats, define peer to peer communication, and more

The NFC Forum was created in 2004 and has grown to more than 110 members, including leading mobile communications, semiconductor and consumer electronics companies. The forum’s mission is to advance NFC use by developing specifications, ensuring interoperability among devices and services, and educating the market.

Martin Buehrlen, NFC program manager for NXP and secretary of the NFC Forum, said that while the organization has already created some up-front specs designed to encourage NFC implementation, its work is far from done.

“We’re finalizing a few more technical specifications regarding support for the tag formats (the tags go on smart posters and coupons to be read by NFC-enabled devices). There was an announcement a year or so ago saying that there’s a list of tags which are readily available in the market and that NFC Forum supports these tag formats,” said Mr. Buehrlen. “These are easy and cost-effective with existing solutions so manufacturers don’t have to make new transponders with NFC,” he added. Bottom line is that “the NFC Forum decided to be compliant with existing tag formats.” These specs are already in the voting process and should be ready soon.

“Other specifications being worked on are focusing on the peer to peer communication between NFC devices and mode switching, utilizing an internal switch so the device can operate in several modes— card emulation mode, card reader mode, peer to peer mode,” he added. “They’re on the schedule (for adoption) this year. We also need to provide the test specs for all the other specifications available in order to establish the compliance program. When you have specs you also need to have a way to test devices in order to make sure they’re compliant.”

The forum doesn’t want the consumer to have to think twice before he whips out his cell phone to make a payment or place it near a smart tag to download some information.

With payments, he said, “in many cases we’re already covered with existing specifications. In some areas this is outside the NFC Forum. What’s covered is the RF (radio frequency) level and the protocols” such as ISO. ” When it comes to higher level protocols and how software works with credit cards, those (protocols) are available from Visa and MasterCard and others.”

Where the NFC Forum is involved, he added, is with the communication from the NFC chip to the smart chip in the mobile phone. “This is being worked on now but it’s not something that’s waiting for implementation because Visa already has a system with NFC in New York and it’s running based on existing technologies, no new specifications,” said Mr. Buehrlen.

In search of ROI

In answer to ABI Research’s comment about a business case for NFC, Mr. Buehrlen says, “there are a lot of business models which are possible with NFC but it does require a certain investment by the companies who want to benefit. If you want to do payment with NFC you need to have an investment in payment terminals. If you want to have a revenue stream (a mobile operator, for example) with respect to downloadable content, then the infrastructure for the consumer to pick up this location-based content needs to be established. The same goes for advertising. When you use NFC in combination with smart posters and product info, you need to build up a certain infrastructure. This is a very normal situation in new technologies.”

He said it would help “if more companies would decide to go for a bigger rollout and a faster rollout then what we have seen so far.”

He cites, as an example, Japan, that has shown that such business models pay off. “More companies are jumping on the train with public transport tickets. There are a lot of payment schemes and loyalty schemes and voucher applications. There are several public transport operators using the mobile phone for not only transit, but for numerous loyalty schemes. Small stores, not chains, but individual restaurants, can have their own loyalty schemes based on this. It’s proof that you can make money with this kind of technology.”

Shortage of handsets and models continues, but help is on the way

“The variety of different mobile phones with NFC support at this time are not sufficient (when compared to) what consumers are used to getting when they go into a store to select a phone,” says Mr. Buehrlen, “but this is really increasing and improving.”

He cites the forum’s increasing membership as an example. “A lot of cell phone manufacturers are members, including a lot of the big ones. Research in Motion (RIM), Blackberry inventor, has come aboard. “The very encouraging part is that so many companies which are in the business of mobile devices are members.”

One of the founding members of the NFC Forum and one of the leaders in producing NFC-compatible phones is Nokia, which, earlier this year, released its latest phone, the 6131, at the Consumer Electronics Show. Attendees got a chance to view its use, including swapping business cards by tapping two NFC phones together, buying coffee, and more.

Calling the 6131 an extremely positive development for NFC, NXP’s Mr. Holmes states, “from my point of view, at least from the U.S. development stage, it gives carriers an option with a nice looking, high end, full featured phone.”

