THE GLOBAL UNIFIED PAYMENT NETWORK. Building real economic value for Payment Market Participants

Transcription

1 THE GLOBAL UNIFIED PAYMENT NETWORK Building real economic value for Payment Market Participants

2 DISCLAIMER This document is an overview ( Overview ) of HAZZA. The Octo3 Foundation Limited ( Octo3 Foundation ) reserves the right to amend or replace any or all of the Overview at any time and undertakes no obligation to update the Overview or to provide the recipient with access to any additional information. Recipients are notified as follows: Eligible purchasers: the information in this Overview is for prospective purchasers and is not intended to be received or read by anyone else. No offer of securities: the HAZZA Token (as described in this Overview) is not intended to constitute securities in any jurisdiction. This Overview does not constitute a prospectus nor offer document of any sort and is not intended to constitute an offer or solicitation of securities or any other investment or other product in any jurisdiction. Any offer or agreement in relation to any sale and purchase of HAZZA Tokens is to be governed solely by a separate document setting out the terms and conditions of such agreement and may not be available to all persons. No advice: this Overview does not constitute advice to purchase any HAZZA Tokens nor should it be relied upon in connection with, any contract or purchasing decision. No representations: the Foundation makes no representation or warranty to the recipient or it advisers as to the accuracy or completeness of the information, statements, opinions or matters (express or implied) arising out of, contained in or derived from this Overview or any omission from this document or of any other written or oral information or opinions provided now or in the future to any interested party or their advisers. This Overview contains forward-looking statements that are based on the beliefs of the Foundation, as well as assumptions made by and information available to the Foundation. No representation or warranty is given as to the achievement or reasonableness of any plans, future projections or prospects and nothing in this document is or should be relied upon as a promise or representation as to the future. The Foundation expressly disclaims all liability for any loss or damage of whatsoever kind (whether foreseeable or not) which may arise from any person acting on any information and opinions contained in this Overview or any information which is made available in connection with any further enquiries, notwithstanding any negligence, default or lack of care. Risk warning: potential purchasers should assess the risks and their own appetite for such risks independently and consult their advisors before making a decision to purchase any HAZZA Tokens. Translations: this Overview and related materials are issued by the Foundation in English. Any translation is for reference purposes only and is not certified by any person. If there is any inconsistency between a translation and the English version of this Overview, the English version prevails. Property of the Octo3 Foundation: this Overview is the property of Octo3 Foundation and, by receiving it, the recipient agrees to not copy or distribute without the express permission of the Octo3 Foundation. Unless otherwise stated, all references to $ and dollars in this Overview pertain to United States dollars. This Overview has not been reviewed by any regulatory authority in any jurisdiction. References in this Overview to specific companies and platforms are for illustrative purposes only. Other than Octo3 Limited and Octo3 Foundation, the use of any company and/or platform names and trademarks does not imply any affiliation with, or endorsement by, any of those parties. 2

3 THE CHALLENGE Total payment transaction value is expected to be $70TN by 2025 (1) The way it is managed is highly fragmented and complex causing friction for consumers, merchants, market participants (transaction fees could amount to $1.7TN by 2025) (2) THE OPPORTUNITY Technology disruptions such as blockchain are revolutionizing the industry levelling the playing field through creating inclusion and accessibility We have entered a convenience-first era, creating huge demand for a global unified payment network THE SOLUTION We have a proven, secure, enterprise payment platform The founders collectively have 60+ years of payments and technology experience We are creating a unified global payment network to drive a seamless experience for all participants at a lower cost THE PARTICIPATION Tokens will be created to access and pay for services on this global payments network through a Token Sale At the end of the Token Sale, there will be a fixed supply of tokens available in the market Note: (1) Electronic transactions consist of online and offline payments by credit card, debit card, pre-paid card, ewallets Note: (10and mobile payments, etc. Note: (2) Total transaction value multiplied by estimated transaction fees captured by intermediaries (2.5%) = $1.7 TN Source: Nilson Report ( ), Persistence Market Research (2016) 3

4 TABLE OF CONTENTS The Challenge The Opportunity The Solution HAZZA Senior Team Octo3 Foundation The Participation Project Timetable Summary Glossary 4

