Introducing China *Source: World Census **World Population estimated at 6.7 billion Population Largest City Total Households GDP US$ 2007 GDP Growth 2007 Internet Use Mobile / Cell Users 0.3 billion New York - 8.3million 106 million 13.86 trillion 2.2% 108 million 127.5 million 1.3 billion Chongqing - 32 million 351 million 10.21 trillion 10.0% 298 million 633.8 million USA China
Introducing China – Financial Cards Millions USA China Card Functionality ATM 1,277.5 1,374.1 Debit 365.6 1,316.9 Credit 722.2 59.5 Prepaid 998.7 154.7
Chinabank Payment is an electronic payment solution provider. From a pure online payment service provider, CBP has diversified its offerings in 2006 and introduced the successful MotoPay service ( Mobile-Order and Telephone-Order Payment ).
Incorporation of CBP Introduction of current controlling shareholder Signed outsourcing contract with China Merchant Bank to distribute POS Became strategic partner with Visa Introduction of MotoPay service Started POS distribution Signed outsourcing contract with Bank of China to distribute POS in Beijing Signed outsourcing contract with Bank of Communications to distribute POS in Beijing Signed contract with Holiland, U-town, Cross Point, and E-mart to provide close-loop prepaid card service May 2005 July 2005 October 2006 Sep 2007 Feb 2008 August 2008 June 2003 July 2007 Jan 2008 Signed contract with Bank of China to provide prepaid card service via BOC’s POS
Domestic card Domestic card online payment flow chart: 3 Choose the goods Send the pay order Select the bank Send the requirement of deduction Input the card info and password 2 1 8 4 Give the goods 5 6 Result of payment 7 Send the result to merchant Consumer CBP Acquire bank Merchant
International credit card International card online payment flow chart: 3 Choose the service Input password Send the requirement of deduction 2 1 4 offer the service 8 Result of payment 7 Send the result to merchant Input the credit card info 3-D Send the Info 5 6 Give result 9 Send the pay order 10 Consumer CBP Acquire bank Merchant
Online Payment – Confirmation process 2. The consumer is forced to by-pass the merchant to make direct payment to the Issuer Payment Gateway (B2C) 1. Online consumer purchases good(s) with card. 3b. The Issuer will check with the bank to see if there is sufficient funds. 3. They in turn, communicate to the merchant whether the transaction is valid or declined. 4. The consumer receives the communication from the online merchant. ISSUING BANK ONLINE MERCHANT ONLINE CONSUMER
Cardholders and merchants are concerned about security
China has seen an increase in law suits ; Cardholder v’s Banks / Merchant
People’s Bank of China (Governing Body) are now reviewing ePayment Regulations
China Banks joined WTO
Adoption to international standards taking place.
Fraudulent activity in China – An example of one recent case Judge’s comments: “ Many credit cards transactions do not require proof of ID , it is similar to cash, losing a card is like losing cash, cardholders should foresee this risk associated with credit cards. Taking this case as an example, the cardholder agreed to be liable for the fraud loss when applying for the card , the best way to avoid risk is to look after the card carefully.” Published on Jin Lin Newspapers Nanjing “ Merchant is not liable for fraudulent credit card transaction, losing credit card is like losing cash ”
Fraudulent activity in China – Another example September 12, 2008 Ms. Li and her husband’s credit cards were stolen , and they reported to banks and police within 1 hour . Fraud had already been committed on all the cards. After report stolen, China Merchants Bank and Guangdong Development Bank wrote the fraud loss off . Ms Li and her husband got all their money back.
Fraudulent activity in China – T&C vary tremendously
“ Cardholders ARE liable for any loss caused by a third party. The bank is not responsible for any dispute on transactions between the cardholder and the merchant or financial institutes.”
Online Payments Survey 2005 The improvements that consumers want to see on online payment in next year Higher security Better legal protection Reduced transaction fee Easier to use More personal management functions More cross bank transaction functions Real time update of the transaction information Better website and product design More value added financial products Other iResearch’s survey in 2005 based on 3701 samples
Most fraudulent items in China Most Fraudulent Items Shoes Electronics Fake Goods AIDS Testing Kits Hotel No-show Airline Tickets
ReD solution proven in China Chargeback (CB) % before & after using ReD services After using ReD services