He adds, “major carriers can request a phone and have it pretty quickly. It opens doors to some of these smaller carriers to have an NFC phone option.”

Gerhard Romen, head of marketing development for Nokia in Finland, said the 6131 is a mass volume device. “Going from pilot to deployment will only happen step by step. We see a three to five year development period. We’ll start in high density areas and evolve from there.”

Nokia views the phone as a mini computer

Mr. Romen said he was in a meeting recently with about 100 people. “I asked everyone if they had a mobile phone and for how long. Most started between 1994 and 1998. The prime application was voice but there has been a huge evolution with texting, SMS, Web browsers, then the introduction of Java on mobile phones. From Nokia’s point of view, the phone is now a mini computer with a full-blown operating system with a keyboard. There are more than two billion users globally who now have Internet connections … they can use eBay. All of a sudden you have much more than a phone.”

He added: “From our heritage at Nokia, we focused on a simple user interface. That’s what brought us into NFC. Back in 2001 we studied user behavior. We felt this touch and point was a powerful thing, not intrusive, something you could do (and) if we combined the phone capabilities with that touch paradigm … that would be powerful. We looked at other technologies, including bar codes, and ended up with NFC.”

Mr. Romen is obviously excited about the potential applications for NFC. “Visa and MasterCard are working with Nokia to make the phone a fully functional credit card. Just tap, and you’ve paid,” he says. But it “offers more than just your credit card. You can confirm the payment before it happens, or you can check your balance first before you make payment.”

In the U.S., he points out, the contactless infrastructure is already there. “We’re just complementing or replacing it. Then you add things like posters or a contact point on your washing machine where you could view the manual on how to operate it, again the touch paradigm, or open hotel doors with your phone. You’re already pre-booked, you have your key on your phone and you can go straight to your room. Airlines could also do that with check-in.”

He uses an analogy to explain NFC’s future. “Think about the key you use for your car … you know you have to insert it under your steering wheel and turn it. Have you ever wondered how many things start happening when you turn the key? The engine and all its moving parts, start up. If you have GPS, it starts. All that is simplicity. You turn it on and it is all available. That’s similar to what we’re trying to do with NFC.”

Why go? “There’s a lot going on in security and on the payment side,” said Mr. Rutledge. “For people in the payments industry, there’s a lot to be aware of. On the security side, the big effort now is on protecting data and managing identity.”

Focusing on these issues and more will be 15 workshops as well as the CardTech Americas Executive Summit that will feature an hour-long Q and A with key officials from Gemalto, Giesecke and Devrient, Oberthur, Sagem Orga, added Mr. Rutledge. “Attendees will be able to ask whatever they want.” In addition, a well-known security expert, former FBI Director Louis Freeh, who is credited with transforming the FBI from a national law enforcement agency to a global security institution, will be a keynote speaker.

A few years ago the show, now in its 17th year, was dominated by security, particularly after 9/11 and the subsequent issuance of HSPD-12 and FIPS 201 standards. Then, contactless made its big splash but stepped aside while everyone rushed to get on the ID security bandwagon.

Then along came near field communication, a co-developed technology of NXP and Sony, to reawaken interest in contactless applications. It has caused an “increasing focus on contactless,” said Mr. Rutledge.

CardTech

This year, the CardTech portion of CTST will be “focusing on NFC and other mobile payment technologies,” he added. A full day will be devoted to NFC. That will include a look at some of the trials currently underway, including the Dallas, Texas consumer trial initiated by MasterCard and a Bank of America “internal test” with its employees, where they were issued NFC-enabled phones, said Mr. Rutledge.

“A lot of vendors are talking about this new technology,” he added. These vendors include not just credit card issuers or chip makers, but wireless carriers as well. And there’s more to mobile payment projects than just NFC. There’s one “payment scheme that will allow you to call up, enter a number and transfer money via a phone line,” said Mr. Rutledge. “A lot of smaller companies are experimenting with that.”

