[email protected] President, e-Business DevelopmentDubai
United Nations Conference on Trade & DevelopmentConference on Electronic Commerce Strategies for Development TunisJune 20th 2003
E-Payments – New Opportunities
Electronic Commerce – % of Total TransactionsEC GDV Activity Continues to Grow
Source: MasterCard Data Warehouse
1.6
2
2.5
1 2.9
3
3.1
3
3.1
5 3.5
6
3.3
2 3.8
8
3.9
3.9
8
00.5
1
1.52
2.5
33.5
4
EC% of Total Volume
Agenda•E-Commerce, The Challenges•E-Commerce, The Solution
– PC Authentication Program
– Chip Authentication Program
– MasterCard 3-D Secure Implementation
•MasterCard Internet Gateway Service (MIGS)
E-Commerce Market Challenges
•Fear of fraud remains barrier to converting online browsers to online shoppers
•Consumer Internet purchases generally restricted to domestic marketplaces
Consumers
Merchants and Acquirers
E-Commerce Market Challenges
• No guarantee of payment for merchant
– Online chargebacks growing – Bears all risk for non-signature
based transactions– Online fraud losses mounting
• Lack of consistent mechanism toauthenticate the buyer to the seller
– Privacy laws restrict use of authentication tools
– High accountholder decline rate – limits activity, especially for cross-border transactions
Findings •Reason Code 37 represents:
– 58% for all chargebacks
– 70% of EC chargebacks
•Decline rates are:– 5% for all transactions
– 16% for EC transactions (same as MO/TO)
Note: Based on MasterCard records.
What is it?MasterCard SecureCode is MasterCard’s consumer and merchant facing program name/identifier for our guaranteed payment solutions
MasterCard SecureCode offers issuers flexibility with choice of authentication technology including both browser-based and applet-based solutions.
MasterCard SecureCode accommodates MasterCard credit and debit including Maestro
Chip Authentication Program
PC Authenticatio
n Program
MasterCard 3-D Secure
Implementation
EMV SPA SPA
Hidden Fields -and- Merchant Plug-In
UCAF DataTransport
MerchantRequirement
IssuerPlatform
Algorithm
Solution Structure
Issuer Choice: PC Authentication Program•PC Authentication Program -- A download
implementation of MasterCard's Secure Payment Application, based on the detailed specifications released 6/ 2001, and has been amended 8/2002 which fully interoperates with the UCAF hidden fields supported by participating merchants.
– This specification has been licensed to more than 84 technology vendors and involves the use of a small downloaded applet by the cardholder that works on his or her PC.
PC Authentication Program
Merchant
AcquirerUCAF passed to Issuer in authorization transaction. Issuer matches to original
and returns positive authorisation
UCAFwith AAV
Merchant Website
Cardholder sees….
Cardholder browses Merchant website
HiddenFields
UCAF
IssuerSPA
Server
Download detects Hidden Fields on Checkout Page and contacts Issuer SPA
Server
Download
PaymentDetails
Download uses hidden fields on merchant website to populate UCAF on merchant
website
AAV
Cardholder sees….Cardholder sees….
PINPINPINPINPINPINPIN
BankWindowCardholder
authenticated by Issuer
S C
Issuer Choice: Chip Authentication Program•Chip Authentication Program --
Designed to integrate the ease of use and security of an EMV-compliant smart card for authentication through a user's PC.
•This solution is designed to interoperate with the UCAF hidden fields specifications and is supported by both connected and un-connected smart card readers.
•Evaluating Clientless alternative
Chip Authentication Program
UCAFwith EMV Dynamic
Cryptogram
Merchant
AcquirerUCAF passed to Issuer in
authorization transaction including EMV cryptogram
Merchant Website
Cardholder sees….
Cardholder browses Merchant website
HiddenFieldsUCAF
IssuerAuthorization
System
Download detects Hidden Fields on Checkout Page
Download
PaymentDetails
Download uses hidden fields on merchant website to populate UCAF on merchant
website
Cardholder sees….Cardholder sees….
BankWindow
Cardholderauthenticate
d by Chip Card
S C
Issuer Choice: MasterCard 3-D Secure Implementation•MasterCard 3-D Secure Implementation --.
The MasterCard implementation of 3-D Secure includes support for the SPA algorithm and UCAF with no changes to the core 3-D Secure protocol. This implementation becomes the client-less (no cardholder download) authentication solution.
•MasterCard has licensed our SPA algorithm to vendors for use within their 3-D Secure version 1.02 implementations for MasterCard issuers.
MasterCard 3D-Secure Implementation with SPA AAV
Acquirer
MerchantCardholder
Issuer
MasterCard Directory
11/12
10/13
6
1
9
2
5
7
8
Hosted or Issuer Access Control Server w/ SPA
Algorithm
UCAF Hidden Fields
Plug-in
3 4
MIGS is a turn key, internet payment gateway, that significantly reduces the complexity and costs of acquiring, enabling, supporting and processing for EC merchants.
MIGS leverages the Bank’s existing transaction processing connectivity to MasterCard’s Banknet® Global Network.
What is MIGS?
Why MIGS for the Member Bank ?
• Banks lack business case yet face losing Merchants
• MIGS takes investment risk away from Member Bank
• Outsourcing with benefits of in-house and more
• MIGS is quicker to market (4 months instead of 12)
• Much lower cost and off balance sheet!
Easy Integration, Known costs, Low Risk
• MIGS requires minimal Systems development to integrate
• MIGS takes investment risk away from Member Bank
• MIGS cost advantage compared to In-House Infrastructure
• MIGS strengthens relationship between Bank and Merchant
• MIGS provides payment solutions for multiple segments
• MIGS strengthens the Bank’s Acquiring Business
Member BenefitsA Low Risk Strategy
Call Centre/IVR Credit Card
Purchase Card
E-CommerceCredit CardPIN’ed Debit
Loyalty Points RedemptionE-Cash (Mondex)
MIGS
Corporate (B2B)Purchase CardFunds Transfer
LC / Escrow
EBPPCredit CardPIN’ed Debit
E-Cash (Mondex)Funds Transfer
POS Credit CardPIN’ed Debit
E-Cash (Mondex)
M-CommerceCredit CardPIN’ed Debit
Loyalty Points RedemptionE-Cash (Mondex)
Payment Solutions - Multiple Segments
Benefits for African Countries
•New Export Potential•Merchants can Market Directly To
Consumer Anywhere• Improves Foreign Currency Earnings•You Decide
InternationalMasterCard