5 THE CHALLENGE 5

6 THE CHALLENGE Payments is a highly complex and fragmented market with many intermediaries ISSUERS Current State Inefficiencies: $585 BN PAYMENT METHOD PROVIDERS ACQUIRERS PAYMENT SERVICE PROVIDERS $23.4TN $22.8TN (in 2016) (1) (in 2016) (2) CONSUMERS MERCHANTS ONLINE PROVIDERS ALTERNATIVE PAYMENT METHODS TECH SOLUTIONS TERMINAL PROVIDERS (POS) Note: (1) Total electronic transaction value paid by consumers in Total electronic transaction value paid by consumers is a projection based on current trends. Note: (2) Total electronic transaction value received by merchants in 2016, after the intermediary fees charged by payment companies. Total electronic transaction value received by merchants is also a projection. Source: Nilson Report ( ), Persistence Market Research (2016) 6

7 THE CHALLENGE resulting in the lack of universal acceptance for consumers and merchants Current State Inefficiencies: $585 BN (average 2.5% fees) $23.4TN $22.8TN Lack of Universal Acceptance (in 2016) (1) (in 2016) (2) CONSUMERS MERCHANTS only 5 accepted A leading global ecommerce platform Typical physical and online shops only 2-3 accepted CASH Caused by Inefficient Layers of Intermediaries Fragmented Technology Standards Complex Multichannel Implementation Note: (1) Total electronic transaction value paid by consumers in Note: (2) Total electronic transaction value received by merchants in 2016, after the intermediary fees charged by payment companies. Source: Nilson Report ( ), Persistence Market Research (2016) 7

8 THE CHALLENGE Disruption is creating new business models and economies Disruptors Sector Incumbents Media & advertising Newspaper, Traditional media Travel & accommodation Hoteling groups, Travel agencies Transport Entertainment & publishing Financial services Car hire and taxi industry Video, music and multimedia rentals Banks, traditional service providers Retailing Department stores, brick and mortar retailers Payment services and economy Credit card Cash What is next for Payments? 8

9 THE NEXT EVOLUTION New technologies can breathe new life into a historically proven model HISTORY FUTURE SELECTED EXAMPLES The birth of First credit card issued by // The birth of the Alliance The birth of the Association First card issuance in China The birth of Visa becomes For-Profit Issuance of first bitcoin The birth of MasterCard becomes For-Profit Membership models have been successful, however they: Are private alliances with expensive membership fees Are an exclusive club for large players, excluding market participants Result in a fragmented market, with high barriers to entry // Emerging APMs and innovations are mostly point solutions For B2C: Alipay, Wechat Pay or ApplePay For Inter-bank: Ripple Do not address: ecosystem and interoperability The birth of Release of The birth of Payments market will need: An open & transparent payment network driving global decentralization Run by members for members for anyone and everyone Leveraging internet and blockchain technology 9

10 THE OPPORTUNITY 10

11 CASHLESS PAYMENTS The non-cash transaction value is expected to exceed GLOBAL PENETRATION Alipay aims to reach a global customer base of SECTOR MOMENTUM Harnessing the explosive growth and innovation in the $70 TN BY 2025 China s mobile payment transaction value grew by 145x in the last 5 years Payment intermediaries is a $585 BN business and estimated to grow to $1.7 TN by 2025 DIGITAL ADOPTION By 2022, smartphone penetration is expected to reach 2 BN BY 2036 Aggressive acquisition of merchants and customers by alternative payment methods (APMs) Ant Financial spent $4 BN in the last two years on market entry FINANCIAL INCLUSION Third world economies, cash is used for payments industry 6.8 BN USERS GLOBALLY 70% OF ALL CONSUMER TRANSACTIONS (2016) 77% increase from 2016 enabling digital payments PMPs are going omni-channel with different underlying technologies (e.g. Visa paywave, MasterCard Paypass, etc.) High barriers to entry for merchants, consumers and APMs New technologies enabling financial inclusion Sources: Goldman Sachs (2017), Nilson Report ( ), Persistence Market Research (2016), Euromonitor (2017), McKinsey (2016), Ripple Insights (2016), Boston Consulting Group (2015), emarketer (2016), China Daily (2016), Ericsson (2017), iresearch Global (2016), Boston Globe (2017), CNBC (2017), Economic Times (2017), TechCrunch (2017), Reuters (2017) 11

12 THE OPPORTUNITY Universal acceptance could be realized through a democratized payment platform Scenario: Chinese tourist spends 20 in Tesco Express in London with credit card Issuers From a closed payments economy PMPs/APMs Acquirers PSPs SELECTED EXAMPLES Customer will be charged FX conversion and transaction fees (~1%) Consumers Merchants Merchants are charged 2.5% on average by payments intermediaries to an open payments economy ILLUSTRATIVE Chinese tourists with WeChat Pay Go to Tesco Express in London Direct and hassle-free payments enabled by smart contract Accept WeChat Pay with the use of HAZZA 12

