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Presentation by Victor Dostov of Paycash for the Dutch delkegation. June 16, 2009

Presentation by Victor Dostov of Paycash for the Dutch delkegation. June 16, 2009

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Rusland Paycash Rusland Paycash Presentation Transcript

    • Dr.Victor Dostov, PayCash Group
    www.paycash.ru
        • Outline
        • What is PayCash Group of companies?
        • What is PayCash technology?
        • How PayCash was evolving?
        • What are PayCash achievements?
        • How Russian payment landscape looks like?
        • What we are doing now?
    • PayCash is:
    • Payment technology, 4 patents
      • Chaum-like digital cash support
      • Accounts management
      • Merchant support
      • Crypto, digital signing, database and other primitives
    • Payment engine
    • Set of business, regulatory and other know-how
    View slide
    • PayCash incarnations:
    • Internet payment system (6)
    • Payment kiosk processing (3)
    • On-line lottery (1)
    • Remittance (1)
    • Mobile payments (3)
    • Miscellaneous (3)
    View slide
    • PayCash incarnations :
    • Yandex.Dengi
    • iDealer
    • Dramcash
    • Cyphermint
    • Moneta Express
    • Alter-I
    • Loki
    • Mobile Wallet
    • Internet.Dengi
    • … .
    • Some of them have failed, survivors have about 40 mln. USD capitalization.
    • PayCash Group is high-tech privately owned narrow purpose incubator:
    • New idea
    • IT development
    • Pilot (business) implementation
    • Commercial run (and getting new ideas )
    • Sale
    • Big experience save a lot of time and money on early stages: fast start, ready environment (financing, corporate, IT, legal, etc.)
    • PayCash Group is not a “classic” incubator, because of:
    • Concentration on payments and around
    • Sale on mature stage, not start-up sale
        • PayCash History
        • 1998
    • Basis
    • Internet payment system looks like a good idea.
    • 50K USD + 1 year ROI
    • We are not alone:
    • DigiGold
    • CyberCash
    • Digicash
    • Millicent
    • e-Gold
    • Question
    • What is exactly the system to build? Answer
    • Digital cash
    • In 1998 life was very different
    • Internet was big already and needed payment tools
    • Internet bubble was coming
    • Credit card on line? Worked, but ugly
    • Internet banking was very unclear
    • Privacy was a huge concern on personal and even state level
    • No 9/11, no Patriot Act, no KYC, no FATF, anonymous accounts in Switzerland, offshore banking
    • Digicash
    • David Chaum “ Security Without Identification: Transaction Systems to Make Big Brother Obsolete ”
    • Digital cash
    • Absolutely new approach to remote payments with no accounts
        • .
        • Digital bearer certificate valued in a currency, digitally signed, by an Issuer (Bank), like a bill of exchange or a traveler check
        • low infrastructure cost (PC + Internet based)
        • highest security: strong crypto
    Digital coins DBC #1234678988 Nomination: $123.25 Underwritten: Tavrichesky Bank Date:12.1.98 11:01 Digital Signature: 12345467575643434556563452678999
  • $1 $1 FILE-sertificate FILE-sertificate $1 FILE-sertificate FILE-sertificate   Internet V-BANK Customer V-SHOP
    • Details
    • Double-spending: number database
    • Blind signing: Bank does not know which specifically coin it signs, but knows face value. No trace of future spending.
    • Everything is signed, easy check by independent party.
    • No need in array of accounts support
    • Fast, private, save, elegant, new.
    • Digicash
    • Made up in Netherlands by Dr. Chaum
    • Deutsche Bank pilot
    • EU Technology Innovations Award 1995
    • Negotiation with Microsoft
    • One country, one Bank
    • Huge license cost
    • PayCash. Better Digicash.
    • Bypass patent umbrella
    • Multicurrency
    • Multibank
    • Even less trust needed
    • Smaller database
    • … .
  • We have done this… Chaum’s Coin( i ,  X ) = { i , X , g i -1 ( f ( X ))} , where X is the random serial number of a coin, chosen by a customer, X belongs to a large set M'      M   = (Z/ m Z) * , m is a composite number whose factorization is known only to the bank, f  :  M'  —>  M  is an easy-to-calculate mapping publicly known and hard-to-invert for all parties of the payment system except, possibly, for the bank PayBook ( N , P ) = { N ,  P , g - N ( f ( P ))} , where P is User’s random public key , f , and g have the same meaning as above, and g - N ( X ) = g -1 ( g -1 (... g -1 ( X )...)) . A nonnegative integer N (the disposition of the book) determines paying capacity of the book.
