Unleashing the Power of Smart Payment

Transcription

1 Unleashing the Power of Smart Payment Brian Russell, Smart Payment Association (SPA) Representative and Senior Vice President, Payment and Transit, Giesecke & Devrient April 2013 V5 (MaMo V2.7)

2 Agenda 1. SPA s role in 2. SPA Latest Publications 3. Contactless & Online: The payment market evolution and the accompanying CNP fraud explosion 4. SPA global smart payment card shipments 2012 Exclusive Preview 5. SPA on standards to prompt market growth without hampering security 6. Take Away 2

3 Exclusive preview Contactless technology was present on 23% of all payment cards shipped in 2012 Contactless growth in Western Europe and Asia exceeded 100% Over 220 million contactless cards delivered by SPA members in 2012 Shipments of Dual Interface cards, incorporating both chip and PIN and contactless technologies, are now growing at 77% year on year 3

4 01. SPA s role in shaping the future of payment

5 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:

6 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. Non- Traditional Ecosystem Expert Advisor Services Help shape the future of payments Customers Members Customers Services Bring Value to Financial Institutions Traditional / Smart Card Members Services Trade Organization Technologies 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. 6

7 How we do it By delivering the market s most accurate barometer of payment trends An annual analysis of payment trends based on actual manufacturer sales data SPA members = 85% of the total smart payments card market By supporting the creation and adoption of standards and best practices EPC-CSG/SEPA: Card Representative and Vendor Sector Spokeperson, Chair of the EPC-CSG Task Force to specify the SEPA functional and security requirements for emergent & remote payments (Internet + Mobile), Convenor 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 and Board Advisor for Card Sector EMVCo Next GenerationTaskforce: 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 7

8 SPA & its members in the US Smart Card Alliance ( Cartes America ( ) EMV Migration Forum ( ) ISO: Smart cards, electronic authentication, biometrics, middleware / collaboration with NIST(ISO JTC 1) Mobile payments / collaboration with major US Banks & Federal Reserve (ISO TC 68) EMVCo Technical Associate & Board Advisor EMVCo NextGeneration Taskforce Optimize interoperable processing of contact / contactless and mobile payment cards* 8 *tamper-resistant hardware, personal, portable device to execute payments, i.e. ID-1 card contact or contactless, SE (SIM/UICC)

9 02. SPA Latest Publications

10 COMING SOON SPA latest publications Biometrics for EMV Payment Cards 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 Download at: 10

11 03. Mobile & Online: The payment market evolution and the accompanying CNP fraud explosion

12 The payments market is moving to mobile and online Statistics on online/ mobile/ magstripe etc. WPR 2011 CAGR Non-Bank Provider 67.3% Bank Providers 47.6% Driven by smart devices, i.e. Smartphones and tablets Driven by connectivity and convenience New players and new usages WPR 2011 CAGR Alternative Payments 67.3% Leading to assymetry and fragmentation Need for accelerated standardization Bank Providers 18.1% Source: World Payments Report

13 So is the fraud! 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 Risk with perception of lack of security of existing standards Source: ECB Card Fraud Report

14 NFC revolution is happening 14 Transport Payment Smart Poster Tags & Cards 14

15 Internet payments Back in the 50 s Card-not-present problem 3D-Secure brings some improvement EMV card enables Dynamic card generation One-time passwords (e-banking) SPA supports & promotes EMV utilization of technology with stakeholders Use of EMV card with a personal terminal device / NFC Chip Scalable, secure Interoperable 15

16 04. SPA global smart payment card shipments 2012 Exclusive Preview

17 975 Million smart payment cards shipped in 2012 by SPA Members* +12% +9% +18% +39% +16% +23% Mio. Pcs sold *includes all chip payment cards EMV represents more than 90% of SPA shipments 17

18 TAM > 1.1 Billion units in 2012* EUROPE TAM: 322M NORTH ASIA TAM: 238M NORTH AMERICA TAM: 84M CISMEA** & EASTERN EUROPE TAM: 208 M SOUTH EAST ASIA SOUTH AMERICA TAM: 225M TAM: 89M Payment Chip cards deployed or in advanced deployment Chip cards in deployment Chip cards migration initiated No Chip cards * 2012 Estimated Total Available Market (1166 units) by Geographies in Millions Includes all chip payment cards ** Includes Turkey 18

