www.smartcard.co.uk
`
`S M A RT
`C A R D
`N E W S
`
`J a n u a r y 1 9 9 3
`
`Vo l u m e
`N u m b e r
`
`2
`1
`
`Smart Cards Being Used
`in Swiss Ski Resorts
`
`A user-friendly Smart Card is being used in Swiss ski resorts to
`speed access for skiers to the lifts and avoid frustrating delays.
`Called the Nedap Ski Card, it is a contactless card which can be
`read in the skiers pocket and is therefore “hands free.”
`
`The picture below was taken high on the slopes of the Matterhorn
`in a temperature of -5 degrees Centigrade. Because there is no
`electricity supply available at this altitude to operate the turnstile,
`power is provided by a diesel generator.
`
`Continued on page 3
`
`© 1993 Smart Card News Ltd., Brighton, England. No part of this publication may be reproduced, stored in a
`retrieval system, or transmitted in any form or by any means, electronic, mechanical, optical, recording or otherwise,
`without the prior permission of the publishers.
`
`1/20
`
`DOJ EX. 1038
`
`

`

`Smart Card News
`
`CONTENTS
`
`Editor: Jack Smith
`
`Technical Advisor: Dr David B Everett
`
`Editorial Consultants:
`
`Dr Donald W Davies, CBE FRS
`Independent Security Consultant
`
`Peter Hawkes,
`Principal Executive
`Electronics & Information Technology Division
`British Technology Group Ltd
`
`Chris Jarman
`Managing Director
`Orga Card Systems (UK) Ltd
`
`Smart Lunch Cards
`
`4
`
`Smart Card Prototype ATMs
`
`5
`
`Bull/Gemplus Licence Agreement
`
`5
`
`Card Payment in Pubs 6
`
`Student Smart Card
`
`7
`
`Case Study: Loreta Bills Over £1m a Month
`8
`
`Carte VITALE - Social Security Card 10
`
`Cylink Advanced Card 12
`
`Published monthly by:
`
`New Vending System 12
`
`Smart Card News Ltd
`PO Box 1383, Rottingdean
`Brighton, BN2 8WX, England
`Tel: +44-(0)273-302503
`Fax: +44-(0)273-300991
`
`ISSN: 0967-196X
`
`Next Month
`
`New Fabrication Technology
`
`13
`
`DTI Proposes Smart Card Forum
`
`13
`
`Smart Card Diary
`
`14
`
`Smart Card Tutorial - Part 5
`Communication Protocols
`
`15
`
`Smart Card Tutorial Part 6 - Communication
`Protocols Continued.
`
`Schiphol Travel Pass
`
`20
`
`Smart Card ‘93 Conference Report.
`
`2/20
`
`DOJ EX. 1038
`
`

`

`January 1993
`
`Nedap Ski Card
`
`Continued from page 1
`
`The Nedap system was installed last year in the
`Zermatt region of Switzerland after rigorous
`testing over two winter seasons (about 1,500,000
`visitors each season). Now about 15,000 cards
`have been issued by the biggest ski company in
`the Zermatt area and discussions are being held
`with other companies operating there. In the
`Aletsch area about 50,000 cards have been issued
`by four companies fully equipped with the
`system.
`
`Nedap are now ready to offer the system to other
`countries, and this month the ski card will be
`tested in Solden, Austria.
`
`The Nedap contactless card is used mainly in a ski
`card system as an electronic ticket for skiers. It
`can be programmed at the ski area point of sale
`terminal as a day, week, season or multi-run pass
`etc. and can be read at up to 70 centimetres at the
`control gate providing “hands-free” access to the
`ski lifts.
`
`Advantages for skiers are clear: it avoids the long
`waiting time for passes to be issued with passport
`photographs, and reduces the time taken to pass
`through the control gates to the ski lifts. Skiers no
`longer have to fumble with tickets or physically
`show passes while trying to hold onto their gloves
`and ski sticks. They do not even have to take the
`pass out of their pocket. The Smart Card is
`checked automatically when they stand in front of
`the turnstile and if it is valid a green arrow lights
`up and they can pass through the turnstile. If the
`card is not valid a red arrow lights up and the gate
`remains locked.
`
`More than 800 people per hour can be checked
`passing through the control gate - about twice as
`many as at gates where each skier has to
`physically show a pass and then put it away.
`
`At the point of sale terminals, which consist of a
`PC-cash register, a video camera and a machine to
`issue the card, the Smart Card is automatically
`programmed with all information, for example,
`type of user, time validity and area. The terminal
`can produce a photo of the user electronically in
`seconds and attach it to the card.
`
`Smart Card News
`
`Sales data is stored twice in the PC-cash register
`and transferred to the system computer on a disk.
`Thus the cashiers’ reconciliations and the daily
`reconciliations are produced automatically.
`
`Benefits for the system operator
`
`Nedap has produced cost-comparison figures
`against the normal magnetic stripe card in such a
`system. Although the magnetic stripe card costs
`approximately $0.25 compared with the Nedap
`Ski Card at $15, it is thrown away at the end of the
`validity period.
`
`The Nedap Card can be used for a guaranteed
`minimum of 5,000 times and, therefore, costs
`approximately $0.03 each time it is used, making
`it eight times cheaper than the magnetic card.
`
`For season tickets with a passport photograph
`there is an additional charge of about $0.04 for the
`video ticket and the packing.
`
`They say that a company that needs 500,000
`magnetic cards would only need 35,000 Nedap
`Ski Cards. The Nedap card becomes viable after
`four years in operation and, after ten years the
`company has saved around $700,000.
`
`Skiers normally pay a deposit of $15 for the card
`which is reimbursed at the refund machine or cash
`point on redemption of the card. If the card is lost
`or the customer does not return it, the company
`retain the deposit to purchase a replacement card.
`
`It is possible to use the system in an area
`involving several companies, and make periodic
`reconciliations. For example, Company A sells a
`Nedap Ski Card valid for its area and also the area
`of Company B. The amount of money due by
`Company A to Company B can be calculated
`automatically, based on
`the number of
`transactions registered on the Ski Card. Similarly
`if B issues cards that can be used in A’s area,
`money can pass from B to A.
`
`Card details:
`Type:Contactless
`Fabricator:Nedap
`Dimensions:84.5 x 54.5 x 3.5 mm
`Contact location:N/A
`Chip manufacturer:Hughes
`Chip type:CPU
`
`© 1993 Smart Card News
`
`3
`
`3/20
`
`DOJ EX. 1038
`
`

`

`Smart Card News
`
`Memory type:EEPROM
`Memory capacity:128 bits
`Comms protocol:Patented by Nedap
`Security:Proprietary
`
`Contact: K van Raay, Manager Ski Card System,
`Nedap NV, Postbus 6, 7140 Groenlo, The
`Netherlands. Tel: +31 5440 71111. Fax: +31
`5440 62745.
`
`Smart Lunch Cards
`
`the Smart Card manufacturing
`SOLAIC,
`subsidiary of French computer engineering
`company SLIGOS, has been awarded a contract
`by the city of Montpellier, France, to supply
`10,000 MIDI integrated circuit cards for use in
`school lunchrooms.
`
`The cards have been under test in two lunchrooms
`since last May and will be gradually extended to
`over 100 establishments managed by the city’s
`central kitchen.
`
`The card will eventually allow schoolchildren to
`pay swimming pool fees and school bus fares.
`
`Card details:
`Type:
`Fabricator:
`Dimensions:
`Contact location:
`Chip Ref No.:
`Chip Type:
`Memory type:
`EEPROM
`Standards:
`Security:
`
`Contact
`SOLAIC
`ISO ID1 size
`ISO or AFNOR
`E3744
`Memory
`EEPROM
`3744 bits
`ISO 7816-1, 2, 3
`PIN (four digit)
`
`Corporate
`Juster,
`Charles
`Contact:
`Communication, Groupe SLIGOS - Tel: France
`+33 1 49 00 96 33.
`
`DataCard Reorganises
`
`DataCard Corporation announced last month that
`it was reorganising the company into three global
`operating groups that will report to Glenn W
`Highland, DataCard’s President and Chief
`Executive Officer.
`
`January 1993
`
`The Plastic Cards Group will consist of
`DataCard’s four plastic card manufacturing plants
`located in the United States, United Kingdom,
`Germany and The Netherlands. Franz Hanlel,
`Corporate Vice President, European Sales, has
`been appointed acting General Manager.
`
`The Card Personalization Group will comprise all
`products
`the company manufactures
`for
`personalizing credit, debit, identification and
`promotional cards. Jim Moar has been appointed
`Corporate Vice President and General Manager.
`
`Three business units - Datatrol Transaction
`Terminals, Addressograph Imprinters and Smart
`Cards and Systems will be consolidated in the
`Transactions System Group, with CEO Glenn
`Highland acting as General Manager.
`
`Contact: Mark Iverson, DataCard Director of
`Communications - Tel: USA +1 612 931 1763.
`Fax: +1 612 931 0418.
`
`Smart Card Club Launched
`
`The Smart Card Club was officially launched at
`an inaugural meeting in England this month
`which attracted 95 attendees from more than 60
`companies.
`
`“We see the Smart Card Club as the premier
`forum for every UK company involved in Smart
`cards,” says founder, Richard Poynder. “Already
`the sector’s major players have agreed to join and
`the final mix of members is in line with our target
`split of 50:50 vendors and scheme operators.” He
`said the club had exceeded its original targets with
`a membership now set to exceed 35 major
`organisations.
`
`Membership, which costs £5,000 for full
`membership
`and
`£2,500
`for
`associate
`membership, is open to any company actively
`involved in developing or using Smart Card
`schemes and is based around a series of monthly
`meetings during 1993.
`
`Contact: Richard Poynder -Tel: England +44
`(0)753 83083. Fax: +44 (0)753 831113.
`
`4
`
`© 1993 Smart Card News
`
`4/20
`
`DOJ EX. 1038
`
`

`

`January 1993
`
`Smart Card News
`
`Smart Card Prototype ATMs
`
`Prototypes of a new generation of Automated
`Teller Machines (ATMs) that will use contactless
`Smart Cards were demonstrated, along with
`potential applications, at the Retail Delivery
`Systems Conference in San Antonio, Texas, last
`month.
`
`Developed by NCR Corporation and AT&T Smart
`Cards, the units are designed to offer customers
`additional services, such as a security system that
`works by verifying the cardholder’s voice print.
`Unless this matches the one stored on the card,
`access to the account is denied.
`
`Although there has been great interest in the use
`of voice prints as a means of positively
`identifying the cardholder as the rightful owner of
`the card, the technology has not yet advanced
`sufficiently to ensure an accuracy for mass market
`use, for example, at points of sale where high false
`rejection rates would be unacceptable. The most
`likely use of this technology is for telephone
`home banking applications.
`
`Perhaps more significant is that AT&T’s Smart
`Card readers can be connected to NCR’s point of
`sale terminals, and they plan to begin working
`with banks to develop new Smart Card-based
`applications that will run on both ATM and point
`of sale machines.
`
`The readers can also be connected to a cellular or
`wired telephone, personal computer, car (for
`electronic toll collection), and other devices.
`
`“Our Smart Card can be viewed as a secure,
`portable, personal database that will provide
`banking customers with enhanced security and a
`broad spectrum of new services,” says Diane
`Wetherington, President of AT&T Smart Cards.
`
`“Most people have come to think of ATMs mainly
`as cash machines,” says Jim Adamson, Vice-
`President of NCR Self-Service and Financial
`Systems Division, in Dundee, Scotland. “But the
`integration of Smart Card readers can transform
`the familiar ATM into a new kind of Financial
`transaction station.”
`
`One obvious benefit of Smart ATM Cards is
`increased security, and a single card can be used
`
`as an ATM card, an insurance information card,
`and a debit card for making purchases in a store,
`placing phone calls, paying highway, bridge and
`tunnel tolls, mass transit fares and even making
`purchases from vending machines. Funds for
`each of these uses can be transferred at any ATM
`from the customer’s bank account to the debit
`portion of the card.
`
`“Smart Cards make it possible for ATMs to
`expand beyond mere banking functions,” said Mr
`Adamson. For example, “electronic tickets” for
`airline travel, sporting events, plays or concerts
`could be purchased at an ATM and loaded onto
`the Smart Card. The card would then be accessed
`at the airport, stadium, theatre or concert hall.
`
`AT&T plans to make the Smart Card interface
`available to other terminal developers.
`
`Contact: Michael Jacobs, AT&T Smart Cards,
`USA - Tel: +1 (201) 564 3836. Jim Mazzola,
`NCR Corporation, USA - Tel: +1 (513) 445 6148.
`
`Bull/Gemplus Licence Agreement
`
`Two of the major players in Smart Card
`Technology, Bull CP8 and Gemplus, have
`confirmed an agreement whereby Bull CP8 has
`licensed Gemplus for the use of Bull CP8 patents
`related to Smart Cards.
`
`The patents are used for the development of the
`most important part of the microprocessor cards -
`the operating system or “mask” used to provide
`the level of security required for the various
`functions of the card, and internal operations
`which allow the card to be used in a wide variety
`of applications, for example, payment systems,
`health cards, pay-TV,
`telecommunications,
`transport systems, personal files, etc.
`
`Bull says the agreement is part of its policy to
`provide access to its patent portfolio in this
`domain. At the same time the move will
`strengthen the position of both companies in the
`Smart Card field.
`
`Contacts: Marc Lassus, Gemplus Chairman and
`CEO - Tel: France +33 1 42 32 50 01; and Jean-
`Louis Coulon, Bull CP8 Chairman and CEO - Tel:
`France +33 1 39 02 44 00.
`
`© 1993 Smart Card News
`
`5
`
`5/20
`
`DOJ EX. 1038
`
`

`

`Smart Card News
`
`Card Payment in Pubs
`
`Regulars at 12 Whitbread managed public houses
`are able to pay for drinks and machine games
`using Smart Cards in a trial scheme which will run
`for six months.
`
`Whitbread’s are using a system from Cashcard
`Systems, based in Newark, Nottinghamshire,
`England; and Smart Cards from Schlumberger
`Technologies, France, who are Cashcard’s
`development partner and a leading producer of
`Smart Cards, systems and software.
`
`The pre-payment Smart Cards are proving
`popular with customers at the test pubs. At The
`Hendon, in North West London, Manager John
`Hyde said: “The trial is going well. It’s a good
`concept and in just over two months we have
`issued over 1,000 cards.”
`
`All of the pub’s amusement machines are now
`card operated and if customers want to play them
`they have to have a card. The trend now is to use
`the card as a “piggy bank” and to buy drinks with
`it.
`
`Customers who use machines frequently gain
`points which are added to their cards. For every
`100 points they earn a free pint.
`
`Most regulars now have cards, said Mr Hyde.
`Among the benefits are that it saves giving and
`holding change, and the machines do not hold
`cash.
`
`There is no charge for the card and it is easy to
`operate. In the weeks before Christmas some
`customers were putting £2 a day on their cards
`and at Chritsmas Eve or New Year’s Eve they had
`between £80 and £90 to spend.
`
`In another test pub, The Portsbridge, at Cosham,
`Potsmouth, the trial was described as a “huge
`success” by licensee Dave Milner. Many
`customers now deposited enough money on their
`cards to last them through the week, he said.
`Recently he issued over 130 cards to customers in
`one week. The cards saved hassle in supplying
`loose change.
`
`From Whitbread’s point of view there is less cash
`on the premises and, where amusement machines
`
`January 1993
`
`are card operated only, there is no cash stored in
`them and no need for them to be emptied. The
`card, of course, also encourages customer loyalty.
`
`The customer chooses the value he or she wants
`put on the card at a validator unit sited at the point
`of sale where the cards are encoded with the
`credit. The cards are then usable, in the majority
`of cases, for the normal cash transactions across
`the bar and at pinball machines, juke boxes, and
`pool tables etc.
`
`Users simply insert the card in an acceptor unit
`fitted to machines or equipment. The amount of
`credit on the card is shown on an LCD unit. The
`unit then shows the appropriate price, for
`example, of a drink or a game of pool and this
`amount is debited from the card.
`
`As it debits the card, the acceptor can also be
`programmed to write incentive points back onto
`the card, perhaps entitling the customer to a free
`drink after so many points have been
`accumulated.
`
`At present use of the card is restricted to the pub
`where it is issued, but eventually it could operate
`across a chain of leisure outlets.
`Card details:
`
`TypeContact
`FabricatorSchlumberger
`Dimensions85.6 x 54.0 x 0.80mm
`Contact locationFront (either top or centre)
`Chip manufacturerSchlumberger
`Chip reference no.SE416
`Chip typeMemory + logic
`Memory typeEEPROM
`Memory capacity416 bits
`Comms protocolSychronous
`SecurityPIN (16 bits)
`CryptographyDES
`
`Cashcard Systems are currently in discussion with
`seven national pub retailers, four bowling
`operators, two bingo operators, a cinema chain, a
`brewery and a family entertainment centre.
`
`Contact: Mike Bowen, Card Project Manager,
`Whitbread - Tel: England +44 (0)582 424200.
`
`6
`
`© 1993 Smart Card News
`
`6/20
`
`DOJ EX. 1038
`
`

`

`January 1993
`
`Smart Student Card
`
`A Smart Student Card is being used by students at
`the University of Lille in Northern France. The
`use of a card - based portable file enables students
`to carry their own records in a safe way while
`allowing the university authority to access and
`update the files when required.
`
`In addition to storing academic records, the multi-
`application card can also be used to pay for meals
`in the university restaurant, pay for the use of
`photocopiers and control access to libraries,
`laboratories and sporting and other university
`facilities.
`
`Smart Cards offer the advantages of automating
`administration
`filing systems, a standard
`communication device, security to provide
`reliability of student records, payment functions
`to minimise the use of cash on the university
`premises, and a single device for multiple access.
`
`Between 20,000 and 25,000 Philips TB100 multi-
`application Smart Cards have been issued in the
`project.
`
`Card details:
`
`TypeContact
`FabricatorPhilips
`DimensionsISO ID1
`Contact locationBack
`Chip manufacturerMotorola
`Chip type68HC05
`Memory typeEEPROM
`Memory capacity
`Mask ROM6 Kbytes
`EEPROM3 Kbytes
`RAM128 Bytes
`StandardsISO 7816-1, 2, 3
`SecurityPIN
`CryptographyDES
`
`Contact: Janice Ratcliffe, Philips Communication
`Systems - Tel: England +44 (0)223 444888.
`
`Advanced Card Association
`
`Plans are being made to launch an Advanced Card
`Association (ACA) as a professional association
`for the promotion and development of Advanced
`
`Smart Card News
`
`Cards, of every type, and to represent the interests
`of the advanced card industry to government
`bodies, standards organisations and to the various
`market sectors. It will also provide information to
`members, including a pan-European central
`information database.
`
`A list of proposed objectives is available and the
`organisers are particularly interested in hearing
`from companies who would be prepared to act as
`a “key contact” for a particular country.
`
`It is intended that the ACA will be a non-
`profit making organisation. If you or your
`company are interested in discussing your
`involvement in the joining and establishment of
`ACA, then contact: Simon Reed or Chris
`Stanford, c/o Charta Associates Ltd, The Court,
`FREEPOST, PO Box 301, Hemel Hempstead,
`Herts, HP1 1BR, England. Tel: +44 (0) 442
`231844. Fax: +44 (0)442 236604.
`
`Patient Data Card Pilot
`
`Smart Card suppliers will be disappointed to learn
`that the National Health Service in Scotland has
`chosen an optical memory card for its Patient Data
`Card system pilot project to be set up in the
`Grampian area. Some 8,000 cards will be issued
`to patients this year and the pilot project will run
`until 1996.
`
`The £750,000 contract has been awarded to EDS-
`Scicon. The card selected is an optical memory
`card which uses laser technology to read and write
`information on the card. The NHS card will have
`the capacity to hold between 800-1,200 A4 pages
`of information.
`
`Health Care Conference
`
`A major international conference on the use of
`card technology in health care to be held in France
`in September (See Diary on page 14) will feature
`top speakers from many countries.
`
`France and Germany are to use Smart Cards in
`their national health programmes and plan to issue
`cards nation-wide by the mid-1990s, while in the
`United States there is strong interest in reform of
`the health services.
`
`© 1993 Smart Card News
`
`7
`
`7/20
`
`DOJ EX. 1038
`
`

`

`Smart Card News
`
`CASE STUDY
`
`Loreta Bills Over £1m a Month
`
`The Loreta (LOcal RETail Accounting) Smart
`card scheme for small garage businesses appears
`to be one of the most successful applications of
`Smart Card technology.
`
`Last year Loreta was billing over £1 million a
`month but since then it has increased the number
`of terminals installed in garages from 250 to 350
`and issued a further 15,000 cards bringing the
`total number of cards distributed to 35,000. Even
`in an economic recession which has hit small
`businesses hard, the Loreta scheme has increased
`its share of a highly competitive market.
`
`After a pilot test, the scheme went “live” in
`October, 1990. It was devised by PHH Europe,
`based in Swindon, 140 kilometres west of
`London, England, and a subsidiary of the PHH
`Corporation headquartered in Maryland, USA.
`Few people have heard of PHH because it
`provides a range of services to other companies
`and does not deal directly with the public.
`
`To understand the Loreta scheme it is helpful to
`look at another part of the company’s business
`operations. In the UK, it has some 600,000 charge
`cards used regularly in a network of 20,000 filling
`stations and repair workshops. Among these is
`the AllStar Fuel Card (a magnetic stripe card)
`which is claimed to be a market leader with over
`50 per cent of the served market. However, this
`card is normally used for fleets of over 100
`vehicles because of the credit requirements. As a
`result, products like AllStar are only available to
`about one third of all company operated vehicles
`in the UK, whereas the bulk of the market is made
`up of small fleets of up to 10 vehicles. Market
`research also showed that many garages wished to
`offer credit accounts to local companies because it
`produced repeat business.
`
`Market Opportunity
`
`Here was a market opportunity - a substantial
`unserved market of small fleets of company
`operated vehicles, a majority of garages wishing
`to offer credit facilities to the same market but
`unable to do so due to the credit risks involved.
`
`January 1993
`
`As a result of their research, PHH decided that
`Smart Cards provided the means to manage credit
`risk along with the ability to handle a wide range
`of end user requirements cost-effectively.
`
`They selected Schlumberger’s Smart Card
`division in The Netherlands as their main partner
`and they supplied the Smart Cards and terminals
`and developed a large part of the software for a
`small scale pilot.
`
`The concept
`
`The concept devised by PHH was that the retailer
`would “own” the product and use it to promote
`account business at his garage in competition with
`other garages in the area, thus PHH was to accept
`the full credit risk for the retailer.
`
`The products would be branded to the retailer’s
`requirements and they would be provided with a
`marketing package to help the retailer sell the
`product.
`
`Thirdly, PHH would provide a regular cash flow
`to the retailer by paying him weekly, although the
`card users would be invoiced less frequently.
`
`Then the card had to be able to support any
`pricing structure - discounts and surcharges -
`required by the retailer on the range of products
`offered for sale via the card.
`
`Attraction for Garages
`
`An attraction for garages is that they can have
`their customer cards specially branded. Some
`companies, typically multi-
`national oil corporations such as Esso, BP and Elf,
`choose to have a unique design. However,
`smaller garage chains may adopt a variation of the
`standard Loreta card, the retailer making his
`choice depending upon his particular marketing
`strategy.
`
`Both types of card used in the Loreta system are
`Schlumberger M64 microprocessor cards, using
`the A2 mask. The retailer card is located inside
`the PIN pad and includes files containing details
`of products such as fuel, shop goods and cash, and
`sub-products, for example, diesel or unleaded
`petrol as types of fuel.
`
`8
`
`© 1993 Smart Card News
`
`8/20
`
`DOJ EX. 1038
`
`

`

`January 1993
`
`Smart Card News
`
`The customer card, which has the capacity for
`over 800 transactions, includes the transaction
`directory where records of purchases against the
`purse (or credit line) and mileage for each
`permitted Vehicle Registration Number (VRN)
`are stored; and the parameter directory where
`attributes relating to the purse (such as value),
`VRN’s and terminals are stored. This file can be
`modified by card parameter change records
`without the card being recalled from the user.
`
`PHH have installed an IBM RS/6000 processor at
`their headquarters at Swindon (this replaces PCs
`used in the pilot test) to handle data transfer,
`normally during the night. It sends records to the
`point of sale terminals and collects the customer
`card sales transactions and confirmation that card
`parameter changes have been applied to the cards.
`If required, blacklisted card numbers and
`marketing messages can be downloaded to the
`terminals.
`
`When a user presents his customer card at a
`garage, the transaction time is about 30-40
`seconds - about the same time required to process
`a magnetic stripe fuel card transaction.
`
`Managing the risk
`
`The Smart Card is seen as a key element in
`minimising the company’s exposure to bad debt.
`If an account becomes bad, the company’s
`exposure can be controlled either by reducing the
`purse values, or by blacklisting the card and
`blocking it the next time it is inserted into a
`terminal.
`
`When spending limits have been established in
`line with expected card usage, the agreed
`spending power is distributed across the cards
`making allowance for the number of vehicles
`involved and the type of products to be purchased.
`For example, a card may be used only for frequent
`purchases of fuel, or perhaps infrequent but high-
`value servicing may be required. Depending on
`the pattern as many as 48 electronic purses can be
`established in the card, ie up to one purse per
`separate product that Loreta allows.
`
`each customer card is automatically revalued at
`the point of sale, back to the agreed purse limits,
`unless the customer is on the black list.
`
`Key Aspect
`
`Another key aspect of the system is end user
`flexibility. A garage manager, for example, does
`not want his account customers to use their cards
`at other garages in the same chain in the area, but
`he would want the card to be used in his
`company’s chain if the vehicle goes out of the
`area. PHH have developed a technique which
`allows this flexibility of control and also pricing
`flexibility, for example, if a garage wants to offer
`big spending customers a discount on car wash
`only, or on the other hand add one pence per litre
`to pump prices for others, this can be achieved
`utilising the relational file system operating on the
`IBM RS/6000.
`
`Conclusion
`
`The success of the Loreta scheme lies firstly in
`recognising a new business opportunity and then
`conducting extensive market research
`into
`customer requirements and managing the credit
`risk. To have used magnetic stripe technology
`would have required on-line authorisation of each
`transaction and profit margins would not support
`the high costs involved. PHH, therefore, decided
`that they could only offer this service profitably
`by using Smart Card technology.
`
`Secondly, after pilot testing, they invested in a
`central computer system with over 100 relational
`databases and about 200 programs. PHH believe
`that it is only by combining the powerful
`applications of the Smart Card with complex
`transaction processing systems that the real value
`of the Smart Card can be exploited.
`
`Not only has the Loreta Smart Card system helped
`PHH to break into a new market, it can also boast
`that
`its clients
`include film stars, sports
`personalities and members of the Royal Family.
`
`During transactions, the appropriate purse is
`decremented by the value of the item. As
`customer invoices are produced twice a month,
`
`Contact: Simon Reed, Charta Associates Ltd -
`Tel: England +44 (0)442 231844. Fax: +44
`(0)442 236604.
`
`© 1993 Smart Card News
`
`9
`
`9/20
`
`DOJ EX. 1038
`
`

`

`Smart Card News
`
`Carte VITALE - The French
`Social Security Card
`
`Experiments with the Carte VITALE, the French
`Social Security Card, are being extended this year
`to three further sites, bringing the total to seven.
`In addition the card readers are being replaced
`with units with a greater memory capacity, and
`there will be a new version of the Bull CP8 card.
`
`The objectives of the experiments are to
`streamline the administration and reimbursement
`procedures of the French Social Security services
`by:
`
`* replacing claim forms
`
`* eliminating the use of medication labels for
`reimbursement
`
`* cut reimbursement time from weeks to under 48
`hours
`
`January 1993
`
`* offer cardholders other services.
`
`To give some indication of the size of this project,
`the Social Security system in France covers three
`main insurance schemes with 80,000 employees,
`28 million members and about another 28 million
`dependants.
`
`Each year over 800 million medical claim forms
`are filled out by medical practitioners and then by
`claimants, and some four billion labels are
`attached to them before they are processed.
`
`The experiment began with project SESAM -
`pilot schemes each involving between 4,000 and
`5,000 social security members and pharmacists in
`the towns of Boulogne-sur-
`Mer, Bayonne, Charleville and Rennes.
`
`This was followed by a full VITALE card project
`in Boulogne-sur-Mer, and more than 121,000
`cartes VITALE have been issued.
`
`Participating in the scheme, each with their own
`card, are CNAMTS, the French National Health
`Insurance Scheme for Salaried Workers; MSA,
`the Farmer’s Mutual Insurance; and CANAM,
`Health Insurance for Non-Salaried Workers.
`They were joined at the end of last year by the
`railway employees and civil servants.
`
`The practitioner’s card (CPS) is issued to all
`medical practitioners
`- doctors, dentists,
`pharmacists, nurses, therapists, and laboratories.
`Some 666 practitioner’s card readers (MPSs) have
`been installed for use by CPS cardholders in their
`surgeries, dispensaries and
`laboratories
`to
`authorise the type and cost of treatment.
`
`terminals at which
`There are 117 public
`cardholders can read the information on their
`cards after treatment and have their cards updated
`if their entitlements change.
`
`It is also possible for health professionals to read
`the history of settlements made.
`
`How the system works
`
`At the doctor’s
`
`* make substantial savings in Social Security
`costs
`
`When medication is being prescribed, the CPS
`card held by the doctor and the VITALE Card
`
`10
`
`© 1993 Smart Card News
`
`10/20
`
`DOJ EX. 1038
`
`

`

`January 1993
`
`Smart Card News
`
`Present card details:
`TypeContact
`FabricatorBull CP8
`DimensionsISO ID1 size
`Contact locationFront
`Chip typeMicroprocessor
`Chip referenceM4
`MemoryEPROM
`Memory capacity1 Kbyte
`StandardsISO 7816-3
`Comms protocolT=0
`SecurityPIN (4 digits)
`CryptographyTelepass algorithm
`
`Future card
`
`The future VITALE card to be supplied will be an
`8 Kbyte EPROM card, SCOT 20 using the DES
`algorithm.
`
`Contact: Yves Girardot, Bull CP8 - Tel: France
`+33 1 39 02 44 63. Fax: +33 1 39 02 44 02.
`
`held by the patient, are inserted simultaneously
`into the MPS. The treatment and cost are
`authenticated
`together with
`the patient’s
`entitlements and then the doctor issues the
`prescription.
`
`The treatment records stored in the MPS are
`polled each night
`to
`the Social Security
`processing centre so that the patient or the doctor,
`depending on who has borne the cost, is
`reimbursed with minimum delay.
`
`At the pharmacist’s
`
`the
`to
`takes his prescription
`The patient
`pharmacist. His medication is bar coded so that
`the pharmacist can record
`the
`transaction
`immediately on his own MPS. The cost of the
`medicine
`is
`then
`authenticated by
`the
`simultaneous introduction of the pharmacists CPS
`card and the patient’s VITALE card. When the
`data has been collected and processed, the
`pharmacist or patient is reimbursed.
`
`Developments
`
`This year sees the replacement of all MPSs with
`larger memory units and an extension of the
`experiment to three other sites which will study a
`new version of the Carte VITALE with the
`possibility of exchanging information with
`biologists and radiologists. The seven sites will
`evaluate their experiments at the end of 1994.
`
`© 1993 Smart Card News
`
`11
`
`11/20
`
`DOJ EX. 1038
`
`

`

`Smart Card News
`
`Cylink Advanced Card
`
`Cylink Corporation, a leading international
`supplier of commercial data encryption devices to
`financial
`institutions
`and multinational
`corporations has developed an Advanced Smart
`Card designed specifically to the meet the
`demands of the high-
`security, public key cryptosystem marketplace.
`Based in Sunnyvale, California, the company says