Anthony Clark Business and Technology Analyst Cybergen Technologies Inc.

1. Telco/MSO Billing & Payment System (BPS)end-to-end recharge & e-commerce transaction flow scenarios Anthony Clark Business and Technology Analyst Cybergen Technologies Inc. Lombard, IL USA July 16th , 2004

2. Contents • Purpose • BPS e-Commerce Network-Level Architecture • Recharge Scenarios • Cash: walk into Verizon’s office and pay cash • Prepaid card: buy card at a retail store, then later, phone in the recharge • Bank Card: • Walk or phone in to Verizon’s office and give card number • Enter card number into Verizon’s web site • Call into BPS IVR and key in card number • Using BPS Balance to Pay for Goods & Services (on the order of 10₡ to $20 per transaction) • Phone Calls • Short Messages • Internet Merchants • Pay-by-Phone Merchants (e.g., Movie Tickets) • Vending Machines • Enter BPS account info into vending machine (key in or swipe card) • Call Vending Machine’s IVR system ( solutions of this type may be in service in Europe) • Call BPS • Bricks & Mortar Merchants (e.g., Cashier at a retail store) • Enter BPS account info into Cash Register Peripheral (key in or swipe card) • Call Merchant’s IVR system • Call BPS • Additional Issues to Consider • Human Factors • Infrastructure • Business Agreements • Background Slides • eCASH transaction flow • PayPal transaction flow

3. Purpose • To give the highest-level end-to-end view of how e-commerce works (or should work) for Telco/MSO Billing & Payment Systems (BPSs). • Notes: • I use company names such as Verizon, MoviePhone, and Mastercard for illustration purposes only. It is not implied that these services will actually be offered by these companies. Feel free to plug in your favorite company. I just felt that the charts are easier to understand with real company names vs. “mobile operator” or “merchant”. • In my research, I didn’t find any end-to-end scenarios, so I had to reverse engineer some info based on marketing material or system specs.

4. Internet? Internet? Internet e-commerce network-level architecture Verizon’s Bank Merchant’s Bank Consumer’s Bank Card Bank Vending Machines Recharge: + walk in with cash or bank card + phone in with bank card Card System Association Spend Payment Processor Merchant’s Web Site Telco/MSO Billing & Payment System (account balances) LDAP ECMP Merchant’s Web Server eCASH Spend + List of Prepaid Cards: status & balance Merchant’s Cash Register Recharge: Buy card & phone in Spend

5. Recharge with Cash • Consumer walks into Verizon’s office with cash • Pays cash to Agent • Agent uses Billing & Payment System (BPS) account balance • Cash is carried to Verizon’s bank

6. Recharge with Prepaid Card • Verizon sells prepaid cards to retailers • Proceeds are deposited in Verizon’s bank • Verizon maintains a list of sold (but deactivated) cards at the BPS • Consumer walks into retail store and buys a prepaid card • At the checkout counter, the cashier activates the card (thwarts shoplifters) • how are cards activated? Somehow the cash register should contact the BPS to activate the card… • After leaving the store, the consumer calls BPS (BPS has a phone number) and interacts with the BPS via IVR to setup a PIN etc.

7. Recharge with Credit Card (or any bank card)Walk-in or Call into Verizon’s Office • Consumer walks in (or calls in) to Verizon’s office with a bank card • Gives card number to agent • Agent uses the usual merchant dial-in to Verizon’s bank to get authorization for the amount • Verizon’s bank contacts consumer’s bank • Funds are eventually transferred from consumer’s bank to Verizon’s bank • Agent increases user’s BPS account balance.

8. Recharge with Credit Card (or any bank card)Call into BPS • Consumer calls BPS (BPS has a phone number) and interacts with the BPS via IVR. Requests recharge and gives bank card number. • BPS must get authorization for the amount (and also settlement) from the consumer’s bank. Options are: • The usual retail store type dialup to Verizon’s bank • A new connection to Verizon’s bank (maybe via the internet) • Verizon’s bank gets authorization (and settlement) from Consumer’s bank (possibly via an intermediary) • BPS increases the account balance.

