Topics. First Data and STAR Network overview. Competitive advantage. Fraud in emerging payments. Fraud innovation what s coming

Transcription

1 Todd Clark

2 Topics First Data and STAR Network overview Competitive advantage Fraud in emerging payments Fraud innovation what s coming 2

3 Introducing Todd Clark Background Entrepreneur Core Data Resources Leader at Concord EFS Sales leader at First Data and Feedzai Executive at Cardtronics Head of STAR Network First Data Other Interests Section hiking the Appalachian trial with his wife House champion ping pong player 3 Confidential and Proprietary 2016 First Data Corporation. All Rights Reserved.

4 First Data New management team with deep expertise leading global organizations in technology, financial services, payments, cyber-security, operations and controls Aligned behind the company s ambition to deliver nextgeneration commerce-enabling technologies that help drive growth Accelerated focus on innovation including the acquisition of six commerce-focused technology start-ups in the last three years Legacy of partnerships with some of the world s leading technology companies to deliver commerce-enabling solutions Moving at the speed of commerce 4 Confidential and Proprietary 2016 First Data Corporation. All Rights Reserved.

5 First Data s industry leadership and large scale give us unique operating advantages First Data by the numbers 5 Large SCALE 6 million+ business locations 4,000 financial institutions 1 million STAR locations 74 billion 2014 global transactions $1.9 trillion Global LEADERSHIP #1 merchant acquirer #1 issuer processor #1 Independent debit network 28% of global ecommerce processed Confidential and Proprietary 2016 First Data Corporation. All Rights Reserved. Global FOOTPRINT 118 countries with First Data clients 36 countries with First Data operations 24 years global operating experience 23,000 owner-associates worldwide 25% of segment revenue generated outside of the U.S.

6 First Data is at the Intersection of Commerce 2016 First Data Corporation. All Rights Reserved.

7 Comprehensive Suite of Commerce Solutions Our approach to innovations addresses how to improve commerce to be frictionless Size & Complexity GlobalChoice TM Solution available for client segment National/ Global >25 locations >100 employees >$70M sales Debit & PINLess echeck Acceptance Security Cross-Border Solutions ecommerce Solutions Mobile Solutions ucommerce Prepaid Gift Solution in development for client segment Mid-Market locations employees $10-70M sales Payroll Retail Private Label Cards Lending & Leasing Regional 2-10 locations 5-50 employees $1-10M sales Clover Go Clover Mini SMB <2 locations <5 employees <$1M sales Clover Mobile Clover Station Data & Analytics Loyalty & Offers Size & Complexity First Data Corporation. All Rights Reserved.

8 MORE PROTECTION STAR provides market leading fraud solutions that protect your brand MORE POWER STAR + First Data = the hub of the payment ecosystem with a 360 view and the scale to leverage all players MORE PROFITS STAR s competitive pricing and simple and transparent fee structure allow you to grow net income and improve your bottom line MORE REACH STAR is the only Network with market share to provide you a viable alternative 8 MORE CHOICE STAR increases choice and competition to allow you to compete for best economics on every transaction

9 STAR Network Touches All Parts Of The Commerce Ecosystem By the Numbers 4.6 Billion Transactions processed per year 116 Million STAR branded debit cards 446,479 STAR ATMS 3,600 Financial Institution Members The Product Suite STAR Network Acceptance PIN Debit, PINless STAR Access SM Signature Debit Fraud & Risk Management ATM POS ecommerce ebiller STARsf Surcharge Free ATM Mobile Payments New Releases STAR PINless Increase cost-effective debit transactions Quicker, hassle-free checkout experience Allows consumers to skip the PIN pad on purchases $50 or less STAR Access SM Provides a signature debit alternative to Visa/MC A multi-phased initiative to expand debit transaction support across the STAR Network 9

