1 / 21

Local card infrastructure a new payment paradigm

Local card infrastructure a new payment paradigm. Leonid Delberg Chairman & CEO Richard Schweger CFO/COO BGS Smartcard Systems New technologies for SME finance The World Bank, Washington D.C. December 4-6 2002. Overview. Company profile Global vs. local DUET concept

libitha
Download Presentation

Local card infrastructure a new payment paradigm

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Local card infrastructure a new payment paradigm Leonid Delberg Chairman & CEO Richard Schweger CFO/COO BGS Smartcard Systems New technologies for SME finance The World Bank, Washington D.C. December 4-6 2002

  2. Overview • Company profile • Global vs. local • DUET concept • Delivery channels

  3. Company profile>>>bgs BGS >>> The smart card pioneer, developing smart card solutions since 1991. Headquarters>>> Vienna/Austria. Offices >> >>> Brazil, India, Kazakhstan, Russia, Ukraine Distributors >>> Bosnia-Herzegovina, Egypt, Ecuador, Mexico, Macedonia, Paraguay, GCC, Philippines, Romania, Uruguay, Uzbekistan. Leading supplier of smart card payment systems to the CIS market. 500 installations with 4.500.000 cards issued and 20.000 POS. 55 highly qualified R&D professionals. Expert know-how from 10 years of DUET projects, 50 specialists covering entire project life-cycle.

  4. Company profile>>>Sbercard Issuer Problem Start Date Now Next step Savings Bank of Russian Federation Secure, fast, country-wide money transfer 5 banks, 3.000 cards, 30 POS December 1993 300 banks, 2,3 m cards, 1200 ATM, 11.000 POS Opening acquiring for other Russian banks

  5. Company profile>>>NBU Issuer Problem Start Date Now Next step Uzbekistan National Bank of Foreign Affairs Retail business outside of bank control 1 branch, 5.000 cards, 50 POS terminals April 1995, now 7 other domestic banks 200K cards, 1000 POS, 130 ATMs, National card system, obligatory for all banks

  6. Company profile>>>OAB Issuer Problem Start General Next step Oman Arab Bank Secure, country-wide government payments Q3 2002, 50 000 cards, 300 terminals Strategic goal to offer full payment service handling all government bodies transactions 70.000 cards, Country-wide usage for b2b, b2c

  7. Overview • Company profile • Global vs. local • DUET concept • Delivery channels

  8. Global versus local>>>globalization • The target of Globalization is to gain access to new markets by accepting competition at home • Globalization was initiated by developed countries already having a strong domestic infrastructure base • Equal interest for the further extension of both networks inside and outside of the country • Emerging countries (EC) also have a strong desire to be connected to the global networks • Missing local infrastructure in EC represents a large competitive disadvantage • Risk ! - Development of the global networks in EC will dampen investments in the local infrastructure

  9. Global versus local>>>competition • Competition based on standardized global products ends in favor of large international corporations • The winner often does not ensure the set up of a full coverage infrastructure within the whole territory • Today foreign as well as local issuers invest in credit card deployment instead of developing local mass markets • Development of global card systems by domestic issuers opens the door to local markets for major international competitors • Only innovative & highly localized card products can successfully support domestic issuers

  10. Global versus local>>>card markets • Emerging countries are still cash based economies • Conventional online debit and credit card systems represent solutions for developed markets • There are substantial differences between developed and emerging card markets: • Low household income results in substantial un-banked population • Much higher number of POS are required in emerging countries • Small merchants can’t afford on-line card operation • Missing trust (collateral) to consumer requires card products with no overspending

  11. Overview • Company profile • Global vs. local • DUET concept • Delivery channels

  12. issuer acquirer 400 500 100 merchant card client card DUET concept>>>payment Client account Preathor.funds Transf. funds 400 Merchant account settlement obtain funds deposit funds purchase

  13. Account on-line PIN1 off-line Agent PIN2 PIN-A Merchant off-line PIN2 PIN-M DUET concept>>>client card SCA FSL E-contract

  14. Loyalty Points Area DUET MF-Software Issuer Data, Key, Client PIN 1. Savings book 2. Time deposit ID Data Area 3. Preauthorized debit 4. Bank credit 5. Micro-lending 6. Differed payment 7. Merchant credit 8. Client data VISA VSDC MC M-Chip DUET concept>>>applications Card EMV OS

  15. Overview • Company profile • Global vs. local • DUET concept • Delivery channels

  16. Delivery channels>>>competing cash • As of today cash is the only payment instrument to compete with in all retail mass markets • There many reasons to throw cash out from circulation: • cash is very expensive • cash doesn’t generate interest • cash is slow moving • cash is always anonymous • cash is uncontrollable • There is a sufficient savings potential to finance cash substitution

  17. Delivery channels>>>payments • A standardized global card is the wrong instrument to solve domestic problems in different countries • Creation of separated payment environments is supported by geographically limited area of consumer spending • Consumer interest is of primary importance for local card systems, guaranteeing overall merchant acceptance • Offering cards with credit facilities is the best attraction for any consumer • Targeted spending power can substantially minimize credit risk

  18. Delivery channels>>>money flow Purchase Rent Service Utility Taxes Car Savings Salary Pension Allowance Credit Loan

  19. Delivery channels>>>infrastructure Retail Landlord Service Utility Authority Petrol Finance Enterprise Authority Social Bank Credit

  20. Delivery channels>>>summary • Creation of domestic card infrastructure is an investment process, profits are generated through services offered over such networks • Development of a standardized global system could benefit a competitor’s business • The competition with large international enterprises can only be won by capitalizing on local market know how • Technology can help a local enterprise to differentiate itself through functionality and faster response to market • Proprietary knowledge transformed in innovative solutions is the key for a successful business

  21. Contact • BGS Smartcard Systems AG • Gersthoferstrasse 131; A-1180 Vienna • phone: +43 1 47601 301; fax +43 1 47601 330 • info@bgssmartcard.com - www.bgssmartcard.com

More Related