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E-Payments New Opportunities
United Nations Conference on Trade
Development Conference on Electronic Commerce
Strategies for Development Tunis June 20th 2003

• Ivan_Jones_at_MasterCard.com
• Vice President, e-Business Development
• Dubai

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Electronic Commerce of Total Transactions
EC GDV Activity Continues to Grow
Source MasterCard Data Warehouse
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Agenda

• E-Commerce, The Challenges
• E-Commerce, The Solution
• PC Authentication Program
• Chip Authentication Program
• MasterCard 3-D Secure Implementation
• MasterCard Internet Gateway Service (MIGS)

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E-Commerce Market Challenges
Consumers

• Fear of fraud remains barrier to converting
  online browsers to online shoppers
• Consumer Internet purchases generally restricted
  to domestic marketplaces

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E-Commerce Market Challenges
Merchants and Acquirers

• No guarantee of payment for merchant
• Online chargebacks growing
• Bears all risk for non-signature based
  transactions
• Online fraud losses mounting
• Lack of consistent mechanism toauthenticate the
  buyer to the seller
• Privacy laws restrict use of authentication tools
• High accountholder decline rate limits
  activity, especially for cross-border transactions

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Findings

• Reason Code 37 represents
• 58 for all chargebacks
• 70 of EC chargebacks
• Decline rates are
• 5 for all transactions
• 16 for EC transactions (same as MO/TO)

Note Based on MasterCard records.
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• What is it?
• MasterCard SecureCode is MasterCards consumer
  and merchant facing program name/identifier for
  our guaranteed payment solutions
• MasterCard SecureCode offers issuers flexibility
  with choice of authentication technology
  including both browser-based and applet-based
  solutions.
• MasterCard SecureCode accommodates MasterCard
  credit and debit including Maestro

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Solution Structure
Chip Authentication Program
MasterCard 3-D Secure Implementation
PC Authentication Program
Issuer Platform
SPA
SPA
EMV
Algorithm
Hidden Fields -and-

Merchant Plug-In
Merchant Requirement
Data Transport
UCAF
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Issuer Choice PC Authentication Program

• PC Authentication Program -- A download
  implementation of MasterCard's Secure Payment
  Application, based on the detailed specifications
  released 6/ 2001, and has been amended 8/2002
  which fully interoperates with the UCAF hidden
  fields supported by participating merchants.
• This specification has been licensed to more than
  84 technology vendors and involves the use of a
  small downloaded applet by the cardholder that
  works on his or her PC.

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PC Authentication Program
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Issuer Choice Chip Authentication Program

• Chip Authentication Program -- Designed to
  integrate the ease of use and security of an
  EMV-compliant smart card for authentication
  through a user's PC.
• This solution is designed to interoperate with
  the UCAF hidden fields specifications and is
  supported by both connected and un-connected
  smart card readers.
• Evaluating Clientless alternative

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Chip Authentication Program
UCAF with EMV Dynamic Cryptogram
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Issuer Choice MasterCard 3-D Secure
Implementation

• MasterCard 3-D Secure Implementation --. The
  MasterCard implementation of 3-D Secure includes
  support for the SPA algorithm and UCAF with no
  changes to the core 3-D Secure protocol. This
  implementation becomes the client-less (no
  cardholder download) authentication solution.
• MasterCard has licensed our SPA algorithm to
  vendors for use within their 3-D Secure version
  1.02 implementations for MasterCard issuers.

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MasterCard 3D-Secure Implementation with SPA AAV
Merchant
Cardholder
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UCAF Hidden Fields
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2
Plug-in
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10/13
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MasterCard Directory
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3
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Hosted or Issuer Access Control Server w/ SPA
Algorithm
Issuer
Acquirer
11/12
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What is MIGS?
MIGS is a turn key, internet payment gateway,
that significantly reduces the complexity and
costs of acquiring, enabling, supporting and
processing for EC merchants. MIGS leverages the
Banks existing transaction processing
connectivity to MasterCards Banknet Global
Network.
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Why MIGS for the Member Bank ?
Easy Integration, Known costs, Low Risk

• Banks lack business case yet face losing
  Merchants
• MIGS takes investment risk away from Member Bank
• Outsourcing with benefits of in-house and more
• MIGS is quicker to market (4 months instead of
  12)
• Much lower cost and off balance sheet!

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Member BenefitsA Low Risk Strategy

• MIGS requires minimal Systems development to
  integrate
• MIGS takes investment risk away from Member Bank
• MIGS cost advantage compared to In-House
  Infrastructure
• MIGS strengthens relationship between Bank and
  Merchant
• MIGS provides payment solutions for multiple
  segments
• MIGS strengthens the Banks Acquiring Business

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Payment Solutions - Multiple Segments
MIGS
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Benefits for African Countries

• New Export Potential
• Merchants can Market Directly To Consumer
  Anywhere
• Improves Foreign Currency Earnings
• You Decide

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