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The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
The Multichannel Issues and Opportunities of EMV 2.0
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The Multichannel Issues and Opportunities of EMV 2.0

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The Multichannel Issues and Opportunities of EMV 2.0

The Multichannel Issues and Opportunities of EMV 2.0

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  • 1. The Multichannel Issues and Opportunities of EMV 2.0 Dr. Andreas Strobel, President, SPA Tuesday 19th November 2013 shaping the future of payment technology
  • 2. 01. A short introduction shaping the future of payment technology
  • 3. Who we are The Smart Payment Association addresses the challenges of today’s evolving payment ecosystem. We offer leadership and expert guidance to help members and their financial institution customers realize the opportunities of smart, secure and personalized payment systems and services - both now and in the future. Since 2004 Members: shaping the future of payment technology
  • 4. What we do  The SPA works in partnership with global standards bodies, its own vendor community, and an expanding ecosystem of established and emerging brands to offer an ever-growing portfolio of advisory and support services. NonTraditional Ecosystem Expert Advisor Services Help shape the future of payments Customers Members Customers Services Bring Value to Financial Institutions Members Services T rade Organization Traditional / Smart Card 4 2013/11/19 • Technologies Mulichannel and EMV 2.0 Advanced/ New Fig 1 Extending advisory and support across the evolving community, the SPA is addressing today’s challenges and shaping the future direction of payment technologies, standards and business models. shaping the future of payment technology
  • 5. 02. The evolution of retail payments shaping the future of payment technology
  • 6. Todays’ payment ecosystem for retail payments is based on a multi-channel approach Players Payment means Direct payment Cash Prepaid Commercial Cards Credit transfers/ Direct debit Traditional payment New payment Mobile M-commerce NFC Apps SMS P2P Payments Consumer Online EFT E-commerce Credit cards Google checkout PayPal Click and buy 1-Click Provider payment options  Financial institutes (Banks, PayPal)  Non-financial institutions: MNOs Device manufacturers Merchants  PSP security Payment schemes (Visa, MC, …) Payment channels Suppliers  Card vendors  Processors  ATM / POS providers convenience Consumer availability 6 2013/11/19 • Multichannel and EMV 2.0 shaping the future of payment technology
  • 7. Todays’ payment ecosystem for retail payments is based on a multi-channel approach Players Payment means Direct payment Cash Prepaid Commercial Cards Credit transfers/ Direct debit Traditional payment New payment Mobile M-commerce NFC Apps SMS P2P Payments Consumer Online EFT E-commerce Credit cards Google checkout PayPal Click and buy 1-Click Provider payment options  Financial institutes (Banks, PayPal)  Non-financial institutions: MNOs Device manufacturers Merchants  PSP security Payment schemes (Visa, MC, …) Payment channels Suppliers  Card vendors  Processors  ATM / POS providers convenience Consumer availability 7 2013/11/19 • Multichannel and EMV 2.0 shaping the future of payment technology
  • 8. Todays’ payment ecosystem for retail payments is based on a multi-channel approach Players Payment means Direct payment Cash Prepaid Commercial Cards Credit transfers/ Direct debit Traditional payment New payment Mobile M-commerce NFC Apps SMS P2P Payments Consumer Online EFT E-commerce Credit cards Google checkout PayPal Click and buy 1-Click Provider payment options  Financial institutes (Banks, PayPal)  Non-financial institutions: MNOs Device manufacturers Merchants  PSP security Payment schemes (Visa, MC, …) Payment channels Suppliers  Card vendors  Processors  ATM / POS providers convenience Consumer availability 8 2013/11/19 • Multichannel and EMV 2.0 shaping the future of payment technology
  • 9. Todays’ payment ecosystem for retail payments is based on a multi-channel approach Players Payment means Direct payment Cash Prepaid Commercial Cards Credit transfers/ Direct debit Traditional payment New payment Mobile M-commerce NFC Apps SMS P2P Payments Consumer Online EFT E-commerce Credit cards Google checkout PayPal Click and buy 1-Click Provider payment options  Financial institutes (Banks, PayPal)  Non-financial institutions: MNOs Device manufacturers Merchants  PSP security Payment schemes (Visa, MC, …) Payment channels Suppliers  Card vendors  Processors  ATM / POS providers convenience Consumer availability 9 2013/11/19 • Multichannel and EMV 2.0 shaping the future of payment technology
