Smartcards and Beyond

Transcription

1 Smartcards and Beyond Nicholle Lindner Head of Cards Westpac Group 22 nd Nov 2011

2 AGENDA TODAY The history of payments What are smartcards? What are the benefits? The evolution of smartcards Contactless functionality what does it mean for customers? Smartcards what s next? The future of payments 1

3 Payments: A Brief History Lesson Since history began civilization has been trying to come to grips with what is the best method for facilitating payments i.e the exchange of money for goods and services. Everyone agrees money has to have 4 key characteristics: Portable Divisible Durable Acceptable However sometimes we have gotten it really wrong in trying to achieve the above. Humans have used all of the various mediums and combinations between them below at various times in history: Tea Cowrie Shells Salt Grain Cows Tusks and Teeth 2 Once coins were invented in Asia Minor around 600BC, they then spread to China and then India. This provided a better medium of exchange. Then the Chinese invented paper notes around 650AD and Marco Polo brought them back to Europe in the 13 th century where they really took off. But we weren t finished evolving payments just yet!

4 Smartcards 101 What are smartcards? A smart card resembles a credit card in size and shape, but inside it is completely different. First of all, it has an inside -- a normal credit card is a simple piece of plastic. The inside of a smart card usually contains an embedded microprocessor. The microprocessor is under a gold contact pad on one side of the card. Think of the microprocessor as replacing the usual magnetic stripe on a credit card or debit card. Smart cards are much more popular in Europe and Australia than in the United States. In Europe, the health insurance and banking industries use smart cards extensively. For example, every German citizen has a smart card for health insurance. The microprocessor on the smart card is there for transmitting data securely. The host computer and card reader actually "talk" to the microprocessor. The microprocessor enforces access to the data on the card. The smart card uses a serial interface and receives its power from external sources like a card reader. 3 Magnetic stripe technology remains in wide use in the United States. However, the data on the stripe can easily be read, written, deleted or changed with off-the-shelf equipment. Therefore, the stripe is really not the best place to store sensitive information. In Europe instead, the card carries the intelligence. Much smarter!

5 Benefits of Smartcards The chip is capable of doing processing and storing secret information securely The chip is inserted into the terminal reader and is present during the entire payment period The chip can perform checks off-line The chip can impose controls Initial drivers for EMV to reduce fraud loss Lost and stolen Counterfeit Skimming Below floor limit credit risk Additional chip applications Loyalty Authentication Transit/ticketing Access control e/m-commerce Stored value Contactless 4

6 Lifestyle benefits of Smartcards Consumers want more sophisticated payment tools and products Smart cards can be designed to complement lifestyles and needs Combine payment functions in a single card: Loyalty Reward Personal data storage Access to selected locations EMV credit and debit payment is all about efficiency Reduces the cost of fraud Reduces credit risk of cardholder overspend Reduces the cost of charge-backs and disputes However smartcards can do much more - multi-application cards can: Contactless payments Digital wallet Chip based loyalty Transit Government applications 5

7 The Evolution of Smartcards Exponential technology innovation in recent years History Magstripe technology was invented in 1960 Forty years of relatively low level changes to the technology EMV EMV Cards launched (Australia) in 2001 Migration to Chip enabled terminals commenced in % of new credit cards issued are EMV since Jan 2010 All acceptance terminals EMV enabled by April 2012 Contactless Contactless Cards launched (Australia) in 2008 Contactless Readers deployed (Australia) in 2008 Mobile Mobile Payments pilots commence in 2008 Various mobile pilots undertaken over

8 The Evolution of Smartcards (continued) From Magnetic stripe card to EMV (chip and PIN) Multi application smart card Contactless payments (Visa paywave / Mastercard paypass) Mobile proximity payment - Smartphone 7

9 Smartcards The journey First GlobalPlatform multi-application card Japan s Mitsui Sumitomo Bank VSDC Identity Prepaid purse (value stored in the card chip not in an external account, can be used offline) First production post issuance download Conducted July 2002 Downloaded PC Login / Network Authentication applet Downloaded over the Internet, using PCconnected reader 8

10 Smartcards Identity GlobalPlatform multi-application card Identity Demographic data Service Specific applets Identity card for 4.5 million USA DOD employees Very strong identity authentication PKI Biometrics Post issuance updates required 9

11 Contactless Payments Speed, Security, Safety and Security Westpac has been steadily migrating its credit card offerings to feature contactless technology and all new cards are now issued with contactless functionality (embedded antennae) on new account, card expiry or re-issue. Customers are by and large embracing the new feature for everyday purchases, although there are some security concerns amongst our card customer base. To make a purchase your card needs to be within 4cm of the terminal reader for more than half a second and the merchant must already have entered the transaction amount into the terminal for it to be approved. Therefore you won't be billed more than once by accident if your card is held against the terminal more than once. Your card also never needs to leave your hand. In addition we have enabled the following for customer s peace of mind a $100 purchase limit in a single transaction for contactless. Above that amount you still swipe and sign or use a PIN. Altitude Gold Altitude Platinum Singapore Airlines Platinum Singapore Airlines Gold 10 As per our standard protection, Mastercard and Visa Zero Liability policies protect you against unauthorised transactions. Embedded antennae

12 Smartcards what s next? All in one! An Evolved Visa Brand Mark Chip E-commerce (Internet secure) Visa smart credit Transit payment (bus, subway) Contactless Identity Additional memory for other applications 38 Loyalty Records Healthcare 11

13 The Future of Payments Debit Contactless Chips The Mobile Revolution 1958 E-Commerce Smartphones 12

14 Why mobile is changing everything A whole new innovation cycle The world s first ubiquitous technology 3.3 Billion Mobiles 800 Million PCs 1 Billion Internet Users 1.5 Billion Visa Cards 2 Billion TVs 100 Million ipods Source: GSM Association; ICT Research; Morgan Stanley Global Internet Trends April

15 Where mobile fits in Payment Point of Sale (POS) Mobile contactless payments Remote Via IVR, SMS, mobile internet Value-Add Offers Mobile offers and discounts Alerts and notifications Customers set parameters; Issuer triggered alerts Money Transfer Acceptance Remittances Cross-border and domestic Mobile acceptance Mobile device enabled to accept both debit and credit payments 14

16 15 Mobile Payments Using enabled iphone (courtesy of Visa)

17 Customer benefits via adoption of mobile payments Customer Benefits Significant consumer appeal and ease of use Convenience of single form factor Enhanced Security Fast remote set-up Coupons and Value Added Services Merchant Benefits Customised POS Offers Works on current Contactless infrastructure Bank Benefits Lower long term distribution costs Integration with other Mobile Banking Applications Ability to remote update, block, unblock & delete Offers Mobile Alerts or read Smart tags 16

18 17 Questions