13 THE SOLUTION 13

14 HAZZA We plan to migrate a proven Fintech payment platform to blockchain technology SOLUTION OVERVIEW Migrating an existing proven payment platform to blockchain Creating an open access, global, unified payment network Through a not-for-profit foundation governed by the community through a decentralized structure (DAO) BENEFITS Revolutionizing the payment ecosystem Optimizing business engagement Leading financial inclusion Enhancing global acceptance of all payment methods The HAZZA network concept was born with this thinking 14

15 CERTIFIED PROVEN PROVEN PLATFORM Using a proven omnichannel, certified and secure solution Certified processor of Visa, MasterCard, Discover Card, Diners Club, and American Express BASE I and BASE II capable Fully functional ISO 8583 Payment Switch Fully compliant local/global instances REAL TIME OMNI-CHANNEL Proprietary, cloud-based technology with simple API integration Intelligent routing & switching for cost optimization Real-time consolidated reporting and dashboards Unlimited scalability SECURE E-commerce, Physical PoS, mpos, MOTO, coupon, loyalty on a single integrated platform All major Card Brands and comprehensive coverage of global APMs Processing in 130+ currencies Web-based, secure portal for transactions management Comprehensive audit trail & access control Encrypted payment card data PCI-DSS Level 1 compliant 15

16 TECHNOLOGY POSSIBILITIES Leveraging blockchain technology KEY FEATURES KEY BENEFITS Peer-to-peer network No central control of network No intermediaries Close to real time settlement Decentralized and Immutable Ledger Public, write-once ledger All transaction activities in the network are encrypted Increased security Independent transaction verification Encrypted transactions and identities No single point of failure Reduced cost Significant savings from disintermediation Minimal infrastructure costs Independently verified transactions All transactions require verification and confirmation by majority of the network participants Smart contracts Key application of blockchain technology Automatically facilitate, verify or enforce the terms of a contract Increased transparency Accessible source of truth Effective governance and audit by participants Reduced transaction time Near real-time transaction (sec/min) Smart contracts triggered once conditions are met 16

17 Existing Fintech solution to migrate IMPLEMENTATION Existing solution proposed to be migrated to blockchain technology in 3 phases Phase I Decentralize Business Engagement Phase II Build Engagement Marketplace Phase III Decentralize Payment Processing Merchants PSPs PMPs Other participants Merchants PSPs PMPs Other participants Merchants PSPs PMPs Other participants HAZZA Open API (decentralized) HAZZA Open API (decentralized) I.I I.II HAZZA Open API (decentralized) HAZZA network leveraging blockchain Participant Registry Rating Service Publishing HAZZA Smart Contracts Discovery KYC On-chain Transactions (Migrated to Blockchain) HAZZA Smart Contracts II Off-chain Transactions & Negotiations (State Channel Technology) Off-chain Off-chain Smart Contracts Smart Contract s III On-chain Transactions (Migrated to blockchain) HAZZA Core Platform Off-chain Transactions & Negotiations (Migrated to blockchain) Evaluate new blockchain technology readiness (e.g. Lightning Network, Faster Raiden) Channel Adaptor Merchant Service Participant Verification Roles of blockchain: Identity verification Contest judge Record distribution Private to 2 parties only Posted upon completion of business rules HAZZA PAYMENT ROUTE OPTIMIZER Leverage blockchain in core processing when ready HAZZA Core Platform HAZZA Core Platform HAZZA token-enabled smart contract functions 17

18 THE HAZZA NETWORK resulting in an open global unified payment network GLOBAL UNIFIED PAYMENTS NETWORK ILLUSTRATIVE Potential Benefits: Potential Benefits: Higher transaction volume Lower technology costs All Merchants An open access, all-to-all payments network enabled by blockchain technology All Payment Methods Greater access to merchants Lower customer acquisition costs Potential Benefits: Lower customer acquisition costs Greater access to merchants Service Providers and Issuers Decentralizing participation Eliminating inefficiencies Driving innovation & new economies Enabling Financial Inclusion New Use Cases and Value Added Services Potential Benefits: New business model New job opportunities for new products / services Note: HAZZA will have a local instance in jurisdictions where in-country payment networks are required. Companies shown above are for illustrative purpose only. 18