9. Recharge with Credit Card (or any bank card)Verizon’s Web Site • Consumer surfs to Verizon’s web site • Logs into secure section to access account • Brings up recharge form • Fills in bank card info • Website must get authorization for the amount (and also settlement) from the consumer’s bank. Options are: • The usual retail store type dialup to Verizon’s bank • A new connection to Verizon’s bank (maybe via the internet) • Verizon’s bank gets authorization (and settlement) from consumer’s bank (possibly via an intermediary) • Verizon’s bank tells Verizon’s web site that the transaction is complete • Verizon’s web site tells the BPS to increase the account balance. • Verizon’s web site informs consumer that the transaction is complete

10. Pay for Phone Calls • I’ll skip discussing this flow since it is not part of e-commerce. Nor is it a recharge.

11. Pay for Goods & Services from an Internet Merchant • Consumer surfs to merchant’s web site • Requests purchase and enters BPS account number & PIN. Note: Website must contact the BPS to decrease balance • Website sends request via ECMP to eCASH • eCASH forwards request to BPS • BPS decreases the balance • BPS sends a message to Verizon’s bank to transfer funds to the internet merchant’s bank • BPS sends ACK back to merchant’s website stating that the transaction is complete • Website informs consumer that the transaction is complete

12. Pay for Goods & Services from an automated pay-by-phone Merchant Note: I use a movie ticket example here • Consumer calls the MoviePhone (444-FILM) IVR system • Consumer touch tones in a movie ticket purchase request • Consumer touch tones in BPS account number and PIN • IVR system contacts BPS to decrease balance • BPS decreases the balance • BPS sends a message to Verizon’s bank to transfer funds to MoviePhone’s bank • BPS sends ACK back to MoviePhone’s IVR system stating that the transaction is complete • MoviePhone’s IVR system informs consumer that the transaction is complete

13. Pay for Goods from an automated vending machineNo phone needed • Consumer walks up to a vending machine • On the machine, consumer keys in purchase request • On the machine, consumer keys in BPS account number and PIN Note: it may be faster to let the consumer swipe a card. (a Verizon issued BPS card? Or maybe this is the recharge card?) • Vending machine contacts BPS to decrease balance. • BPS decreases the balance • BPS sends a message to Verizon’s bank to transfer funds to vending machine’s bank • BPS sends ACK back to vending machine stating that the transaction is complete • Vending machine informs consumer that the transaction is complete and releases product

14. Pay for Goods from an automated vending machinephone is used (this type of service may already be in use in Europe) • Consumer walks up to a vending machine • Consumer calls vending machine’s IVR system. (phone number printed on the vending machine) • Consumer touch tones in: • Machine number (if many machines use the same phone number) • Product number • BPS account number • PIN number • IVR system contacts BPS to decrease balance. • BPS decreases the balance • BPS sends a message to Verizon’s bank to transfer funds to vending machine’s bank • BPS sends ACK back to vending machine’s IVR system stating that the transaction is complete • IVR system sends a message to the vending machine (via internet? Wireless?) telling it to release the product • IVR system informs consumer that the transaction is complete

15. Pay for Goods from an automated vending machinephone is used to call BPS • Consumer walks up to a vending machine • Consumer calls BPS. (BPS has a phone number) • Consumer touch tones in: • Machine number • Product number • BPS account number • PIN number • BPS decreases the balance • BPS sends a message to Verizon’s bank to transfer funds to vending machine’s bank • BPS informs consumer that the transaction is complete • BPS sends a message to the vending machine (via internet? Wireless?) telling it to release the product

