Reimagining Transaction Innovation with Emerging Trends

Reimagining Transaction Innovation
Vikrant Sabharwal, Regional Business Development
Manager, South East Asia
TSYS International
Email: vsabharwal@tsys.com
© 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`

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
8

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 WorldCard 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.
12

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 CoinageBartering
E-CommerceCredit Credit Cards
13

To Branchless Banking
Kiosks
14

To Biometrics ...
Biometrics
15

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
16

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
24

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
26

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

Reimagining Transaction Innovation with Emerging Trends

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