apc2013 reimagining transaction innovation design

Reimagining Transaction Innovation

Vikrant Sabharwal, Regional Business Development

Manager, South East Asia

TSYS International

Email: [email protected]

© 2013 Total System Services, Inc.® All rights reserved worldwide.

TSYS Corporate Overview 1 2 Reimagining Transaction Innovation 2

What We Will Cover


Transaction Processing 4

5

Upcoming Trend Examples 3

2

TSYS Corporate Overview


Looking Back. Moving Forward.


TSYS celebrates 30 years in 2013.

Our story begins with people.

4

Who We Are


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

© 2013 Total System Services, Inc.® All rights reserved worldwide. 7

Updated: June 5, 2013`

http://www.veracitypayments.com/index.php

Asia Pacific Regional Presence


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

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Reimagining Transaction Innovation


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


Managing Money


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


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.

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From Barter to Blackberry ....


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


Kiosks

14

To Biometrics ...


Biometrics

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Upcoming Trends in Transaction Innovation 1


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

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Upcoming Trends in Transaction Innovation 2


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


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


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


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


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


Transaction Processing


Traditional Transaction Processing


Payment

Schemes

Acquirer

Retailer

Issuers

3D Secure Fraud Monitoring

Risk Assessment

Domestic

Schemes

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The New World of Transaction Processing


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?


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

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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


Right Sourcing


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


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