16. Pay for Goods from a bricks & mortar merchant phone not needed • Consumer walks up to cashier with shopping cart of products to be purchased • Cashier rings up total price for shopping cart • Consumer keys in BPS account number & PIN on the cash register peripheral Note: it may be faster to let the consumer swipe a card. (a Verizon issued BPS card? Or maybe this is the recharge card?) • Cash register contacts BPS (via internet?) to decrease balance • BPS decreases the balance • BPS sends a message to Verizon’s bank to transfer funds to merchant’s bank • BPS sends a message to the cash register informing the cashier that the transaction is complete • BPS sends ACK to consumer stating that the transaction is complete

17. Pay for Goods from a bricks & mortar merchant phone is used to call Merchant’s System • Consumer walks up to cashier with shopping cart of products to be purchased • Cashier rings up total price for shopping cart • Consumer calls Merchant’s IVR system • Consumer touch tones in: • Cash Register ID • BPS subscriber ID • PIN • Shopping cart price • IVR system contacts BPS to decrease balance • BPS decreases the balance • BPS sends a message to Verizon’s bank to transfer funds to merchant’s bank • BPS sends ACK back to merchant’s IVR system stating that the transaction is complete • IVR system sends a message to the cash register (via internet?) informing the cashier that the transaction is complete. • IVR system informs consumer that the transaction is complete

18. Pay for Goods from a bricks & mortar merchant phone is used to call BPS • Consumer walks up to cashier with shopping cart of products to be purchased • Cashier rings up total price for shopping cart • Consumer calls BPS (BPS has a phone number) • Consumer touch tones in: • Merchant ID • Cash Register ID • BPS subscriber ID • PIN • Shopping cart price • BPS decreases the balance • BPS sends a message to Verizon’s bank to transfer funds to merchant’s bank • BPS sends a message to the cash register informing the cashier that the transaction is complete • BPS sends ACK to consumer stating that the transaction is complete

19. Additional Issues to Consider • Human Factors: • Some of the preceding consumer interactions are complex. Many consumers, especially those in the US, may not want to key in a lot of info into a cell phone to make small purchases… Voice recognition may not be accurate enough for financial transactions. Having a card to swipe may help for face-to-face purchases. Another solution may be needed for phone-in purchases. • Infrastructure: • This is not a simple “add-on” to the existing network. Modifications and/or replacements may be needed for Vending Machines, Cash Registers, Web Servers, eCASH, and IVR systems. These changes are needed to allow these systems to communicate with the Telco Payment System. • There may be internal network changes needed to enable the inter working of the above endpoints. • Business Agreements: • Agreements (including sharing of some consumer data) among the owners of the above endpoints (e.g., Vending Machines) may be needed to enable the operation of this e-commerce network.

20. Background Slides

21. 2 1 4 6c 6b 6a 3 5 Internet Internet? Internet? eCASH Transaction Flow?Animation (please view in slideshow mode)(also see note pages) Verizon’s Bank Merchant’s Bank Consumer’s Bank Card Bank Vending Machines Recharge: + walk in with cash or bank card + phone in with bank card Card System Association Spend Payment Processor Merchant’s Web Site Telco/MSO Billing & Payment System (account balances) LDAP ECMP Merchant’s Web Server eCASH Spend + List of Prepaid Cards: status & balance Merchant’s Cash Register Recharge: Buy card & phone in Spend

22. + e-mail $20 to “A” + Move $20 to from B’s account to A’s account + transfer funds + tell A that he has $20 + e-mail to A “you have $20” Internet PayPal Transaction Flow?Animation (please view in slideshow mode) Consumer B’s Bank Account Consumer A’s Bank Account + Recharge PayPal Account + Withdraw funds from PayPal Account PayPal: + e-mail payments from consumer to consumer + used by 50% of eBay transactions + a free service + Users save the 3% or so credit card transaction fee + Paypal makes money on the float. (i.e., they don’t pay interest immediately) Transaction Flow: Consumer A’s PayPal Account Consumer B’s PayPal Account Web Server e-mail via web site Transaction processor ? ECMP eCASH Consumer A Consumer B