The Multichannel Issues and Opportunities of EMV 2.0
1. The Multichannel Issues and
Opportunities of EMV 2.0
Dr. Andreas Strobel, President, SPA
Tuesday 19th November 2013
shaping the future of payment technology
3. Who we are
The Smart Payment Association addresses the challenges of today’s evolving
payment ecosystem. We offer leadership and expert guidance to help members
and their financial institution customers realize the opportunities of
smart, secure and personalized payment systems and services - both now
and in the future.
Since 2004
Members:
shaping the future of payment technology
4. What we do
The SPA works in partnership with global standards bodies, its own vendor
community, and an expanding ecosystem of established and emerging brands
to offer an ever-growing portfolio of advisory and support services.
NonTraditional
Ecosystem Expert Advisor Services
Help shape the future of payments
Customers
Members Customers Services
Bring Value to Financial Institutions
Members Services
T
rade Organization
Traditional / Smart Card
4
2013/11/19 •
Technologies
Mulichannel and EMV 2.0
Advanced/ New
Fig 1
Extending advisory and
support across the evolving
community, the SPA is
addressing today’s challenges
and shaping the future
direction of payment
technologies, standards and
business models.
shaping the future of payment technology
6. Todays’ payment ecosystem for retail payments
is based on a multi-channel approach
Players
Payment means
Direct
payment
Cash
Prepaid
Commercial
Cards Credit transfers/
Direct debit
Traditional
payment
New
payment
Mobile
M-commerce
NFC
Apps
SMS
P2P Payments
Consumer
Online
EFT
E-commerce Credit cards
Google checkout
PayPal
Click and buy
1-Click
Provider payment options
Financial institutes
(Banks, PayPal)
Non-financial institutions:
MNOs
Device manufacturers
Merchants
PSP
security
Payment schemes (Visa, MC, …)
Payment
channels
Suppliers
Card vendors
Processors
ATM / POS providers
convenience
Consumer
availability
6
2013/11/19 •
Multichannel and EMV 2.0
shaping the future of payment technology
7. Todays’ payment ecosystem for retail payments
is based on a multi-channel approach
Players
Payment means
Direct
payment
Cash
Prepaid
Commercial
Cards Credit transfers/
Direct debit
Traditional
payment
New
payment
Mobile
M-commerce
NFC
Apps
SMS
P2P Payments
Consumer
Online
EFT
E-commerce Credit cards
Google checkout
PayPal
Click and buy
1-Click
Provider payment options
Financial institutes
(Banks, PayPal)
Non-financial institutions:
MNOs
Device manufacturers
Merchants
PSP
security
Payment schemes (Visa, MC, …)
Payment
channels
Suppliers
Card vendors
Processors
ATM / POS providers
convenience
Consumer
availability
7
2013/11/19 •
Multichannel and EMV 2.0
shaping the future of payment technology
8. Todays’ payment ecosystem for retail payments
is based on a multi-channel approach
Players
Payment means
Direct
payment
Cash
Prepaid
Commercial
Cards Credit transfers/
Direct debit
Traditional
payment
New
payment
Mobile
M-commerce
NFC
Apps
SMS
P2P Payments
Consumer
Online
EFT
E-commerce Credit cards
Google checkout
PayPal
Click and buy
1-Click
Provider payment options
Financial institutes
(Banks, PayPal)
Non-financial institutions:
MNOs
Device manufacturers
Merchants
PSP
security
Payment schemes (Visa, MC, …)
Payment
channels
Suppliers
Card vendors
Processors
ATM / POS providers
convenience
Consumer
availability
8
2013/11/19 •
Multichannel and EMV 2.0
shaping the future of payment technology
9. Todays’ payment ecosystem for retail payments
is based on a multi-channel approach
Players
Payment means
Direct
payment
Cash
Prepaid
Commercial
Cards Credit transfers/
Direct debit
Traditional
payment
New
payment
Mobile
M-commerce
NFC
Apps
SMS
P2P Payments
Consumer
Online
EFT
E-commerce Credit cards
Google checkout
PayPal
Click and buy
1-Click
Provider payment options
Financial institutes
(Banks, PayPal)
Non-financial institutions:
MNOs
Device manufacturers
Merchants
PSP
security
Payment schemes (Visa, MC, …)
Payment
channels
Suppliers
Card vendors
Processors
ATM / POS providers
convenience
Consumer
availability
9
2013/11/19 •
Multichannel and EMV 2.0
shaping the future of payment technology
10. Todays’ payment ecosystem for retail payments
is based on a multi-channel approach
Players
Payment means
Direct
payment
Cash
Prepaid
Commercial
Cards Credit transfers/
Direct debit
Traditional
payment
New
payment
Mobile
M-commerce
NFC
Apps
SMS
P2P Payments
Consumer
Online
EFT
E-commerce Credit cards
Google checkout
PayPal
Click and buy
1-Click
Provider payment options
Financial institutes
(Banks, PayPal)
Non-financial institutions:
MNOs
Device manufacturers
Merchants
PSP
security
Payment schemes (Visa, MC, …)
Payment
channels
Suppliers
Card vendors
Processors
ATM / POS providers
convenience
Consumer
availability
10
2013/11/19 •
Multichannel and EMV 2.0
shaping the future of payment technology
11. An unbroken trend - Card payments continue
growing across all regions worldwide
Globally in 2011
Credit card
transactions volume
+12,3%
Debit card
transactions volume
+15,8%
In North America
65% of non cash
transactions made by
payment card!
Source: World Payments Report 2013
11
shaping the future of payment technology
12. Todays’ payment ecosystem for retail payments
is based on a multi-channel approach
Players
Payment means
Direct
payment
Cash
Prepaid
Commercial
Cards Credit transfers/
Direct debit
Traditional
payment
New
payment
Mobile
M-commerce
NFC
Apps
SMS
P2P Payments
Consumer
Online
EFT
E-commerce Credit cards
Google checkout
PayPal
Click and buy
1-Click
Provider payment options
Financial institutes
(Banks, PayPal)
Non-financial institutions:
MNOs
Device manufacturers
Merchants
PSP
security
Payment schemes (Visa, MC, …)
Payment
channels
Suppliers
Card vendors
Processors
ATM / POS providers
convenience
Consumer
availability
12
2013/11/19 •
Multichannel and EMV 2.0
shaping the future of payment technology
13. The rise of e- and m-payments – more
payments channels and non-bank providers
Driven by smart devices &
connectivity
CAGR 2010-14
18,1%
Convenience and
innovation
New players and new
usages
CAGR 2010-14
58,5%
Non-Bank
Providers
92,3%
Leading to asymmetry and
fragmentation
Need for accelerated
standardization
Bank Providers
55,4%
Source: World Payments Report 2013
13
shaping the future of payment technology
14. Todays’ payment ecosystem for retail payments
is based on a multi-channel approach
Players
Payment means
Direct
payment
Cash
Prepaid
Commercial
Cards Credit transfers/
Direct debit
Traditional
payment
New
payment
Mobile
M-commerce
NFC
Apps
SMS
P2P Payments
Consumer
Online
EFT
E-commerce Credit cards
Google checkout
PayPal
Click and buy
1-Click
Provider payment options
Financial institutes
(Banks, PayPal)
Non-financial institutions:
MNOs
Device manufacturers
Merchants
PSP
security
Payment schemes (Visa, MC, …)
Payment
channels
Suppliers
Card vendors
Processors
ATM / POS providers
convenience
Consumer
availability
14
2013/11/19 •
Multichannel and EMV 2.0
shaping the future of payment technology
15. For non-cash transactions the card fraud has
been declined, thanks to chip migration in SEPA
0.036%
Source: ECB - Second report on card
fraud, July 2013
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2013/11/19 •
Multichannel and EMV 2.0
shaping the future of payment technology
16. In e-Commerce channel the card-not-present
fraud (CNP) is dominant and further increasing
Evolution of the total value of card fraud using
cards issued within SEPA 1)
Value in millions of EUR / %
Transactions (millions) / %
Total level of fraud has
reduced overall for the
SEPA region
However, card-not-present
transactions now represent
the biggest share and the
biggest growth in terms of
fraud
Most of fraudulent F2F
transactions with EU cards
took place outside the EU
Top 6 locations:
USA, Dominican
Republic, Colombia, Russian
Federation, Brazil, Mexico) –
Source: Europol
CPSs: Card Payment Schemes
CNP
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2013/11/19 •
56 %
Multichannel and EMV 2.0
CNP 60 %
Source: ECB - Second report on card
fraud, July 2013
shaping the future of payment technology
17. 03.
The gobal EMV payment market
shaping the future of payment technology
18. With the US and China adopting EMV the chip
migration has become a global phenomenon
Source: EMVCo
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2013/11/19 •
Multichannel and EMV 2.0
shaping the future of payment technology
19. 975 million pcs. smart payment cards were
shipped in 2012 by SPA Members*
+9%
+12%
+18%
+16%
+39%
+23%
418
580
675
798
898
975
2007
Mio. pcs
sold
2008
2009
2010
2011
2012
* includes all chip payment cards – EMV represents more than 90% of SPA shipments
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2013/11/19 •
Multichannel and EMV 2.0
shaping the future of payment technology
20. The total available market for payment chip
cards is estimated to 1.2 Billion pcs. in 2012*
EUROPE
TAM: 322M
NORTH ASIA
TAM: 238M
NORTH AMERICA
TAM: 84M
CISMEA** & EASTERN
EUROPE
TAM: 208M
SOUTH EAST ASIA
SOUTH AMERICA
TAM: 89M
TAM: 225M
Payment Chip cards deployed
or in advanced deployment
Chip cards in deployment
Chip cards migration initiated
No Chip cards
20
* 2012 Estimated Total Available Market (1166 units) by Geographies in Millions – Includes
all chip payment cards
** Includes Turkey
shaping the future of payment technology
21. In all regions the growth of contactless cards
(CTLES) was stronger than for contact cards *
CTLES
+106%
CTLES
+111%
WESTERN EUROPE
Contact: 240 Mio.
Contactless: 62 Mio.
CTLES
+17%
AMERICAS
Contact: 205 Mio.
Contactless: 54 Mio.
CT
-4 %
Chip & PIN deployed or in
advanced deployment
CT
-14 %
CTLES
+34%
CT
+26%
CT
+1 %
ASIA PACIFIC
Contact: 142 Mio.
Contactless: 80 Mio.
CISMEA & EASTERN
EUROPE
Contact: 164 Mio.
Contactless: 29 Mio.
Chip & PIN in deployment
Chip & PIN migration initiated
No Chip & PIN
21
* Comparison of SPA members shipments from 2011 and 2012
shaping the future of payment technology
22. The adaption rate of DDA cards outperformed
previous technology in all regions *
DDA
+6%
DDA
+60%
WESTERN EUROPE
DDA: 258 Mio.
nDDA: 43 Mio.
DDA
+69%
nDDA
-33%
DDA
+45%
nDDA
+7%
AMERICAS
ASIA PACIFIC
DDA: 39 Mio.
nDDA: 220 Mio.
DDA: 117 Mio.
nDDA: 105 Mio.
nDDA
-7%
CISMEA & EASTERN
EUROPE
DDA: 133 Mio.
nDDA: 60 Mio.
Chip & PIN deployed or in
advanced deployment
Chip & PIN in deployment
Chip & PIN migration initiated
nDDA
-18%
No Chip & PIN
22
* Comparison of SPA members
shipments from 2011 and 2012
shaping the future of payment technology
23. EMV is a truly established global secure and
interoperable infrastructure
Smart payment card shipments hit the one billion mark in
2011, and exceeded 1.1 billion in 2012
Ever increasing penetration of contactless payment (23 %
in 2012)
Move towards more secure ways to pay (DDA more than
half of shipments)
EMV is a truly established, global secure & interoperable
infrastructure, and NFC is the contactless extension paving
the ground for the evolving connected world
Discover and China Unionpay have joined EMVCo in 2013
US and China are moving to EMV
EMV has beat the fraud (Europol) on card payment but
what about the online fraud?
