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Smart Cards & ecommerce

Smart Cards & ecommerce. 2. Perceptions. Were C Solution looking for a problem C Expensive and inflexible The breakthrough! C Platform for new services C Cost-effective and very flexible. Smart Cards & ecommerce. 3. Interface Trends. Platforms C Attended POS C Unattended POS

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Smart Cards & ecommerce

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  1. