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Card TechnologyNovember 6, 2017 / Jennifer Baur, Conduent & Jamie Topolski, Fiserv

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Recent USAToday Headline:Wisconsin company to install rice-sized microchips in employees1

1 – Bowerman, Mary. “Wisconsin company to install rice-sized microchips in employees” USAToday.com, https://www.usatoday.com/story/tech/nation-now/2017/07/24/wisconsin-company-install-rice-sized-microchips-employees/503867001/ (accessed July 28, 2017).

“Welcome to the future?

A Wisconsin technology company is offering its employees microchip implants that can be used to scan into the building and purchase food at work. Whether or not to get a chip is up to the employee to decide.”

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Agenda

• Where did we start?– Brief History of Food Stamps/EBT

• Where are we now?– EMV Technology – Overview, impact to EBT– Instant Issuance Options & Uses

• What’s the future hold?– Online Shopping Pilot Update– Mobile Account Access– Mobile Wallets/Virtual Cards – Biometrics

• Wrap Up

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Where did we start?

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EBT Highlights

1984 -88 1990 1993 2000 2008 2016

EBT Pilots1984: 1st pilot started inReading, PA

1988: Pilots begin –Albuquerque, NM; RamseyCounty, MN; & Park CircleDistrict of Baltimore, MD

1st Statewide ProgramMD expands program statewide

SNAP2008 Farm Bill: the FoodStamp program is renamedto Supplemental NutritionAssistance Program (SNAP)

Greater emphasis on nutritionbegins

EBT EstablishedLeland Domestic Hunger Relief Actestablishes EBT as alternative topaper food stamps

Amends Food Stamp Act of 1977

FNS develops EBT regulations

Interoperability/ PortabilityCongress passes Interoperability andPortability Act

Online Purchasing Pilot

FNS issues RFV to participatein an Online Purchasing Pilot.

Work is underway by retailersand processors, with pilot tostart in 2018.

1994 1996EBT Mandate

Personal Responsibility and WorkOpportunity Reconciliation Act ofAugust 22, 1996

States must implement before October1, 2002 (41 implemented in 2001; lastconversion in 2003)

1st Multi-State CoalitionStarted with SAS (Southern Allianceof States) - 8 states, procured byDept. of Treasury

1995: 3 additional (NAS, WSEA,ND/SD)

2020WIC Mandate

October 1, 2020 – all WICstate agencies required toimplement EBT

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Where are we now?

EMV Overview

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What is EMV™? How does it reduce fraud?

• Standard for secure payment transactions

• Developed by Europay, MasterCard and Visa in 1995

• Every payment network must develop or license a compatible payment application

• Provides enhanced protection against card fraud

• EMV chips protect keys that are unique for each card – can’t be copied or spoofed

EMV is a trademark owned by EMVCo LLC

• Every chip transaction includes a unique cryptogram

• The issuer can validate that the card and transaction are genuine• Stolen EMV card data can’t be used to create fake cards

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Who uses EMV?

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EMV Benefits: Authentication and Self-sufficiency

Authentication Self-sufficiencyWhat it means

The issuer can determine if the card and transaction are genuine for card-presenttransactions

The card can function offline, without a network connection (approve or decline transactions, validate the PIN)

Why it is needed

Prevent fraud/theft Unreliable and/or expensive telecom networks

How it works 1. Secret keys (IMK, MDK) are securely loaded and stored in the chip card during personalization 2. These keys generate a unique cryptogram for every transaction3. The issuer can validate the cryptogram to determine if the card and transaction are genuine

1. Additional keys (IPK), authorization rules, and (optionally) the PIN are securely loaded and stored in the chip card during personalization2. The POS terminal can validate the keys to confirm that the card is genuine 3. The card can validate if the PIN entered is correct4. The card analyzes the transaction and approves or declines based on the authorization rules

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EMV Impact on Payments Infrastructure

Terminal Acquirer Network Processor Card

• Purchase and install new terminals

• Install new software• Load public keys and

AIDs• Test and certify

• Support EMV data in financial messages

• Maintain debit routing choice

• Test and certify

• Support EMV data in financial messages

• Develop testing and certification

• Develop payment applications

• Support EMV data in financial messages

• Generate EMV keys• Validate EMV

cryptograms• Test and certify

• Mill and embed chips in cards

• Modify card design• Enhance data

preparation• Modify card

personalization• Test and certify

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EMV Considerations for the EBT Community

• Development of common Application Identifier (AID)/application for EBT– Participation by all ecosystem parties required

• Increased card costs to switch to EMV• Upgrade of POS terminals to support EMV transactions

– New equipment with chip readers– Loading of AID for EBT– Certification by FNS

• Does EMV address the fraud experienced by EBT card programs

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Instant Issue

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Options to Meet Your Needs

Instant Issue Equipment

Centrally issued and personalized cards

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Temporary cards2

1Instant Issue Helps Increase Cardholder Satisfaction & Card Use

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What’s Driving the Interest?

Enhance the cardholder experience

Instant replacement of compromised cards

Instant issuance of EMV chip cards

Competitive pressures

Potential for increased revenue

• Instant access to benefits/funds

• No activation challenges

• Response to natural disasters

• Unreliable, unknown, or changing mailing address

• Instant replacement for lost or compromised cards

• Fraud reduction

EMV™ is a trademark owned by EMVCo LLC.

