Empowering Retails with Electronics and Mobile Payment

Empowering Retails with Electronics and Mobile Payment ASEAN Financial Institution Conference 2013 1st Edition in Yangon 1st March 2013 Ng Kian Seng ManagePay Group Malaysia 0

Agenda ManagePay Corporate Introduction N2N Solutions ManagePay History & Achievements Understanding the Basics of Card Payment Who does what Authorization Process Flow Settlement & Clearing Process Flow Service Fees (Merchant Discount Rate) distribution Common Cards of Card Scheme (Visa/MasterCard)- Credit Card, Debit Card & Prepaid Card Understanding of Available Acquiring System: Internet Payment EDCPOS Terminals Mobile POS Challenges 1 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

ManagePay N2N Solutions Back Office Application Front Office Application Card Issuing Application Card and Card Applets CLMS CardGain Loyalty Management System; MPTUS - Multi-purpose Payment Top Up Solution. MDEX B2B2C E-Commerce Solution and Services Sinatec Enterprise Application ERP, POS, Mobile Applications. Acquiring System & Network solution covering EDCPOS Payment, Mobile POS Payment, & Internet Payment, with VAS on Loyalty System, Prepaid Top Up Solution, Billing, Voucher and Ticketing System EMV Card toolkits & Card Mailer Program Personalization Service Complete N2N Secure Transaction Solution Personalization Services 2 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

ManagePay Payment Industry History & Achievement - I Year Key Achievements/Milestones/Awards 2001 ManagePay was granted MSC Status by the Government of Malaysia. 2002 ManagePay was appointed Hypercom (World 2 nd largest EDCPOS Terminal, and Largest Payment Network NAC Supplier) System integrator 2005 Awarded by EON Bank to be the Payment Network NAC (Network Access Controller) system integrator Awarded in-source EMV Card Personalisation contract by EON Bank ManagePay was awarded in-source EMV Card Personalisation contract by Southern Bank Berhad 2006 ManagePay was awarded contract by EON Bank to be the EDCPOS Terminals supplier to support the Bank s Merchant Acquisition 2007 ManagePay was awarded contract by Maybank to be its External Sales Agent for Merchant Acquisition and supply of EDCPOS Terminals 2008 ManagePay was appointed to manage and operate MATTA Co-branded Card by EON Bank, pushing ManagePay to be Loyalty System Operator 2009 ManagePay s MATTA Card Loyalty Management System was a finalist in the Best of Tourism and Hospitality Application category for the Asia Pacific ICT 2009 Award 3 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

ManagePay Payment Industry History & Achievement - II Year Key Achievements/Milestones/Awards 2009 ManagePay s MATTA Card Loyalty Management System was a finalist in the Best of Tourism and Hospitality Application category for the Asia Pacific ICT 2009 Award 2011 ManagePay was listed on Ace Market of Bursa Malaysia on 15 March ManagePay was invited to participate in Malaysian Government DTP s (Digital Transformation Program driven by MDeC and PEMANDU) Digital Malaysia Master Plan where we originated and championed the EPP (Entry Point Project) named Enabling epayment Services for SMEs and Micro Enterprises. 2012 MPAY officially launched by The Honourable Prime Minister of Malaysia on 21 June 2012. On 25 th September, ManagePay won the 2012 Frost & Sullivan Asia Pacific New Product Innovation Award in Mobile Electronic Payment Terminal Solution. SMECORP Malaysia had on October 17 th 2012 appointed MPSB to become a Third Party Acquirer to pursue with the EPP objective. 2013 On 25 th January, ManagePay received Notice of Compliance from Central Bank of Malaysia to roll out Electronic and Mobile Payment System. 4 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

Who Does What CARD SCHEMES (e.g. MasterCard/Visa) License Agreement License Agreement ISSUER ACQUIRER Cardholder Agreement Cardholder Acceptance Cardholder Sale Contract Products and Services Merchant 6 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

Authorization Process Flow 1 Cardholder 2 Merchant 3 Merchant Acquiring Bank 4 Card Scheme Payment Switch 1. Cardholder presents a credit card to pay for purchases. 2. Merchant swipes/insert the card, enters the amount, and transmits an authorization request to the merchant bank. 3. Merchant Acquiring bank sends the authorization request to the card scheme processing network. 4. Card Scheme processing network passes the request to the card issuer. 8 Merchant 7 Merchant Acquiring Bank Card Scheme Payment Switch 6 Card Issuing Bank 5 5. Card issuer approves or declines the transaction. 6. Card Scheme processing network forwards the card issuer s authorization response to the merchant bank. 7. Merchant bank forwards the response to the merchant. 8. Merchant receives the authorization response and completes the transaction accordingly. 7 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

Clearing & Settlement Process Flow Merchant Acquiring Bank 4 3 1 2 Card Scheme Designated Settlement Bank (Acquirer & Issuer) 1 1. Acquirer run daily settlement batch file, and update card scheme on total settlement amounts. Card Scheme push settlement file to issuer for reconcilation as well. 2. Card Scheme pay to acquirer bank, in T+X days, and debit issuing bank account, to each respective settlement bank. 3. Acquiring bank receive money from Card Scheme. Merchant s Account Bank 5 Merchant Cardholder Card Issuing Bank 6 4. Acquiring bank pay to merchant s settlement bank (it can be same as acquirer bank) in T+X days, 5. Merchant receive money from Acquiring bank. 6. Card issuer debit card holder account on all settled transaction 8 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