  • 10. Todays’ payment ecosystem for retail payments is based on a multi-channel approach Players Payment means Direct payment Cash Prepaid Commercial Cards Credit transfers/ Direct debit Traditional payment New payment Mobile M-commerce NFC Apps SMS P2P Payments Consumer Online EFT E-commerce Credit cards Google checkout PayPal Click and buy 1-Click Provider payment options  Financial institutes (Banks, PayPal)  Non-financial institutions: MNOs Device manufacturers Merchants  PSP security Payment schemes (Visa, MC, …) Payment channels Suppliers  Card vendors  Processors  ATM / POS providers convenience Consumer availability 10 2013/11/19 • Multichannel and EMV 2.0 shaping the future of payment technology
  • 11. An unbroken trend - Card payments continue growing across all regions worldwide Globally in 2011 Credit card transactions volume +12,3% Debit card transactions volume +15,8% In North America 65% of non cash transactions made by payment card! Source: World Payments Report 2013 11 shaping the future of payment technology
  • 12. Todays’ payment ecosystem for retail payments is based on a multi-channel approach Players Payment means Direct payment Cash Prepaid Commercial Cards Credit transfers/ Direct debit Traditional payment New payment Mobile M-commerce NFC Apps SMS P2P Payments Consumer Online EFT E-commerce Credit cards Google checkout PayPal Click and buy 1-Click Provider payment options  Financial institutes (Banks, PayPal)  Non-financial institutions: MNOs Device manufacturers Merchants  PSP security Payment schemes (Visa, MC, …) Payment channels Suppliers  Card vendors  Processors  ATM / POS providers convenience Consumer availability 12 2013/11/19 • Multichannel and EMV 2.0 shaping the future of payment technology
  • 13. The rise of e- and m-payments – more payments channels and non-bank providers  Driven by smart devices & connectivity CAGR 2010-14 18,1%  Convenience and innovation  New players and new usages CAGR 2010-14 58,5% Non-Bank Providers 92,3%  Leading to asymmetry and fragmentation  Need for accelerated standardization Bank Providers 55,4% Source: World Payments Report 2013 13 shaping the future of payment technology
  • 14. Todays’ payment ecosystem for retail payments is based on a multi-channel approach Players Payment means Direct payment Cash Prepaid Commercial Cards Credit transfers/ Direct debit Traditional payment New payment Mobile M-commerce NFC Apps SMS P2P Payments Consumer Online EFT E-commerce Credit cards Google checkout PayPal Click and buy 1-Click Provider payment options  Financial institutes (Banks, PayPal)  Non-financial institutions: MNOs Device manufacturers Merchants  PSP security Payment schemes (Visa, MC, …) Payment channels Suppliers  Card vendors  Processors  ATM / POS providers convenience Consumer availability 14 2013/11/19 • Multichannel and EMV 2.0 shaping the future of payment technology
  • 15. For non-cash transactions the card fraud has been declined, thanks to chip migration in SEPA 0.036% Source: ECB - Second report on card fraud, July 2013 15 2013/11/19 • Multichannel and EMV 2.0 shaping the future of payment technology
  • 16. In e-Commerce channel the card-not-present fraud (CNP) is dominant and further increasing Evolution of the total value of card fraud using cards issued within SEPA 1) Value in millions of EUR / % Transactions (millions) / %  Total level of fraud has reduced overall for the SEPA region  However, card-not-present transactions now represent the biggest share and the biggest growth in terms of fraud  Most of fraudulent F2F transactions with EU cards took place outside the EU  Top 6 locations: USA, Dominican Republic, Colombia, Russian Federation, Brazil, Mexico) – Source: Europol CPSs: Card Payment Schemes CNP 16 2013/11/19 • 56 % Multichannel and EMV 2.0 CNP 60 % Source: ECB - Second report on card fraud, July 2013 shaping the future of payment technology
  • 17. 03. The gobal EMV payment market shaping the future of payment technology
  • 18. With the US and China adopting EMV the chip migration has become a global phenomenon Source: EMVCo 18 2013/11/19 • Multichannel and EMV 2.0 shaping the future of payment technology
