apc2013 reimagining transaction innovation design
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Reimagining Transaction Innovation
Vikrant Sabharwal, Regional Business Development
Manager, South East Asia
TSYS International
Email: vsabharwal@tsys.com
© 2013 Total System Services, Inc.® All rights reserved worldwide.
TSYS Corporate Overview 1 2 Reimagining Transaction Innovation 2
What We Will Cover
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Transaction Processing 4
5
Upcoming Trend Examples 3
2
TSYS Corporate Overview
© 2013 Total System Services, Inc.® All rights reserved worldwide.
Looking Back. Moving Forward.
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TSYS celebrates 30 years in 2013.
Our story begins with people.
4
Who We Are
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the people of TSYS improve lives and
businesses across the world with
every payment transaction.
41 million times each day
5
Where We Are
6 © 2013 Total System Services, Inc.® All rights reserved worldwide.
~ 400 Clients Around
the World
>80 Countries Where
TSYS Does Business
>15 Billion Enterprise-wide
Transactions
> 9,300 Team Members
Sample Global Clients
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Updated: June 5, 2013`
Asia Pacific Regional Presence
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SERVICES
Serving clients in 13 Asian
countries
Serves 3 of the top 7 Indian
Banks including largest
issuer & acquirer
Clients include the top banks
in Malaysia, Vietnam and Sri
Lanka
JOINT VENTURES
>CUP Data (China UnionPay)
TSYS owns a 44.5 percent equity
stake in CUP Data, a subsidiary
of China UnionPay
>GP Network Corporation
TSYS acquired a majority share
in GP Net in 2000, a joint
venture formed by seven leading
Japanese credit card companies
and Visa International
TSYS OFFICES
Opened office in Kuala Lumpur
in 2000
Opened offices in New Delhi,
2006 and Mumbai, 2007
Acquired offices in Pune, 2009
Offices in Japan and China
8
Reimagining Transaction Innovation
© 2013 Total System Services, Inc.® All rights reserved worldwide.
History of Payments and Payments Processing
Retailers settle directly with their consumers via Bartering
Cash clearing started by Banks issuing notes
Cash became cheques cleared by clearing houses
Cards cleared by associations through to Bank
Banks outsource to processors
Programme managers run multiple Bank programmes
Large retailers directly clear through associations
Retailers reach grows enabling them to directly settle with their consumers
© 2013 Total System Services, Inc.® All rights reserved worldwide. 10
Managing Money
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BANK LED
• Global links through ‘clubs’
• Outsourcing
• In-house processing
PROGRAMME
MANAGERS
• Using multiple bank
partners to deliver larger
scale solutions
• Managing in-between the
Bank and Client
RETAILER-LED
• Using new ‘currencies’ to
directly reach into
consumer wallets on an
international scale
11
•Watches
•Fobs
•Cell Phones
• Mag stripe
• Chip
• Contactless
• Internet – Direct
– Token
•MOTO
•M-Commerce
•Money Transfer
Devices Virtual World Card In Wallet
Transaction Sourcing
© 2013 Total System Services, Inc.® All rights reserved worldwide.
From Cash in Wallet to......
The need to support the increasing varied sources of transactions and
processing models opens options for innovation in the evolution of not
only transactions themselves but in card processing too.
12
From Barter to Blackberry ....
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Commodity money evolved out of bartering, and is based around the idea that the commodity itself has a specific value to it. The earliest examples of commodity money include dyes, strung beads, and shell jewelry. In fact, the term Shekel, which is still used today, originally referred to a specific mass of barley and dates in Mesopotamia right around 3000 BC.
The first gold and silver coins were introduced by the Lydians somewhere around 650 BC.
Banks would issue a receipt, or note, to the depositor that was redeemable for whatever gold or silver they had stored. Since these notes were basically the same as gold, they eventually began to be traded. The first widely accepted paper money appeared in China right around 960 AD
Bank Notes
Bartering is thought to date back over 100,000 years, and was seen across practically every culture
Diners Club was the first general purpose charge card, but it required that people pay the entire balance at the end of each statement period. The idea of credit cards as revolving debt didn't really start to take off until the launch of the cards that would eventually become Visa and MasterCard in the mid to late ‘60s.
Over the past couple of decades, new technologies have changed the way people purchase things. Payments can be scheduled and made online. These payments not only involve accepting credit cards, but enable the use of PayPal, Google Checkout and a slew of other payment portals
Advancements now allow you to manage bank accounts and transactions directly from your cell phone. Different applications allow you to not only bank from your mobile phone, but to accept credit cards on your Blackberry.
Mobile
The increasing use of bank notes and paper money as currency allowed banks to take up the practice of fractional reserve banking and begin loaning out money while trusting that not everyone would want all their money back at the exact same time.
Commodity Money Coinage Bartering
E-Commerce Credit Credit Cards
13
To Branchless Banking
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Kiosks
14
To Biometrics ...