MDR (Merchant Discount Rate) or Service Fees Distribution 1 2 3 4.X 5.X % Service Fees Paid by Merchant Cardholder Merchant Merchant Acquiring Bank 4 Card Scheme Payment Switch 8 Merchant Acquiring Bank made the balance for services provided 7 Merchant Acquiring Bank Card Scheme Payment Switch 6 Card Issuing Bank 5 1.X % Shared by Card Scheme & Card Issuer 9 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

Common Cards of Card Schemes (Visa/MasterCard) Card Type Credit Card Debit Card Prepaid Card Where money comes from? Borrowing money from a bank or financial institution. (Spending "other's" money) Funds taken from the money that you have in your bank account. (Spending your "own" money) Funds taken from the money that you have prepaid in a special account. (Spending your "own" money) Commonly used: Credit given by Issuer, spending future money, good for cash flow Better control of spending, only spend what is available in your bank account. Normally used as gift card or private label card, carrying preloaded amount. Widely use for cardholder who does not qualify a credit card or debit cards. Interest Charges Interest will be charged on all outstanding amount not settled monthly. No interest charged No interest charged Credit Rating Responsible credit card usage and payment can improve one's credit rating. Does not affect credit rating. Does not affect credit rating. 10 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

Types of Acquiring System EDCPOS Terminal Traditional and most commonly used payment device for on-premise face to face payment, card present transaction. Can support both EMV & Non-EMV Transaction. Internet Payment Support payment for transaction done online, non face to face transaction, card not present transaction. Non EMV Transaction Mobile POS Payment Newer & fastest growing payment devices. Support payment for on-the-move, or on-premise face to face payment, card present transaction. Can support both EMV & Non-EMV Transaction. 12 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

EDCPOS (Electronic Data Capturing POS) Terminal EDCPOS Type Communication How it Work! Dial Up Phone Line PSTN IP PSTN Broadband IP Encrypted ISO 8583 message Network Access Controller (NAC) Acquiring Host Internet Encrypted ISO 8583 message Router/Firewall GPRS/3G Telco Mobile Network (GPRS/3G) Private IP Network Encrypted ISO 8583 message Telco 13 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

Benefits of EDCPOS Payment Most widely accepted payment acquiring devices worldwide Proven to be extremely secured, effective & efficient in handling payment transaction, both EMV & Non EMV Transaction. Easiest roll out mode as compare to Internet Payment & Mobile POS Payment for country just started their acquiring business. Training for Merchant is straightforward and easy, and is a very familiar payment device to all the worldwide card holders. 14 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

Internet Payment 1. Non Face to Face & Card not present transaction. 2. Support online e-commerce & mobile commerce payment 3. Widely used in online ticketing ordering especially in airlines, hotels & entertainment business. 4. Able to process huge volume of bill & utilities payment online, safe time & money in bill payment. 15 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

How it work! Merchant Domain Internet Payment Domain (Banks/Service Provider) Acquirer Domain Internet Internet Internet Payment Gateway Internet /TCPIP E-Commerce Website With Internet Payment Facilities Internet Acquiring Host MPI (Merchant Plug-In) 3D Security Server 16 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

Mobile POS Payment Mobile as the Point of Sales Every Smartphone is a cash register Projected 1 billion Smartphone ship globally by 2015 by IDC Projected global mobile payment by 2015 is USD670 billion by Juniper Research 17 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

Benefits of Mobile POS Payment Work on consumer owned Smartphone device Lower merchant startup cost, cheaper to roll out then traditional GPRS/3G EDCPOS terminal. Great mobility, light and easy to carry, make it a perfect payment solution for business on-the-move, small and medium company with limited or no store front. Low software maintenance cost versus traditional EDCPOS terminal, all software can be manage in the cloud. All software patches, update and enhancement is easily done through an app update on iphone AppStore, Google Play Store, or Windows Store. Smartphone payment application can be easily integrated with Value Added Features and services, enhanced Merchant and Card Holder payment experiences. 18 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

Mobile POS Payment Flow Key in amount and product description (if any), then tap on PAY button Insert card reader then insert payment card. Tap on SUBMIT button once the card reading process completed Once the transaction approved by bank, sign on the page and tap on NEXT button GPS location being captured for further proof of transaction. Key in the customer email address and tap on SUBMIT button to send digital payment receipt through email. 19 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

How it work! Merchant Domain Mobile POS Domain (Banks/Service Provider) Acquirer Domain Internet Encrypted EMV transaction data Mobile POS Payment Gateway [EMV Compliances] Internet /TCPIP Encrypted ISO8583 Message NAC Acquiring Host 20 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

Chip Readers ICC Chip Reader (For iphone, Android & Windows) EMV Level 1 USB ICC Chip Reader (For Android & Windows) EMV Level 1* 22 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

Mobile Payment Roadmap Smart Gadgets: Mag Strip (Non- EMV) or Chip Reader (EMV L1) Bluetooth PinPad with Chip and MagStrip Readers (EMV L1) All-in-1 Bluetooth PinPad with Chip and MagStrip Readers (EMV L1) plus offline EMV L2 Kernel, printer and contactless reader (supports Touch n Go) 24 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

Summary Cashless transaction must be in place to grow the trading and retail businesses, from the most conventional of cheque & cash payment, to card payment (local card like MUP, and international card like Visa, MasterCard, AMEX, CUP, JCB, Diners and etc). More payment option -> more transaction generated -> more sales -> more revenue -> growing economy. 29 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved

Thank you Ng Kian Seng ManagePay Systems Berhad Email : kianseng@mpsb.net Mobile : +6012-5651880 Office : +603-80231880 30 Strictly Private & Confidential Property of ManagePay Group All Rights Reserved