  • 19. 975 million pcs. smart payment cards were shipped in 2012 by SPA Members* +9% +12% +18% +16% +39% +23% 418 580 675 798 898 975 2007 Mio. pcs sold 2008 2009 2010 2011 2012 * includes all chip payment cards – EMV represents more than 90% of SPA shipments 19 2013/11/19 • Multichannel and EMV 2.0 shaping the future of payment technology
  • 20. The total available market for payment chip cards is estimated to 1.2 Billion pcs. in 2012* EUROPE TAM: 322M NORTH ASIA TAM: 238M NORTH AMERICA TAM: 84M CISMEA** & EASTERN EUROPE TAM: 208M SOUTH EAST ASIA SOUTH AMERICA TAM: 89M TAM: 225M Payment Chip cards deployed or in advanced deployment Chip cards in deployment Chip cards migration initiated No Chip cards 20 * 2012 Estimated Total Available Market (1166 units) by Geographies in Millions – Includes all chip payment cards ** Includes Turkey shaping the future of payment technology
  • 21. In all regions the growth of contactless cards (CTLES) was stronger than for contact cards * CTLES +106% CTLES +111% WESTERN EUROPE Contact: 240 Mio. Contactless: 62 Mio. CTLES +17% AMERICAS Contact: 205 Mio. Contactless: 54 Mio. CT -4 % Chip & PIN deployed or in advanced deployment CT -14 % CTLES +34% CT +26% CT +1 % ASIA PACIFIC Contact: 142 Mio. Contactless: 80 Mio. CISMEA & EASTERN EUROPE Contact: 164 Mio. Contactless: 29 Mio. Chip & PIN in deployment Chip & PIN migration initiated No Chip & PIN 21 * Comparison of SPA members shipments from 2011 and 2012 shaping the future of payment technology
  • 22. The adaption rate of DDA cards outperformed previous technology in all regions * DDA +6% DDA +60% WESTERN EUROPE DDA: 258 Mio. nDDA: 43 Mio. DDA +69% nDDA -33% DDA +45% nDDA +7% AMERICAS ASIA PACIFIC DDA: 39 Mio. nDDA: 220 Mio. DDA: 117 Mio. nDDA: 105 Mio. nDDA -7% CISMEA & EASTERN EUROPE DDA: 133 Mio. nDDA: 60 Mio. Chip & PIN deployed or in advanced deployment Chip & PIN in deployment Chip & PIN migration initiated nDDA -18% No Chip & PIN 22 * Comparison of SPA members shipments from 2011 and 2012 shaping the future of payment technology
  • 23. EMV is a truly established global secure and interoperable infrastructure  Smart payment card shipments hit the one billion mark in 2011, and exceeded 1.1 billion in 2012  Ever increasing penetration of contactless payment (23 % in 2012)  Move towards more secure ways to pay (DDA more than half of shipments)  EMV is a truly established, global secure & interoperable infrastructure, and NFC is the contactless extension paving the ground for the evolving connected world  Discover and China Unionpay have joined EMVCo in 2013  US and China are moving to EMV  EMV has beat the fraud (Europol) on card payment but what about the online fraud? 23 shaping the future of payment technology
  • 24. 04. The multichannel opportunities & issues shaping the future of payment technology
  • 25. Todays’ payment ecosystem for retail payments is based on a multi-channel approach Players Payment means Direct payment Cash Prepaid Commercial Cards Credit transfers/ Direct debit Traditional payment New payment Mobile M-commerce NFC Apps SMS P2P Payments Consumer Online EFT E-commerce Credit cards Google checkout PayPal Click and buy 1-Click Provider payment options  Financial institutes (Banks, PayPal)  Non-financial institutions: MNOs Device manufacturers Merchants  PSP security Payment schemes (Visa, MC, …) Payment channels Suppliers  Card vendors  Processors  ATM / POS providers convenience Consumer availability 25 2013/11/19 • Multichannel and EMV 2.0 shaping the future of payment technology
  • 26. eCommerce is the „low hanging fruit“ for organized online fraud criminals  Financial institution have made significant efforts to defend online accounts  Cyber criminals target more and more eCommerce sites  The eCommerce market is huge: In 2012 the market was about several hundred billion Euros with about >20 billion transactions  Online retailer have access to credit card details and deliver goods that criminals can resell (change of shipping address, network of mules)  Most e-Commerce sites lack fraud protection; it is unclear to customers how sites are protected; fragmentation and lack of standardization  Weak user authentication only by User-ID and password  Data breaches (of huge data bases) by hacking, insiders, malicious software  Cracking of stolen passwords to reveal user credentials by todays’ powerful parallel-connected computing devices and reselling of digital IDs 26 shaping the future of payment technology
