Introduction to Online Payment Processing and PayPal Payment Solutions

Introduction to Online Payment Processing and PayPal Payment Solutions

PayPal Helps Bring You New Customers Drivers of Consumer Demand for PayPal Opportunities for Merchants PayPal is: Secure Simple Fast 51% 14% 141M Percentage of Increase in sales for consumers small to mid-sized who would businesses have Number abandoned of that PayPal added their accounts purchase PayPal worldwide Express if PayPal payments Checkout* were not available** ***Source: PayPal study survey of of small- and to mid-sized mediumsized businesses, businesses, November 2006 2007 2

The PayPal Opportunity PayPal is the safer, easier way to get paid by online shoppers around the world. PayPal Growth 141M accounts 31% yoy volume growth 190 countries 70+ currencies 1000s of merchants add PayPal every year PayPal helps you grow your business 3

Understanding the Payment Processing Network Individuals Merchant seller of goods Customer buyer of goods Institutions Customer s Issuing Bank provides customer s credit card information and verification Merchant s Acquiring Bank provides internet merchant account Processor authorizes credit card transactions and settles funds for merchants 4

The Payment Network Provides Processes and Services Processes Authorization the process of verifying a customer s credit card Settlement the process of collecting funds from the customer s account Services Payment Processing Service connects merchants, customers, and banks through secure online transactions. Gateway the secure pipe between the banks and the processor 5

Authorization Process Payment Processing Service 3 2 7 6 Merchant 4 8 Customer 1 5 Customer s issuing bank Processor 1. Customer decides to make an online purchase and inputs credit card information 2. 3. 4. 5. 6. 7. 8. Merchant s website receives customer information and sends it to a payment processing service Payment processing service routes information to processor Processor routes information to bank that issued customer s credit card (issuing bank) Issuing bank sends authorization (or declination) to processor Processor routes transaction results to payment processing service Payment processing service sends results to merchant Merchant decides to accept or reject purchase 6

Settlement Process Payment Processing Service 2 1 4 3 Merchant 7 Customer s issuing bank 5 Processor 6 Merchant s acquiring bank Customer 1. Merchant informs the payment processing service to settle transactions 2. Payment processing service sends transaction information to the processor 3. Processor checks the information and forwards settled transaction information to the issuing bank 4. Issuing bank transfers funds to the processor 5. Processor routes funds to the acquiring bank 6. Acquiring bank credits merchant s bank account 7. Issuing bank includes merchant s charge on customer s credit card account 7

PayPal Provides an All-in-One Solution for Online Merchants Payment Processing Service Customer s issuing bank Merchant Processor Customer Merchant s acquiring bank Protecting the security of a merchant s information is the top priority at PayPal.. 8

Understanding the Risks of Internet Fraud Vulnerabilities abound leading to losses Authentication is a challenge Hackers can break into a merchant s network Hackers can also steal customer identities Multiple access points for break-ins An estimated $2.8B USD was lost to online fraud in the U.S. and Canada in 2005 The rate of credit card fraud for online sales is three to four times higher than the overall fraud rate 9

Common Fraud-Related Risks Product theft Using a stolen credit card to purchase goods and services Chargebacks A cardholder disputes a credit card purchase Accessing payment networks Identity theft Cash theft Accessing a payment network to complete fraud Using stolen information to open new credit cards Issuing unauthorized credits or payments 10

How to Protect Your Business Against Fraud 1 2 3 Transaction Level Ensure each transaction you accept and process is valid, and be careful in reviewing suspicious transactions because some may be valid. Account Level Make sure only authorized users have access to your payment gateway account, and be alert for suspicious account access patterns. Network Level Ensure your perimeter is defended against unauthorized access. 11

Your Disclosure Policy Tells Customers that You Are Honest and Dependable 1 Business Description Explains what the company does 2 Privacy Policy Describes how the company treats and protects customers information 3 Shipping Policy Details shipping terms, shipping classes offered, & expected delivery timeframe 4 Return Policy Provides clear guidelines on how a return is handled 5 Contact Information Makes it easy for customers to get in touch with the merchant via different communication channels 12

Compliance with PCI Data Security Standards Must Be Followed Control Objective Requirement Build and Maintain a Secure Network 1. Install and maintain a firewall configuration to protect cardholder data 2. Do not use vendor-supplied defaults for system passwords and other security parameters Protect Cardholder Data 3. Protect stored cardholder data 4. Encrypt transmission of cardholder data across open, public networks Maintain a Vulnerability Management Program 5. Use and regularly update anti-virus software 6. Develop and maintain secure systems and applications Implement Strong Access Control Measures 7. Restrict access to cardholder data by business need-toknow 8. Assign a unique ID to each person with computer access 9. Restrict physical access to cardholder data 10. Track and monitor all access to network resources and cardholder data 11. Regularly test security systems and processes Regularly Monitor and Test Networks Maintain an Information Security Policy 12. Maintain a policy that addresses information security 13

PayPal Offers the Payment Solution that Meets Your Business Need PayPal Products Website Payments Standard Website Payments Pro** Express Checkout** Payflow Gateway Scenario #1 Scenario #2 Scenario #3 Scenario #4 Accept online credit card payments with minimal effort Build an all-in-one solution for accepting web, phone, fax and mail payments Accept PayPal, keep current payment processor Provide a secure connection from your online store to your merchant account 14

Selecting the Right Product for Your Business Product Website Payments Standard Website Express Payments Pro Checkout Payflow Gateway Scenario Accept online credit card payments with minimal effort Build an all-inone solution for accepting web, phone, fax and mail payments Accept PayPal, keep current merchant account Establish a secure connection between online store and merchant account, and keep merchant account Internet merchant account needed? Where customers checkout Virtual Terminal included? Business credit approval needed? PayPal X X PayPal or merchant s website PayPal PayPal or merchant s website X X X X X 15

Questions? 16