EMV Migration in Canada: Opportunities and Challenges 2007

Table of Contents

EXECUTIVE SUMMARY

INTRODUCTION

• Objectives of the Study
• Research Methodology
• A Note on Forecasts
• Currency
• Acknowledgements

THE EVOLUTION OF PAYMENTS IN CANADA

• Introduction
• The Payments Landscape in Canada
  • Cash Payments
  • Debit Card Payments
  • Credit Card Payments
  • Cheques
  • Online Payments
  • Canadian Payments in Perspective

THE HISTORY OF CHIP CARDS IN PAYMENT SYSTEMS IN CANADA

• Stored-value Cards
  • The Mondex Guelph Pilot
  • The Exact Pilot in Kingston
  • The VisaCash Barrie Pilot
  • The Mondex Coup
  • Mid-Course Correction
  • The Mondex Sherbrooke Pilot
  • Dexit
• IMVCCP
• CCMP

EMV MIGRATION

• EMV Overview
  • CCD and CPA50
  • Processes in a Typical EMV Transaction
  • SDA, DDA and CDA
  • Cardholder Verification

THE CASE FOR EMV MIGRATION IN CANADA

• Fraud as a Key Driver
  • Credit Card Fraud
  • Debit Card Fraud
• Securing and Modernizing the Payments System
• Keeping up with International Developments
• Multi-application Cards and Future Functionality
• EMV Migration Challenges
  • Issuers
  • Acquirers
  • Merchants
  • Merchants Views on EMV Migration
• Terminal Infrastructure
  • POS
  • ABMs
  • Automatic Fuel Dispensers
• The Impact on Consumers86

IMPLEMENTING EMV IN CANADA

• Overview
• Timelines for EMV Migration
  • The Kitchener-Waterloo Trial
• Assessing the Investment Required
  • Migration Window
• Wireless Payments
• Migration Forecast
• The Supply Structure
  • The Payment Systems Value Chain

List of Figures

• Canadian Retail Sales by Sector (2005)
• Average Annual Growth in Retail Sales by Sector (2001 - 2005)
• Canadian Banknotes and Coin in Circulation
• Number of ABMs in Canada by Type
• Volume and Value of Cash Withdrawals at ABMs in Canada
• Cash-based Retail Payment Transaction Volumes in Canada
• Annual Volume and Value of Interac Direct payment Transactions
• Debit Card Payment Transactions by Sector
• Share of Number of Transactions at Retail Outlets (1996 - 2005)
• Share of Transaction Values at Retail Outlets (1996 - 2005)
• Number of Visa and MasterCard Credit Cards Issued in Canada22
• Net Retail Dollar Volume and Transaction Volumes (Visa & MasterCard)
• Relative Shares of Visa and MasterCard in Canada
• Number of Merchant Outlets Accepting Visa and MasterCard
• Volume and Value of Cheques Cleared through the ACSS in Canada
• Share of Personal Consumption Expenditure (PCE) by Payment Type in Canada
• Payment Transaction on PCE by Payment Instrument
• Consumer Preferences for Payment Method
• EMV Transaction Flow
• Credit Card Fraud in Canada
• Credit Card as a Percentage of Retail and Cash Advance Dollar Volumes
• Breakdown of Credit Card Fraud by Type (2005)
• Credit and Debit Card Fraud in Canada
• Forecast Number of Credit Cards in Circulation in Canada
• Forecast of Credit Cards Issued Annually in Canada by Type
• Forecast Number of Debit Cards in Circulation in Canada
• Forecast of Debit Cards Issued Annually in Canada by Type
• Forecast of EMV Cards Issued Annually in Canada
• Forecast of Installed Base of POS Terminal in Canada
• ABM EMV Migration Forecast in Canada
• Interlinked Value Chains: Payments

List of Tables

• Number of Interviews by Sector
• Debit Card payments by Retail and Business Sector
• Primary Issuers of Visa and MasterCard in Canada
• Key Features of the Mondex Guelph Pilot
• Key Features of the Exact Kingston Pilot
• Key Features of the VisaCash Barrie Pilot
• Key Features of the Mondex Sherbrooke Pilot
• EMV 4.1 Structure (EMV 2000)
• EMV Compliance Assessment in Europe (mid-2006)
• Summary of Merchants' Perspectives on EMV Migration
• Key Features of Payment Organization EMV Migration Policies in Canada
• Interac' s EMV Migration Targets
• Visa' s Liability Shift
• Attributes that make Kitchener-Waterloo an Attractive Trial Location
• Number of Retail and Service Establishments by Sector
• Canadian EMV Investment Requirements