23
shaping the future of payment technology
25. Todays’ payment ecosystem for retail payments
is based on a multi-channel approach
Players
Payment means
Direct
payment
Cash
Prepaid
Commercial
Cards Credit transfers/
Direct debit
Traditional
payment
New
payment
Mobile
M-commerce
NFC
Apps
SMS
P2P Payments
Consumer
Online
EFT
E-commerce Credit cards
Google checkout
PayPal
Click and buy
1-Click
Provider payment options
Financial institutes
(Banks, PayPal)
Non-financial institutions:
MNOs
Device manufacturers
Merchants
PSP
security
Payment schemes (Visa, MC, …)
Payment
channels
Suppliers
Card vendors
Processors
ATM / POS providers
convenience
Consumer
availability
25
2013/11/19 •
Multichannel and EMV 2.0
shaping the future of payment technology
26. eCommerce is the „low hanging fruit“ for
organized online fraud criminals
Financial institution have made significant efforts to defend online accounts
Cyber criminals target more and more eCommerce sites
The eCommerce market is huge: In 2012 the market was about several
hundred billion Euros with about >20 billion transactions
Online retailer have access to credit card details and deliver goods that
criminals can resell (change of shipping address, network of mules)
Most e-Commerce sites lack fraud protection; it is unclear to customers how
sites are protected; fragmentation and lack of standardization
Weak user authentication only by User-ID and password
Data breaches (of huge data bases) by hacking, insiders, malicious software
Cracking of stolen passwords to reveal user credentials by todays’ powerful
parallel-connected computing devices and reselling of digital IDs
26
shaping the future of payment technology
27. Lack of strong user authentication is one of the
identified weaknesses of todays’ eCommerce
The ECB forum for Security of Retails Payments
(SecuRe Pay) gave 13 recommendations to
tackle Card Not Present Fraud
Protect the initiation of internet payments, as well payment data by means of
strong customer authentication
Limit the number of log-in or authentication attempts
Transaction monitoring mechanisms against fraudulent payment transactions
Implement multiple layers of security defenses to mitigate risks
Provide more guidance and education to customers
…
Source: ECB - Recommendations for the security of internet payments, January 2013
27
shaping the future of payment technology
28. EMV has the basic ingredients, but some parts
are missing from SPA point of view
Security, interoperability, good user experience and a robust business model
for the card issuer, constitute the four key advantages of the card technology
In general the new EMV standard should include: more interfaces, transaction
independent from the interface – this is mainly covered by EMVCo Next Gen
Protocols and message structures for payment convergence; harmonizing
protocols on the terminal to acquirer interface to standardize the back office
More means to include “on-card” peripherals and new card functionalities
needed for strong cardholder authentication to protect high value transactions
Faster and more competitive evolution of the new standard, softening of the
rigid EMVCo IP policy to ensure state-of-the-art contributions/implementations
Better collaboration between PCI and EMVCo; early mandate by Card Payment
Schemes requested to adopt EMV Next Generation as soon as possible
Better positioning of the secure element as THE token which offers secure
authentication and protects the privacy of eCommerce transactions
28
shaping the future of payment technology
29. 05.
SPA’s role in bridging the gap
shaping the future of payment technology
30. How we do it – SPA contributes and gives
expert advice to leading standards bodies
By supporting the creation and adoption of standards and best
practices
SEPA: European Payments Council – Cards Stakeholder Group
Card Representative and Vendor Sector Spokesperson,
Chair of the EPC-CSG Task Force to specify the SEPA functional and security
requirements for emergent & remote payments (Internet + Mobile),
Conveyor of the new EPC-CSG Expert Team on Card Innovative Payments,
Member of the Preparatory Committee of the SEPA Security Certification
Management Body
EMVCo:
Technical Associate
Board Advisor for Card Sector
Next Generation Task Force: Contributor
By extending expert advice and support across the payments
ecosystem
An eye-catching library of expert technical resources and thought
leadership collaterals to shape the future of payment
30
shaping the future of payment technology
31. Some take aways –
Summary and recommendations
EMV has proven to be the global, interoperable and secure standard of choice
to tackle card fraud at the physical point of sale – more collaboration needed
Despite the fact that overall fraud is decreasing (SEPA-region) the card-notpresent fraud is further increasing
eCommerce transactions contribute to the major part of card-not-present
fraud and are the low hanging fruits for online fraud
Strong user authentication is needed for eCommerce transactions – User-ID
and password in cloud-based platforms is not sufficient anymore
NFC technology relying on certified, tamper proof secure elements is the
recommended solution to tackle fraud for m-payments
Card Payment Schemes should engage stronger to establish strong user
authentication for eCommerce by means of EMV and NFC technology
EMV based secure elements offer the ingredients to better secure eCommerce
as compared to purely cloud based solutions
31
shaping the future of payment technology
32. Have a look at the latest SPA publications
and visit our web site
NEW!
Biometrics for EMV Payment Cards
NEW!
UICC Application Lifecycle Management
Software to Chip Fallback Solution
Security Certification for Mobile Platforms
Security for Mobile Payments
PIN by SMS
Private Label Payment Solutions
Business Continuity in the Payment Card
Issuance Industry
… more publications to come the next weeks!
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2013/11/19 •
Multichannel and EMV 2.0
shaping the future of payment technology
33. Thank You for Your attention!
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www.smartpaymentassociation.com
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shaping the future of payment technology