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Instant Issue: Non-Personalized Cards

• No investment in equipment and software• Instant access to benefits – clients don’t have to wait to

receive in the mail• Order in bulk with or without a PIN• Same functionality as a personalized, mailed card • Can issue as temporary and mail a permanent card later,

if desired

NON-PERSONALIZED CARD ISSUED

Economical solution to instantly issue cards

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How it Works

Vendor encodes and personalizes cards with a generic identifier i.e. “Valued Cardholder,” and ships in bulk to state offices

Cards stored in secure vault in inactive state

Agency personnel pull a card from the vault, activate using the processing platform, and hand card to client recipient

(Optional) Permanent card with cardholder’s name is shipped directly to customer

Temporary card no longer valid once permanent card activated

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Instant Issue Advantage: Equipment

Personalized cards issued in agency office

• In-office desktop equipment used to apply cardholder information at issuance• Capable of supporting both magnetic stripe and EMV chip card issuance• Option of issuing embossed (raised print)

or unembossed (flat print) cards

• Installation, training, maintenance

• Consumables

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How it Works

Core application running on agency processor’s main server

Workstation access to create the card

Equipment to produce the card and enable PIN selection

Uses custom keys for programming

Connectivity to the core processing system and/or EFT card management system

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Module Equipment: Printers

Maxima 861 Evolis Primacy Zebra XP Series 3 Fargo DTCii Fargo HDPii Plus

Embosser Direct-to-Card Direct-to-Card Direct-to-Card Retransfer

Embossed Print Flat Print Flat Print Flat Print Flat Print

Cannot print images Good for printing gallery or custom images and can start with white stock

Print on both sides of cardPrints edge to edge

Good for printing gallery or custom images and can start with white stock

Print on both sides of card

Prints edge to edge

Good for printing gallery or custom images and can start with white stock

Print on both sides of card

Prints edge to edge

Best for printing gallery or custom images and can start with white stock

Print on both sides of card

Prints over the edge

Ribbon: Black, Silver, Full Color Ribbon: Black, White, Full Color Ribbon: Black, Silver, Full Color Ribbon: Black, Full Color

EMV Encoder included EMV Encoder included EMV Encoder included EMV Encoder included EMV Encoder included

29.3”H x 19.1”D x 11.4”W 9.72”H x 8.07”D x 15”W 9.3” H x 14.5” D X 7.9” W 10.05”H x 10.27” D x 22.94” W 11.5”H x 28.6”D x 9.25”W Dual Hopper (as shown in image)

11.5”H x 24.6”D x 9.25”W Single Hopper

Single hopper Single hopper Single hopper with an exception feed Dual-hopper with exception feed Single or Dual hopper with exception feed

119 lbs. 8.9 lbs. 11.6 lbs. 11 lbs. 28 lbs.

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Card Options

White Plastic

• Card design is printed at time of personalization

• Uses consumables for each card

• Can include a photo on the card

• Same card can be used for multiple agencies’ programs

Combination

• Custom litho• Photo ID is printed at

time of personalization

Custom Litho

• Minimum card order sizes• Multiple card designs /

programs• Leverage same card

stock for instant and central issue cards

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Both Instant Issuance options offer recipients immediate access to benefits/funds, but each have unique considerations when implementing

Instant Issuance Considerations

Type of Issuance Benefits Drawbacks Comments

Bulk, Non-personalized • No set-up/investment costs• Ability to bulk order encoded cards• Simplified process to issue cards

• Cards are non-personalized or equipment is needed to add name in issuing office

• Multiple programs cannot share card stock

• Order timelines need to allow time for encoding at card vendor

• Cannot support photo cards easily

Preprinted cards sent to agency offices, with account number printed & encoded. Agencies can choose to send out a personalized card to replace instant issued-card.

On-site Instant Issuance • Variety of card/equipment options• Ability to personalize cards onsite• Ability to support multiple

agencies• Ability to print photo cards

• Investment in hardware & ongoing consumables for issuing offices

• Equipment training for personnel• Ongoing maintenance of equipment

Card type options: white/printed onsite, custom preprinted, combination of the 2

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Key considerations when contemplating photo cards for your SNAP or WIC card:

• Rationale for including photos on cards

• Training for all constituencies

• Logistics/costs associated with producing photo cards (in-agency or at card vendor)

• FNS guidelines for photo cards

• State policy/ regulations

Photo Cards

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What’s the future hold?

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Background:

• Mandated by the 2014 Farm Bill to test feasibility and implications of acceptance of SNAP benefits through online transactions.

• Online transactions required to be secure, easy to use, private, and provide similar support as found in retail stores

• Pilot to include at least 5 online retailers in at least 3 states

• September 2016: FNS issues RFV for a 2 year pilot

Online Shopping PilotToday:

• 10 retailers selected to participate in phase 1

• 7 states anticipated to participate based on the retailers selected

• Secure PIN entry through Acculynk’sPaySecureTM service

• Development work underway by the processors and retailers

• Planned 2018 launch

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Mobile Wallets/ Virtual Cards

• Securely store card in phone

• Similar considerations to EMV & Online Shopping

• Reduces clients’ lost card risks

What’s Next?

Biometrics

• Use of retina scan or fingerprint

• Implications for authorized users

• Infrastructure impacts across ecosystem

Mobile Account Access

• Increase in smart phone usage in EBT demographic

• Provide self-service how clients can access

• How to optimize to provide maximum benefit to clients

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Wrap Up

Questions & Answers

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Contact Information

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Jennifer Baur• Jennifer.Baur@Conduent.com

• (302) 518-3374

Jamie Topolski• Jamie.Topolski@Fiserv.com

• (651) 846-3616