10 The Power of the Network 2016 First Data Corporation. All Rights Reserved. Channels: ATM In Store POS Internet ecommerce Biller Websites, Kiosks, IVR, Call Center In-App (Issuer or Acquirer mobile payment applications) Devices: Magnetic Stripe Card Chip Card Companion Cards e.g. Fobs, Mobile Mobile Devices (using Secure Elements or Secure Database e.g. cloud-based) Desktop Computers Cardholder Verification Methods (CVM): PIN Signature PINless (No CVM) Secure authentication options for Cardholder Not Present payments Over 9 Million Merchants Accepting Debit 10

11 PINless Debit- Transaction Savings QSR Case Study PINless Debit Results: Reduced Transaction costs 40-45% over current V/MC NO CVM transactions Pilot met the customer s expectations In process of currently rolling out 5,000 store of corporate & franchise locations Background: First Data estimated client would reduce transaction costs on 40% to 60% over their current V/MC NO CVM transactions (average of $.01 to $.03 per transaction) Pilot: Validate the impact and cost savings for ~50 merchants 11 Results: The customer experience from using a PINless Debit transaction did not differ from that of doing a V/MC NO CVM transaction Per transaction savings were in line with the estimates provided during pre-pilot ROI analysis

12 Fighting Fraud with Prevention Detection Authentication Prediction Manage risk with powerful, real-time solutions to help combat fraud and identify theft. Identify fraudulent transactions, and limit losses with real-time authorization scoring and neural network technology. Attract new and existing customers with state-of-the-art authentication tools while minimizing identity theft risks. Adding more value to our suite of fraud solutions with STAR Prediction - our best-in-class fraud score. Card Activation Authorization Name Match CardValue (CV) Validation Fraud Risk Identification Services FOOTPRINTS Online Internal Fraud Monitoring FICO Card Alert Service Fraud Manager SafeID Verification Score SafeID Questions SafeID Address Score PIN NowSM Verified by VISA MasterCard SecureCode Focused on intelligent and predictive capabilities to address additional risks associated with signature and other CVM transactions. Coming Spring

13 Fraud Score Differentiators The most Powerful Collection of Data Modern Machine Learning Speed of Learning Differentiators Breadth of Data Feedback Loop 13

14 14 Use Cases Drive Data Sources

15 Breadth of Data STAR Network Data PIN, PINless, ATM, STAR Access, e- Tailer, and Bill Pay Confirmed Fraud Fraud Chargebacks Negative File Real-Time, Near Real-Time, and Batch Feeds First Data Merchant Acquiring PIN, PINless, All other Signature Debit, including ecommerce/cnp Fraud Chargebacks Merchant Account Info Near Real-Time and Batch Feeds First Data Issuing (In partnership with our Issuers) Cardholder Management & Authorization System Cardholder Profile Confirmed Fraud and Fraud Chargebacks Fraud Data from FD Issuing Systems Near Real-Time and Batch Feeds 15

16 Speed of Learning Models updated immediately with new intelligence self discover patterns Ability to implement new data sources to enhance the model Continuous machine learning based on behavioral patterns Real-time data used to actively re-train models after each transaction 16

17 Models Make a Difference Global Brand Neural Networks STAR Machine Learning Opportunity Areas Cannot handle different input types Cannot handle missing values Not scalable Slow to train new models Needs tuning Best-in-class Generalizes patterns well Robust to different input types (text, numbers of different scales, etc.), missing data and outliers/errors Fast to train and score Requires less tuning 17 STAR s Goal Highest Approval Rates and Lowest Fraud

18 Test Results Key Findings High detection of fraud Detected 72% of fraud transactions 73% detection of fraud dollars Low number of false positives For threshold > 800, model has 1:1.97 False Positive ratio.19% False Positive rate More data improves the model Up to 10% improvement with more data added to model 18

19 Thank You For Your Time Todd Clark Head of STAR O M Todd.clark@firstdata.com Dean Nolan STAR Merchant Sales O M Dean.nolan@firstdata.com First Data Corporation. All Rights Reserved.