19 SPA regional growth 2012 vs. 2011* EUROPE & CISMEA** SPA +8% + 1% WE: Moving from SDA to highly secure DDA/CDA Accelerating pace of European contactless card shipments SEPA rules enforce chip and PIN CISMEA s EMV growth supported by Russia and newly migrating African countries AMERICAS Canada finished migration to EMV US EMV migration has been initiated (Visa, MC, AMEX liability shifts 2015) LATAM is still SDA oriented Chip & PIN deployed or in advanced deployment Chip & PIN in deployment APAC SPA +24% China massively migrates to chip based payments (PBOC 2.0 mandate until 2015) India initiated move towards EMV Strong contactless growth in APAC region too Chip & PIN migration initiated No Chip & PIN * 2012 SPA Shipments by Geographies Compared to 2011 SPA Shipments Includes all chip payment cards ** Includes Turkey 19

20 220+ Million increase in contactless payment card shipments in Europe in 2012, notably Dual Interface 11% Adoption rate contactless cards 12% 13% 15% 23% Contactless technology = 23% share of smart payment card shipments Dual Interface = 77% YoY growth (represents 89% share of contactless shipments) 8% Contactless Contact

21 SPA regional contactless growth 2012 vs CTLES +106% WESTERN EUROPE CTLES +111% AMERICAS Contact: 205 Mio. Contactless: 54 Mio. CT -4 % CTLES +17% Chip & PIN deployed or in advanced deployment Chip & PIN in deployment Chip & PIN migration initiated No Chip & PIN Contact: 240 Mio. Contactless: 62 Mio. CT -14 % CT +26% CTLES +34% CISMEA & EASTERN EUROPE Contact: 164 Mio. Contactless: 29 Mio. CT +1 % ASIA PACIFIC Contact: 142 Mio. Contactless: 80 Mio. 21

22 More convenient payment options Contactless: fast, secure and convenient technology Bring convenience to cardholder Undisputed advantages for issuers, able to increase card usage and ticket size Combined with transit features, grants issuers Top of Wallet benefit Pave the ground for mobile payments Contactless payment infrastructure (terminals, POS, etc.) in deployment End user education to pay contactless with cards or others form-factors (stickers, ) Accelerate NFC introduction to mass market Migration to contactless: a reality Spreading in more than 30 countries on all continents (Canada, UK, Turkey, Poland, France, Australia,...) 220+ Million contactless cards delivered by SPA members in 2012 The Next Payment Evolution: From Contactless to Mobile Payment December

23 More than half of shipments are DDA DDA Growth in 2012: +28% 21% 26% 32% 41% 47% 56% DDA ADOPTION

24 SPA DDA regional growth 2012 vs DDA +6% DDA +60% WESTERN EUROPE DDA: 258 Mio. ndda: 43 Mio. ndda -33% DDA +69% ndda +7% DDA +45% AMERICAS DDA: 39 Mio. ndda: 220 Mio. ASIA PACIFIC DDA: 117 Mio. ndda: 105 Mio. 24 ndda -7% Chip & PIN deployed or in advanced deployment Chip & PIN in deployment Chip & PIN migration initiated No Chip & PIN CISMEA & EASTERN EUROPE DDA: 133 Mio. ndda: 60 Mio. ndda -18%

25 More secure ways to pay Big payment schemes pushing for DDA/CDA DDA/CDA reducing fraud Mature markets now migrating to DDA/CDA technology Majority of Dual-Interface cards using DDA technology White Paper Available on DDA Migration April

26 05. SPA on standards to prompt market growth of secure, interoperable contactless payments

27 SPA on convergence of contactless standards INTEROPERABILITY of any contactless device is KEY to deploy applications SPA considers the way forward to be through Common Testing Methods SPA supports EMVCo convergence project with NFC Forum and ISO A first analysis performed by EMVCo in order to identify gaps and overlaps Consistency between ISO standards and EMV specs to be managed With regards to NFC Digital Protocol, the objective is that NFC devices may pass the L1 EMVCo certification 27