19 USE CASE Smart contract technology will be utilized to revolutionize and optimize business model Building a marketplace leveraging smart contracts Potential benefits for merchants I am looking for PMP Accept CNY/IDR/THB Service in all Asian countries Full KYC Above average rating Lowest price available No rating requirement Smart Contract I am a PMP Accept CNY/IDR/THB Services all Asian countries Full KYC POS provider Open and transparent marketplace access to all payment participants Real-time discovery complete automation by smart contract Significant time savings PMP / PSP engagement completed within minutes (vs. months) No downtime auto-switching to best payment option available Potential benefits for payments participants High rating only POS Provider MERCHANTS HAZZA-enabled smart contract with self-discovery High rating only PAYMENT INTERMEDIARIES Average rating Minimized merchant acquisition cost automated business engagement Greater merchant access with high scalability exposed to global merchants with one connection Minimized operational risks all rules pre-set on smart contracts Expected to be completed automatically within minutes on the HAZZA network 19

20 HAZZA SENIOR TEAM Founders: 60+ years collectively of payments and fintech experience AJMAL SAMUEL Founder & Chairman of OCTO3 Limited TYRONE LYNCH Chief Executive Officer (CEO) of OCTO3 Limited HANS WONG Founder and Chief Technical Officer (CTO) of OCTO3 Limited 20+ years of financial infrastructure, payments, clearing houses, regulatory, IT and management experience Ex-President and CEO Cityline, Founder and CEO ASAP Transaction Processing Corporation Limited Fellow of the Hong Kong Institute of Directors Member of the Institute for Electrical and Electronic Engineers (IEEE), International Computer Society, and Association for Computing Machinery (ACM). Board member, Sir David Trench Fund (HKSAR Government) 20+ years of P&L management experience for global multinationals in the payments and technology sectors Expertise in international market entry and commercialization of new businesses (Recently created and managed NTT Group s new global payments service line) Former CEO of NTT DATA Hong Kong s global payment business, Senior VP at NTT Communications Asia and Senior Executive for Atos Origin and Schlumberger Japan 20+ years of industry experience in large-scale mission critical financial infrastructure and payments systems development, deployment and management Comprehensive working knowledge of the banking regulatory framework applicable to financial technology Previously led the technical direction, development and operation of mass transaction systems and designs and implementation of mission-critical messaging solutions at International Messaging Associates for US government organizations and many large international corporations 20

21 OCTO3 FOUNDATION HIGHLIGHTS The OCTO3 FOUNDATION is not-for-profit OCTO3 Foundation Aims to democratize the payment ecosystem and promote financial inclusion Intends to oversee the HAZZA open access payment Run by a not-for-profit foundation decentralized governance structure platform Expects to introduce various revenue streams to maintain sustainability, benefit participants and ensure it achieves its goals Surplus cash flow will be donated to selected charities and to support technology development in the payment/fintech industry 21

22 GOVERNANCE Governed by the community for the community COMMUNITY Governed by the community and not-for-profit Participants 3 rd party service providers PMPs Issuers Industry Associations Acquirers Coaches / Trainers KYC Services Data Analytics Merchants Consumer Groups Financial Services Other participants Credit Services Tax Services Other service providers Composition 7 Directors 3 Founding Directors 4 Independent Directors: elected by the Foundation members BOARD OF DIRECTORS Guidance Key decisions Review strategic and material decisions Committee setup: Remuneration, Nomination and Audit Committee ADVISORS Subject matter experts Key Responsibilities Oversee Token Sale and HAZZA network development Promote HAZZA network awareness OCTO3 FOUNDATION Executive Management Team Day-to-day operation To be appointed by Board of Directors Foundation Members Vote for Independent Directors and key decisions A portion of members to be elected by HAZZA participants PARTNERS Regulatory/Legal Technology Others 22

23 THE PARTICIPATION A token sale will be launched to raise required proceeds to build the HAZZA network The HAZZA Token will be the KEY to the HAZZA Economy

24 HAZZA TOKEN GOALS The HAZZA token sale (ticker: HAZ) HAZZA TOKEN OVERVIEW WHY A TOKEN SALE? Our vision is for the HAZZA Tokens to be the digital currency that will underpin the HAZZA network and will enable participants to: Pay for accessing the HAZZA network and its services Govern the technological development of the HAZZA network Contribute their efforts to developing the HAZZA network Utilize future token functionalities of the HAZZA Token once online To Democratize the Payments Market Levelling the Play field Global Accessibility Expedite Adoption Facilitate opening up of proprietary technology to a not-for-profit foundation for the benefit of the payments community Allow transparency of the HAZZA network and the various participants interests Access a wide pool of contributors and participants Allows 24/7 token sales Strong and efficient engagement with the community of users Bootstrap network effect 24