Along with NFC market projections from Ginger Schmeltzer, manager of Edgar Dunn and Co. and market opportunities in telecom-based payments by NXP’s Manuel Albers, the NFC/Mobile Payment Technologies session will also include a look at Visa’s pilot mobile payments programs and an “Update on NFC Reference Design” by Inside Contactless and a look at SIM-based NFC services from Gemalto.

There are also what Mr. Rutledge calls “merchant driven alternative payment systems, like Paypal that allows merchants to go beyond major credit card vendors to offer payment systems that don’t have anything to do with MasterCard or American Express. That’s started to take off in a lot of areas. Whether its online or over the phone, alternatives to different payment systems will be some key topics,” he said.

May Kay Bowman, senior manager, global payments for Amazon.com will discuss “The Retailer Rebellion,” while a Verizon representative will talk about the “Move to Mobile.” Under the heading, Battle of the Systems,” a panel discussion will include representatives from First Data Commercial Services, Gratis Card, Tempo and Yodlee.

With these alternative payment systems also comes different card form factors, he added.

A section titled “Battle of the Form Factors” will include panelists from Cardinal Venture Capital, iCache, and Aliaswire.

The CardTech portion will also feature an update on EMV migration, particularly in Canada. Catherine Johnston, president and CEO for ACT Canada, will head a panel discussion featuring representatives from the Bank of Montreal, Interac (the country’s national automated banking machine and POS debit sale network), MasterCard Worldwide and the Visa Canada Association.

There will also be an EMV case study, “Deploying a Full Grade EMV Card and Acceptance Network,” a look at “Contactless EMV: Finding its Place in the U.S. Market,” and “The Role of EMV in Fraud Mitigation.”

Another daylong session will cover contactless payment strategies and will look at those of Visa and MasterCard, Wells Fargo’s contactless card rollout, American Express’ contactless card, and “Consumer Perceptions versus Realities.”

SecurTech

The other half of CTST, security, won’t be outdone. “We’ve always talked about security at the card level. We have a new workshop called ‘Advanced ID Management and Cybersecurity,’ where we’ll be talking about network security, management of digital IDs, public key encryption,” said Mr. Rutledge. This Smart Card Alliance-produced session will include representatives from Gemalto, Microsoft, Actividentity, Verisign, Lockheed Martin, GSA, Intercede, the Department of Defense and Corestreet.

Some of the topics include: ID management on desktops and servers, managing the identity on the credential, shared services for ID management, the DoD’s Common Access Card and mobile credential management for first responders.

“We’ll be talking about the system holistically, taking it to a new level in terms of network ID, managing security life cycles, etc.,” said Mr. Rutledge. “This will be a very intense workshop.”

There will also be half-day sessions, back-to-back, covering biometrics security and the Real ID Act. Sponsored by the International Biometric Group, the biometrics portion will include what the federal government is doing with biometrics, consumer acceptance of biometric technology, and an update on biometric testing and technology. The Real ID portion will cover what some of the states are currently doing to comply with the act, a panel discussion on “obstacles and opportunities” to Real ID Act implementation, and some of the “benefits and challenges” to the Real ID Act. A panel discussion will feature representatives from the American Association of Motor Vehicle Administrators, California’s DMV, Department of Homeland Security and Digimarc.

Two other daylong sessions in the SecurTech track will cover Healthcare Card Technologies and Strategies and Data and Physical Security Convergence.

The former will feature speakers from Accenture, IBM Research, Healthmeans, G&D, Siemens and Gemalto and will include a look at healthcare cards market projections, open technology standards, best practices in healthcare card implementation, and case studies on the Taiwan Healthcare card, the Texas Medicaid Access Card and the French healthcare card.

The data/physical security convergence session will include speakers from the City of Vancouver, Symantec, Intel, the Boeing Company, Identity Alliance and Unisys and will feature global security management, interoperability standards for security convergence, case studies in convergence engineering, ID token technologies for converged security, and more.

A daylong session on Authentication and Secure Payment Technology for executives will include speakers from Crone Consulting, Javelin Strategy and Research, Volubis, mSystems, Magtek, eFunds Xiring, and IBM Canada.