28 SPA on interoperability as a driver for security Interoperability can t be achieved at the price of weakening the security of the overall payment processing chain Best technology to secure Mobile Devices through adoption of the Trusted Executing Environment as standardized by GlobalPlatform Common Certification practices based on PCI & EMVCo specifications Optimization of Mobile Payment Platform certification practices Migration towards Elliptic Curves Cryptography Promotion of Biometrics as a standard Cardholder authentication method in EMVCo Chip to Software secure fallback solution pushed in SEPA and EMVCo 28

29 SPA proposal for EMV Seek the interfaces for interoperability most needed to maximize the number of transactions 2. Identify those technologies and services that should remain in the competitive space 3. Standardize peripherals to be integrated on the smart card body to support new card functionalities 4. Establish a well-designed policy to address IP 5. Carry out a comprehensive risk analysis method for new payment instruments 6. Enhance mechanisms to facilitate free choice by the cardholder of the payment instrument 7. Carefully plan technology migrations and introduce a card fallback mechanism 8. Facilitate central acquiring by adopting new ISO message structures and data elements 9. Revisit appropriate Cardholder authentication methodologies and standardize a Biometrics profile for Payment Applications AVAILABLE ON DEMAND 10. Revisit privacy protection practices in the light of mobile payment adoption and upcoming regulation 29

30 06. Take Away

31 Take away 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 SPA plays a key role in shaping the future of smart payments through recommendations and strong involvement in SEPA, EMV and ISO Standards 31

32 One Address: Contact: 32

33 Appendix

34 SPA Market Data Monitoring Process The figures in this presentation are actual shipments published by SPA. Actual shipments data, segmented by region and by interface, are sent on a quarterly basis by SPA members to an independent third party. There is no direct exchange of data between SPA members. Consistent with SPA's practices for the exchange of historical data, the third party aggregates and anonymizes the data so that no SPA member is able to identify another SPA member's contribution. The data is published on an annual basis, at the end of the first quarter of the following year. Once a year, total market estimates by region are also sent by SPA members to this independent third party to evaluate TAM (Total Available Market).

35 Comparing Market Figures Cards in circulation / installed card base: Cards in circulation means that all cards that have been issued in the current /covered year, as well as all previously issued cards that are still valid, are taken into account. Card validity differs across markets, typically between 2 to 5 years. Source 2010* 2011* 2012* Growth Total Available Market (TAM): Only cards issued in the current / covered year are counted (new cards, replacement cards, re-issued cards) this number is estimated by SPA. Actual shipments: Actual shipments data, segmented by region and by interface, are sent on a quarterly basis by SPA members to an independent third party who aggregates and anonymizes the data so that no SPA member is able to identify another SPA member's contribution. EMVCo Cards in Circulation SPA Estmated TAM SPA Actual Shipments 1,083 1,340 1,549 16% 916 1,036 1,166 13% % Differences in card types counted: EMVCo reports on EMV payment cards only. Other reports may include local / domestic schemes and other non-emvco member payment chip cards. *In million units 35

36 Alternative Payment Options Checks Less and less utilization Small checks replaced by debit cards Large checks replaced by money transfer Cash Still most convenient for small payment amounts Legal value money It is there to stay Cash virtualization could happen Pre-loaded mobile Cloud-based currencies QR code Appealing: (almost) no infrastructure needed Optical reading: Not-fast, light ambience dependent No standard, dependent on issuers Apps dependent Security: genuine codes are checked inside phone apps User recurring costs (SMS) Slowing down NFC deployment 36

37 The NFC Deployment NFC technology based on Secure Element NFC Contactless technology is not just for mobile payments NFC deployment is happening beyond Mobile Handsets and NFC POS Many devices will be NFC capable NFC transactions Not just payments Co-locating with other services Get ready to exploit NFC pervasiveness Strong Standardization effort: ISO, EMVCo, NFC Forum 37

38 Are EMV Cards Protecting You? 5.2 Billion Payment Cards shipped in 2011 EMV deployment is pushing fraudulent transactions out of EMV countries Good implementation of EMV proven to significantly reduce fraud 25% are private label cards: Retail, Airlines, Petrol, Transport,... Source: EMVCo & Nilson Report 38

39 SEPA SEPA = Single Euro Payments Area There are 17 countries that are members of the European Union (EU) and use the Euro currency There are 10 countries that are members of the EU and do not use the Euro currency There are 3 European countries (Liechenstein, Island and Norway) that are not members of the EU and do not use the Euro + Switzerland & Monaco 39

40 Thank You