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Biometrics
15
Upcoming Trends in Transaction Innovation 1
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P2P P2B Closed Loops
• Instant person-to-person payments possible anywhere
• Money transfers to mobile devices by SMS, email and ATM
• 'Tap And Go' Is So 2012
• Contactless payments by phone, by tablet, by glasses, by watch
• mPOS payments on the go
• Merchants dealing directly with customers' banks - not via "merchant acquirers" and other middlemen
• Payments vanishing into merchant apps - specialist linking networks no longer required
16
Upcoming Trends in Transaction Innovation 2
© 2013 Total System Services, Inc.® All rights reserved worldwide.
Authentication Beyond NFC Bitcoin$
• Biometrics are go
• Finger print and face recognition already in trials
• Are passwords and PINs dead?
• iBeacon broadcast chips, beaming out data to your smartphone
• Indoor GPS consumer detection
• The power to transform retail at the point of sale way beyond the capabilities of NFC
• Digital P2P currencies
• Moving from in-game to the real world with emerging exchange rates
• Bitcoins are just the first. Many digital currencies will emerge
17
Upcoming Trend Examples:
• Remitly
• Zapp
• CloudZync
• O2O: Alipay Sound Wave
© 2013 Total System Services, Inc.® All rights reserved worldwide.
P2P: Remitly
• The amount of money migrants send
home to their families reached
$406 billion in 2012
• Remitly sends money from a
computer, smartphone or iPad to any
major bank or 10,000 pickup locations
in the Philippines
• Consumers have a choice to pay
under $5 for an immediate transaction
or wait three days free of charge – for
any amount
• Email or text message alerts
recipients of the pickup details
© 2013 Total System Services, Inc.® All rights reserved worldwide. 19
P2B: Zapp
• Instant mobile payment initiative
• Zapp uses direct bank transfers
– cheaper for retailers than credit card payments
– No interchange fees
– No bank card transaction fees
• Links bank accounts to mobile phone
numbers to make real-time payments
• At participating retailers, users click the
pay by Zapp button will be taken to their
mobile banking app
• On a desktop or in-store, the POS or
browser generates a six digit Zapp code
for users to enters into their mobile app
to complete the transaction
© 2013 Total System Services, Inc.® All rights reserved worldwide. 20
Closed Loops: CloudZync
• A mobile wallet app enabling customers
to pay for items by phone
• With integrated loyalty cards and
special offers
• Users load the app with funds from their
bank account, then open the wallet with a
PIN and select the "make payments"
option at participating retailers
• The app automatically generates a
unique QR code the customer then
presents for scanning
• The merchant verifies the customer's
identity by approving a photo ID
• Payment direct from bank to store
© 2013 Total System Services, Inc.® All rights reserved worldwide. 21
O2O: Alipay Sound Wave
• Experimental Online-to-Offline (O2O)
payments technology used at two
subway stations in Beijing
• Uses white noise generated by
smartphone to beam payment
requests to vending kiosks
• Users open the Alipay Wallet app
while holding their phone close to a
sensor on the kiosk, and wait for it to
make a noise
• Each sound transmission is unique to
the transaction and is only valid for
five minutes because of security
• Each transaction takes less than a
minute
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Transaction Processing
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Traditional Transaction Processing
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Payment
Schemes
Acquirer
Retailer
Issuers
3D Secure Fraud Monitoring
Risk Assessment
Domestic
Schemes
24
The New World of Transaction Processing
© 2013 Total System Services, Inc.® All rights reserved worldwide.
Retailers
Issuers
Payment
Schemes
Domestic
Schemes
Virtual
Schemes
Private
Schemes
Person to Person
QR Codes
In App In Game
3D Secure
Fraud Monitoring
Risk Assessment
25
So Where Next?
• The way we transact is changing
– The accounting & risk management principles remain
• The way we receive those transactions is changing
– Reconciliation & Settlement challenges have to be met
• Disintermediation is inevitable in some cases
and has started already
• Major Processors accommodate these changes
in line with market demand
– But what can in-sourced institutions do?
© 2013 Total System Services, Inc.® All rights reserved worldwide.
Taking account of the challenges created on both the way
we transact and how we process is paramount to
successfully navigating the sea of change
26
Staying Ahead of the pack
• Focus on flexible solution architectures
– Account Based solutions
– Detailed data housing – you can never
have enough
– Multi-Currency
– XML / Flexible interfacing :
Look for re-usable tools & Keep the
links to a minimum
– Software Toolkits for 3rd Party Interfaces
• Don’t lose sight of the cost-benefit matrix
– Manage the risks with the new transaction sources
– Consider Right-Sourcing Solutions to save costs
© 2013 Total System Services, Inc.® All rights reserved worldwide. 27
Right Sourcing
© 2013 Total System Services, Inc.® All rights reserved worldwide.
3D-Secure
Authentication
Services
3D-Secure
Acquiring
Personalisation
& Print Services
Portfolio
Management
Risk
Management
Chargeback
Management
Right sourcing is an option for those looking to get scale
benefits available from Processors for in-house solutions
Reduced
Infrastructure
Costs
Specialist
Head Count
Reduction
Increase
Revenues
Reduce
Attrition Reduce
Risks
Improve
Margins
28
Thank You
© 2013 Total System Services, Inc.® All rights reserved worldwide.
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