  • … and even more New two-stage scratch card protocol Password Verifier Patent: Method for a cardholder to request fulfilment of an obligation associated with the card and for the issuer to acknowledge this obligation
    • Some IT
    • Thin server
    • Very thick client
    • Very secure environment, but proprietary and not easy-to-learn (for customers and shops)
    • “ Russian leader in financial cryptology ” - Computerra
    • National Intel technological award [ 03 /00] , Intel diploma (shared with International Banking Institue) [07/00], Best site [St.Petersburg , 06/00], Business site 2000 diploma [11/00]; Russian Innovation Conquest (Intel/Audi/Expert) Award [05/03]
    • Four patents
    • International expertise ( Chaum, Shneier )
    • Certificate of Special US Congressional Recognition [ 12 /02]
    • How to ROI?
    • Sale of patents
    • + software licensee
    • + pilot
    • + commercial run (around 00, Russia, US…)
    • PayCash. Change of paradigm
    • Group of analytics
    • Development company
    • Operating company
  • Shop 34567899 PayCash Bank External World Internal world Banks Payment systems Scratch cards On-line payment systems 34567899 Plastic cards Kiosks
    • Running the system
    • Legal & financial model
    • Agreement with shops
    • Money-in/Money-out: agreement with agents
    • Customer supports
    • Security
    • … ..
    • Running the system
    • Development is slow
    • Cash burns fast
    • IT/Marketing interface is poor
    • … ..
    • Anyway, we are doing a great thing
    • 2001. Outside
    • Digicash bankruptcy
    • 9/11. Shift to conservative models
    • No more privacy motivation
    • Internet bubble exploded
    • Not a best time for private internet payment systems
    • 2001. Inside
    • System became evidently commercial
    • No more privacy, but engine works excellent
    • Can be transformed into account-based model
    • We were getting Central Bank License
    • We became interesting for vendors, partners, licensees, etc.
    • We started join venture Yandex.Money
    • Yandex.ru is a biggest Russian search-centered portal (now in World Top 10).
  • Instant acquirement of a huge auditorium.
  • Sold in 2007 to Yandex Now 3+ mln accounts, $800 mln per year
    • What more?
    • To clone PayCash internet payments in another countries
        • Internet.Dengi, Ukraine, sold
    • Remittance
        • Moneta Express, in process of sale
    • eLottery
        • Loki
    • Intellectual property protection, crypto, etc.
    • What more ?
    • Advanced technologies of financial values storing and/or management (internet, mobiles, stand-alone chips…)
    • Non-banking financial operators
    • Advanced market segments (internet and mobile merchants, etc.)
    • Is this an endemic situation to extinct or the can get some universal lessons from it?
    • Russia: typical features
    • 142,7 mln. population
    • more than 50% lives in small towns/countryside, with only Federal Post or Sberbank offices providing very basic financial services
    • Average monthly income in countryside is few hundreds USD
    • Average income in Moscow is comparable to NY
    • Two worlds in one
    • Both worlds use more than 150 mln cellular phones, 99% are prepaid
    • Russia: typical features
    • Banks target B2B, weakness of retail banking: can’t build retail in 20 years from scratch
    • Banks targets credits with 20%+ p.a. rate Banks are not very interested in retail payments
    • Historical weakness of “distant” payments (no checks…)
    • Low effective card and accounts penetration (percents) Formal penetration is more than 100%
    • High-tech culture
    • development of sophisticated payment instruments
  • How do people pay for, say, prepaid mobiles or telcos?
    • Kiosks
    Cash-in Touch screen
    • Kiosks
    • What pay for?
    • Prepaid mobiles
    • Return of bank credits
    • Prepaid telcos
    • Utilities
    • Tickets, MMORG, everything
    • Kiosks
    • Cyberplat, ePort, OSMP
    • How market looks like:
    • Kiosks: more than 100,000
    • Merchants: 2000 (large) + small
    • Monthly turnover: 1 bln USD
    • Average transaction: $20
    • Yearly growth: +30%
    • What more?
    • m-Payments
        • Mobile Wallet, joint venture with Vimpelcom and other MNOs
        • The same account for Air-Time and purchases, like Premium SMS
        • Bank as an intermediate between MNO and merchant
        • 1 mln USD per monts, 400 000 accounts
        • Paying for internet, VoIP, flowers, tickets, e-books, internet services etc.
    • Other m-payments
    • Different m-banking schemes
    • Credit-card based m-payment
    • NFC pilots
    • A men needs half of a day to think out the thing, which will keep thousands of other man busy for a few years.
    • Joseph Strauss, inventor of Golden Gate Bridge in San Francisco
  • Victor Dostov [email_address]