For more information about this year’s conference, go to: http://www.sourcemediaconferences.com/CTST07/.

At the Minskoff Theater, home of Disney’s The Lion King, Sandbar introduced “The Lobby Bar” on the main floor of the theater overlooking Times Square. The Lobby Bar staff is being equipped with wireless terminals that can accept both magnetic stripe and contactless transactions. This program is scheduled for introduction at other Nederlander theaters later this year.

“Concessions had previously been cash only. Now, with wireless terminals and readers, the consumer speeds through the whole process,” commented Brian Triplett, Visa’s senior vice president for emerging product development.

Theater goers simply place, and pay for, their concession orders with clerks wandering the concession area utilizing wireless point-of-sale terminals from ExaDigm that accept contact and contactless cards. The paid-for order is then picked up at the concession stand, explained Mr. Triplett. As with most contactless payments, no signature is required for orders under $25. Regardless, customers can still request a receipt if they want one, he added.

“This brings whole lot of new things together for us. We’re excited about our relationship with Broadway theaters, which we’ve had since 1999. We continue to look for unique and innovative places where we can put this (contactless) technology to work to drive value. Here, we’re taking a cash-only environment and making it easier for the customers. It’s a combination of a whole lot of things coming together and it makes a lot of sense for both consumer and merchant.”

For The Nederlander Organization, it means faster concession lines during the short intermissions and, of course, customer convenience.

Electronic payments also increase throughput and spending, and add to collection efficiency, inventory management and reporting processes associated with cash handling, Mr. Triplett stressed. Probably most important, shorter concession lines means more purchases since theaters have only a limited time to sell concessions, typically before the show and during the short intermissions.

While ticketing is a different operation, that may be something for Visa down the road. “At this point we’re just focusing on this first launch at Sandbar,” said Mr. Triplett.

Using Visa contactless at the theaters is just part of the “hospitality upgrades the theater has put together. They’ve opened a new bar area where patrons can watch the performance on plasma screens.”

While Visa has a half-billion cards in use in the U.S., just seven million are contactless, said Mr. Triplett. “But well over 50% of consumers are starting to understand what’s out there. (Contactless) is beginning to penetrate the consumer mind set.”

He added: “Two years ago, there were zero (contactless) cards. In June, 2005, the first Visa contactless card hit the market in Atlanta.” Before moving on, “we wanted to make sure we had a solid base of acceptance.” It helped with Chase, Visa’s biggest issuer, “dropping” Visa cards in major markets, such as Denver, Colorado, New York, Dallas, Texas. “At the end of ‘05, we had 3,000 merchant locations. At the end of ‘06 we had just over 25,000. Now we’re up to 30,000,” he said.

And other issuers are coming online, such as U.S. Bank, Wells Fargo “and quite a few more who are in the process of coming aboard,” said Mr. Triplett. “Adoption by large scale issuers will drive the growth,” he said.

Driving the contactless model specifically is recent Visa research that shows more and more consumers want to use a payment card for purchases under $25 for convenience (73 percent), efficiency (44 percent) and speed (39 percent).

What 2007 holds “is continued growth” including adding cards and merchant locations, continuing to promote consumer adoption and getting more involved in some of the new technologies coming down the pike, specifically near field communication and cell phones, said Mr. Triplett.

In the Toyota Avalon, for instance, an on-board sensor recognizes a signal from the smart key, allowing the driver to start the engine by pushing a switch. If he waves the smart key near the trunk, it opens. And, of course, it unlocks the car as the driver approaches. Ditto for the American-produced Corvette and Cadillac XLR.

“In terms of the use of smart keys, Renault, Mercedes, BMW and Rover are also introducing ‘keyless’ cards that identify you as the authorized driver when you’re within range, automatically unlock the door … (then) simply press a button to start the ignition,” said Jack Morgan, senior director of automotive for NXP (formerly Philips Semiconductors). “They also make it possible to ‘lock’ the key itself, immobilize the car if it’s stolen, and prevent you from locking yourself out,” he added.