  • 27. Lack of strong user authentication is one of the identified weaknesses of todays’ eCommerce The ECB forum for Security of Retails Payments (SecuRe Pay) gave 13 recommendations to tackle Card Not Present Fraud Protect the initiation of internet payments, as well payment data by means of strong customer authentication Limit the number of log-in or authentication attempts Transaction monitoring mechanisms against fraudulent payment transactions Implement multiple layers of security defenses to mitigate risks Provide more guidance and education to customers … Source: ECB - Recommendations for the security of internet payments, January 2013 27 shaping the future of payment technology
  • 28. EMV has the basic ingredients, but some parts are missing from SPA point of view  Security, interoperability, good user experience and a robust business model for the card issuer, constitute the four key advantages of the card technology  In general the new EMV standard should include: more interfaces, transaction independent from the interface – this is mainly covered by EMVCo Next Gen  Protocols and message structures for payment convergence; harmonizing protocols on the terminal to acquirer interface to standardize the back office  More means to include “on-card” peripherals and new card functionalities needed for strong cardholder authentication to protect high value transactions  Faster and more competitive evolution of the new standard, softening of the rigid EMVCo IP policy to ensure state-of-the-art contributions/implementations  Better collaboration between PCI and EMVCo; early mandate by Card Payment Schemes requested to adopt EMV Next Generation as soon as possible  Better positioning of the secure element as THE token which offers secure authentication and protects the privacy of eCommerce transactions 28 shaping the future of payment technology
  • 29. 05. SPA’s role in bridging the gap shaping the future of payment technology
  • 30. How we do it – SPA contributes and gives expert advice to leading standards bodies  By supporting the creation and adoption of standards and best practices  SEPA: European Payments Council – Cards Stakeholder Group Card Representative and Vendor Sector Spokesperson, Chair of the EPC-CSG Task Force to specify the SEPA functional and security requirements for emergent & remote payments (Internet + Mobile), Conveyor of the new EPC-CSG Expert Team on Card Innovative Payments, Member of the Preparatory Committee of the SEPA Security Certification Management Body  EMVCo: Technical Associate Board Advisor for Card Sector Next Generation Task Force: Contributor  By extending expert advice and support across the payments ecosystem  An eye-catching library of expert technical resources and thought leadership collaterals to shape the future of payment 30 shaping the future of payment technology
  • 31. Some take aways – Summary and recommendations  EMV has proven to be the global, interoperable and secure standard of choice to tackle card fraud at the physical point of sale – more collaboration needed  Despite the fact that overall fraud is decreasing (SEPA-region) the card-notpresent fraud is further increasing  eCommerce transactions contribute to the major part of card-not-present fraud and are the low hanging fruits for online fraud  Strong user authentication is needed for eCommerce transactions – User-ID and password in cloud-based platforms is not sufficient anymore  NFC technology relying on certified, tamper proof secure elements is the recommended solution to tackle fraud for m-payments  Card Payment Schemes should engage stronger to establish strong user authentication for eCommerce by means of EMV and NFC technology  EMV based secure elements offer the ingredients to better secure eCommerce as compared to purely cloud based solutions 31 shaping the future of payment technology
  • 32. Have a look at the latest SPA publications and visit our web site NEW!  Biometrics for EMV Payment Cards NEW!  UICC Application Lifecycle Management  Software to Chip Fallback Solution  Security Certification for Mobile Platforms  Security for Mobile Payments  PIN by SMS  Private Label Payment Solutions  Business Continuity in the Payment Card Issuance Industry  … more publications to come the next weeks! 32 2013/11/19 • Multichannel and EMV 2.0 shaping the future of payment technology
  • 33. Thank You for Your attention! Download from www.smartpaymentassociation.com #SmartPayment shaping the future of payment technology

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