25 VALUE CREATION Using HAZZA tokens to access a potential $700+BN economy ESTIMATED VALUE CREATION FOR THE PAYMENT COMMUNITY ($ BN) HAZZA Roadmap Potential Token Utilities Phase I 50 10x 110 Phase II Access Govern Access Govern Develop x Access Phase III Develop Govern Note: (1) PSPs could save transaction fees paid to technology providers per transaction Note: (2) Merchants could save an estimated 1% of the projected non-cash transaction value due to disintermediation Note: (3) The additional interchange revenue of PMPs and issuers benefiting from the use of HAZZA network Source: Nilson Report ( ), Persistence Market Research (2016), Pew Global (2015) TBD 730 Potential savings on technology costs (1) Benefiting PSPs & 15+ MN merchants Potential savings on transaction costs (2) Benefiting 40+ MN merchants Potenial economic value of greater access (3) 15% expansion of payments market Method of payment Identify Verification Other utilities FINANCIAL INCLUSION $2500BN (2.5 BN unbanked spending <US$100 per month) OTHER POTENTIAL BENEFITS TO THE COMMUNITY New job opportunities for society (reskilling) Creating sub-economies around HAZZA new financial products/services Open for innovation to shape payment system and drive adoption Lowering barrier of entries for small-tomedium enterprises Faster adoption of new payment methods $500+BN Potential other benefits 25

26 HAZZA TOKEN GOALS Sale structure and token distribution SALE STRUCTURE TOKEN DISTRIBUTION KEY DATES FIXED proportion to the public & private sale Aug 25 Sept 1 HAZZA Website Go-Live Whitepaper Release FIXED token supply FIXED token quantity determined at end of sale UNCAPPED until completion of token sale Oct 3 Public Sale Private-sale US$0.38 token price MARKET DETERMINED OUTCOME Oct 31 On or after Nov 8 Token Activation Note: 1) The Foundation reserve the right to end the Token Sale at any time before Oct 31 without prior notice; 2) Token activation is subject to completion of AML / CTF requirements as may be required by Octo3 Foundation. 26

27 HAZZA Roadmap Token Sale Schedule PROJECT TIMETABLE Aiming to launch the HAZZA network within 8 months Q3 Q4 Q1 Q2 Q3 Q4 Jul Aug Sep Oct Nov Dec Project Kick-off Whitepaper Release HAZZA Token Activation (Nov 8) Token Sale Mobilization Sept 1 Oct 31 Private sale Oct 3 Oct 31 Public Sale Legend Milestones Phases Key activities Octo3 Foundation Registration Smart Contract Development Smart Contract Activation (Oct 3) Octo3 Foundation Org Setup Participant Register Service Publishing HAZZA Phase I Development API Development & Release Discovery KYC Participant Verification Merchant Service Rating Sandbox Release Pilot HAZZA Go-live Phase II Development 27

28 SUMMARY Disruption is inevitable Timing is perfect HAZZA is positioned to harness this potential to benefit you HAZZA has the solution and the team to realize this opportunity 28

29 APPENDIX Glossary Acquirer APIs APMs B2C BASE I BASE II DAO FX HAZZA Token HAZZA network ISO 8583 Issuer KYC mpos MOTO Term Definition Financial institution which provides merchant accounts and related services to merchants Application programming interfaces Alternative payment methods Business to consumer VisaNet s authorization system VisaNet s settlement system Decentralized autonomous organization Foreign Exchange ERC20-compliant token issued using the ethereum network The technology network that all payments players can connect to for global unified payments The international standard for financial transaction card originated interchange messaging issued by the International Organization for Standardization A financial institution which issues a card and in some cases a line of credit to the consumers Know-your-customer Mobile point-of-sale Mail order/telephone order 29

30 APPENDIX Glossary (Con t) Octo3 Octo3 Foundation Open API PCI DSS Term Octo3 Limited Octo3 Foundation Limited Definition A publicly available application programming interface that provides developers with programmatic access to a proprietary software application Payment Card Industry Data Security Standard PCI Level 1 Payment Card Industry Level 1 POS PMPs PSPs VAS Point-of-sale Payment method providers Payment service providers Value-added service 30