Cracking the immobilizer code?

Security is also a key concern of car manufacturers, particularly protecting the cars against theft. “The car’s ignition system became more secure with the introduction of the immobilizer concept. It uses transponder RFID technology that requires the key to not only mechanically fit the lock but also that it is the only key programmed to match the vehicle’s electrical system,” added Mr. Morgan.

“It’s relatively easy for a trained thief to make a key that will work. But the thief cannot match the electronic immobilizer code. That technology exists with the key which is why we’re going to remote systems.”

He said the immobilizer started in Europe in the 1980s after the Berlin Wall came down. “All the BMWs were disappearing.” That standard then moved to the U.S. and now all U.S. production vehicles have immobilizer technology installed. NXP, he said, provides it to Chrysler and General Motors.

“That technology evolved into the key fob (and) will now evolve to the credit card-type security system,” said Mr. Morgan.

Enter NFC …

“The auto industry now is in an interesting period with respect to electronics,” he said. “It’s looking at convergence in two areas–in entertainment, where everyone wants it portable and on the go, and the other in data/financial security.”

Helping that convergence are the inroads being made by NFC. Some have even suggested that we may soon use the mobile phone to unlock the car and crank the ignition, similar to how key fobs function today. But Mr. Morgan doesn’t see that happening. The reason is the read distance. NFC has a very short read range. An electronic key card powered by RFID only needs to be carried in a driver’s pocket. As he approaches the car, the vehicle recognizes him as the driver, unlocks the car and he’s ready to go.

“To use NFC, you have to hold it close. That’s not the way people want to do it (in automobiles). They want it in their pocket and when they get near, the car will open and will sit there waiting for you,” he adds.

NFC does have other advantages, however. It can enable keys to interact wirelessly and to deliver/obtain content via other electronic devices securely and wirelessly, said Mr. Morgan.

Your car talks back

With the advance of NFC, “the best use case” is to include it as part of the automobile’s workings, “to put NFC in with the immobilizer function in a vehicle. Now you open up … in a real way … the ability to use your car’s access system” to allow the car to transmit “a lot of data functions that are of interest to the car owner and the car manufacturer,” he added.

For example, when you go to the car dealer you can download data about your car. “There’s a lot of interest by car manufacturers to have some connection with the car … the car will automatically contact the dealer who will then let you know that it’s time for an oil change and perhaps that you’re having difficulty with your turn indicator. You can also keep a history on your vehicle in terms of warranty.”

“While it may appear that NFC isn’t going on quick enough, I can assure you that hundreds of trials are underway, say 30% in the U.S., 30% in Europe and 40% in Asia,” added Mr. Ghanname.

Those trials, he said, converge in two areas: wireless carriers and other value chain players like public transport companies.

For example, the recent Philips Arena trial in Atlanta, which allowed sports fans to use NFC-enabled Nokia 3220 phones to pay for snacks at the concession stand, gave the industry some good feedback on what’s needed in the future, said Tom Zalewski, director of payment and ticketing for Nokia America.

The Philips Arena trial that involved Visa and several wireless carriers, “was a well-defined system with season ticket holders purchasing concessions with their phones, or they could walk up to a poster and get real time information on a player who might have been pulled from the game due to an injury,” said Mr. Zalewski.

He said Nokia has also studied the various transit business models (the commercial rollout earlier this year in Hanau, Germany, for example, where NFC phones are capable of serving as transit tickets, or a similar trial currently underway in New York). “The ability to touch a poster to purchase a ticket and have that ticket sent to your phone, it’s certainly a lot more convenient.”

PR and more PR needed

Mr. Ghanname predicts that the first major commercial rollouts will be by wireless carriers “conducting aggressive consumer education about what they can do with NFC. In some cases they do not need to use the terminology ‘NFC’ as such. NFC will open various applications that will have different names. At the end we want to simplify the consumer experience around mobile and consumer devices.”

Generally, he added, the feedback “we’re getting now is to be more aggressive at educating consumers.”

