2. Problem Statement
Research - Payment Industry & its Innovations
This research also talks about the
challenges, risks, and benefits in the industry.
What other industries are linked with the Payment Industry
Impacts of this industry on the global economy.
The purpose of this research project is to understand
how Payment Industry is evolving,
how it is advancing with the latest technologies along with innovations
through the internet and smart devices.
3. What is a payment?
Payment is a method of paying money from one entity to another
entity, and the entity can be a person or business.
Available money sources are cash, bank (check), cards, digital
currency-like bitcoin.
Sender Receiver
Funding Source Settlement
Initiates
4. Introduction
Earlier, the payments made with cash, paid directly to retailer.
Payment industry separated as the customer wanted a
choice on the payment methods and
selection of their desired money source to that payment method.
5. Disruption Causes
Traditional Banks
processing times
fee on each and every activity
service fee, transfer fee, settlement fee, account maintenance fee, ATM fee, check bounce fee, overdraft fee, etc.
Millennial behavioral impact
Technological innovations disrupted the Industry
Internet and Smart devices
e-commerce business integration with the payments
6. Payment Systems, Closed Loop
Transfer of money between two
entities with the same payment
processing company like PayPal,
Western Union, etc.
Money transfer happens instantly,
as identity has already verified.
Closed Loop system is safe, secure,
fast and seamless.
End User End User
Closed Loop
Systems
7. Payment Systems, Open Loop
Entity A issues a check to another entity B, and entity B deposits the
check in a bank where they have an account. It could be the same or
different bank.
Customer has the flexibility to work with their own bank.
Processing and settling funds take days.
End User End User
Open Loop Systems
(Bank Transfer
System)
Bank Bank
8. Payment Methods
Banks – Money Transfers, Bill Pay
Closed Loop Systems like PayPal, Western Union
Digital Wallets – Apple Pay, Android Pay
Money Grams
Cashier Checks
Wire Transfers
Blockchain
11. Most prominent card available in the market.
Credit Cards issued based on their credit
rating, and on their payment ability. Also, the
credit revolves as they pay.
Credit Card issuers offer a specific amount of
cash as a credit to the customers (based on the
credit worth), where they can spend it on their
current and future needs.
Banks or Issuers charge an interest on
borrowed money.
12. Card types and Payment authorization flow
Card Types
o Credit Card (Based on credit worth)
o Charge Card (Like Credit Card)
o Debit Card (Bank cards)
o Gift Card / Prepaid Card
o Corporate Card (Businessmen Travel)
o Purchase Card (Admins for office)
o Promotional Card (Airlines, Vacation)
o Store Card (iTunes, Macy’s)
Online Transaction Processing of a payment
13. Card’s Economics
Money Moved, Commission Charges
Cardholder gets charge of $100.00
Issuer: Holds $1.14, transfers $98.86 to Acquirer
Acquirer: Holds $.0.45, transfers $98.41 to Merchant
Merchant gets after settlement: $98.41.
14.
15. Payment Methods & Checkout Options
Checkout from e-commerce websites using Cards, Closed Loop Systems like
PayPal, Visa Checkout, Chase Pay etc.
Bluetooth – Beacon Technology
Short URL like PayPal.me
VR Pay – Nodding head
Contactless (NFC) – Apple Pay, Android Pay
QR Code – Pay through image
Mini Card Readers: Square, PayPal Here
Hands free payments - PayPal in Home Depot
16. Risks and Threats
Carding (Stolen card information and retrying for a good card)
DoS (/DDoS) Attacks
Card Not Present (Online, Recurring Transactions)
Counterfeit Cards (Stolen CC data to produce card)
Stand-In Transaction (Network Availability)
17. Secure Data Transmission
Data Encryption
P2PE Solution
Tokenization
EMV Chip & PIN, Chip & Signature
Compliance
Government Regulations
PCI Standards
Regional Restrictions
18. Fraud Types
Stolen Cards – Bad Merchant Account
Fake Cards – Generation from Carding/ZDA
Chargebacks – Request for refund, New Merchant
Buyer Fraud – Refund Game to make extra set of money
Buyer Fraud – Refund Game to keep goods
19. Fraud Prevention and Detection
Tools and Procedures
Card Verification Method (CVV2, CVC)
Address Verification System (AVS)
3D Secure (Visa & MC)
Max Mind – Min Fraud
IP Blocking at Load Balancer
20. Payments Connected
Customers forgetting ‘how to make the payment, now?’
when using services like
Cab applications - Uber and Lyft
Vacation planning applications like Expedia, Airbnb
Carpool applications like Scoop, Waze Ride etc.
Social apps like Facebook, Instagram etc.
Gaming apps to buy points, related goodies etc.
and many other apps does various other innovative things for customers
Order products ahead using Smart Apps like PayPal
23. Conclusion
Industry evolved from traditional pain points.
Card evolution is start of the change.
Seamless experiences – Contactless, Hands free, Head Nodding etc.
Millennials behavior on getting things done, right away.
Latest innovations in Technology invented Smart devices like Smart phone.
Internet helping to stay connected wherever, whenever to make secure payments to
anyone in the world through email, phone number, and smart applications.
Payments connected with various payment methods, and several money sources.
Frauds, Risks and Threats are included.
Near-field communication (NFC) is a set of communication protocols that enable two electronic devices, one of which is usually a portable device such as a smartphone, to establish communication by bringing them within 4 cm (2 in) of each other.
Denial of Service (DoS) is one kind of cyber threat that an attacker or spammer is sending an enormous number of requests to merchant site such that they cannot process any payments.
EMV: Europay, MasterCard and Visa - is a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions.
PCI DSS: Payment Card Industry Data Security Standard
Data Encryption: Secure Sockets Layer (SSL) + Transport Layer Security (TLS)
Point-to-Point Encryption (P2PE): Most sensitive information in the card is the card number/Primary Account Number (PAN), Card Expiry Date, Card Validation Code (CVV), and Email, and other insensitive data that transmitted are the card holder name, and their address, retailer account details.
Tokenization in real terms is the process of substituting a sensitive data element with a non-sensitive equivalent, referred to as a token.