“We are changing focus to more public relations. We have to work on concrete projects. We also plan to show off NFC phones, along with our partners, at exhibitions, at major consumer trade shows,” he said.

“As a first step we have been educating the industry and value chain players about NFC and how it can benefit their customers,” added Mr. Ghanname. “We now have more than 80 members from various industries in the NFC Forum and each player is promoting NFC in its way.”

Finally, specs are here

The NFC Forum a couple months ago issued NFC specifications in attempts to standardize the technology. “Many manufacturers have been awaiting the release of the specs,” said Mr. Ghanname. “They provide for the first time a common data exchange format for applications. So based on the common data formats, applications can now be developed that are vendor independent and cross-platform compatible.” These new specs also provide a way to implement smart poster/smart object applications, which are used in many of the current sites, he added.

He said more work is progressing for specs on NFC-compliant tags “leading to a further simplification of software development for a broad variety of devices, as the same source code can then be used for different platforms.”

NFC will soon reach the next level. “That will happen by the end of this year. I see more products out there on the market. We expect by 2007 to see rollouts in the U.S. and Asia. ABI Research expects 50% of mobile phones to be NFC-enabled by 2010. That’s possible now since contactless has really taken off,” said Mr. Ghanname. “We already see today small scale commercial rollouts in some countries.”

New NFC phones coming

Required for these trials and rollouts will be new NFC-compatible phones. While the Nokia 3220 was used in the Philips Arena trial because it was compatible with an NFC shell that could be affixed to it, “the phones we’re coming out with next will have this functionality built in,” said Mr. Zalewski.

He added: “If you think back 10 years, there were no cameras in phones, no MP3 players. Ten years from now, many phones will have NFC functionality. The interesting thing with NFC is that it was one of the first technologies to bring together stakeholders from different industries, financial institutions, wireless carriers. When looking at having a device used as a transaction enabler, they’re not a bank or an issuer, so they have to work with carriers.”

By incorporating this functionality into the phone, stakeholders have to come together to determine what’s best for them and the consumer, he added. “Access control and tickets have to be done in a very secure fashion, having the real time ability to do this sort of thing. It’s certainly coming.”

‘Over-the-air’ is key to future of NFC

One of the issues with which companies have had to deal is what Mr. Zalewski calls “over-the-air” management of this data that is being sent wirelessly.

Recently, International technology group Giesecke & Devrient, Munich, Germany, and Nokia formed a joint venture to provide secure management services for NFC-enabled mobile devices. This venture will allow mobile operators, transport operators, retailers, banks, credit card companies and others to offer their services and applications to consumers with NFC-enabled mobile phones, such as downloading transit tickets over the air to their cell phones.

Over-the-air management of the consumer applications is a critical part for the emerging NFC ecosystem, and the joint venture will work closely together with other stakeholders when bringing these services to the market. The joint venture is expected to commence operations in the fourth quarter 2006.

Rapid progress poised to continue into 2007

Mr. Zalewski believes that NFC, “like Bluetooth, will pick up pretty quickly.” Bluetooth allows mobile phones, computers, and personal digital assistants, and other devices to be easily interconnected using a short-range wireless connection.

“Maybe I’m three years ahead of the curve. It’s just a matter of how it’s marketed, who the stakeholders are. One major advantage with NFC, is that “there’s revenue-generation capability for the stakeholders, such as the banks,” he added.

NFC has already addressed some of the critical issues, such as security, he points out. “Earlier trials had no way of locking the phone. Now with NFC, you can have a pin number and lock the phone. You also have the ability to store multiple credit cards.”

“Now it’s simply a matter of developing the business models between the stakeholders,” concludes Mr. Zalewski. “It’s going to be an exciting time in the next few years.”

NFC evolutionary timeline:

2002: Philips and Sony invent NFC.
2004: NFC Forum established.
2005: Field trials become prominent.
2005: Commercial phone available.
2006: NFC Forum reaches 80+ members.
2006: Commercial rollouts expected in at least two regions.
2007: NFC specification on most high-medium end phones.
2010: NFC in 50-percent of phones (ABI Research).

Source: NXP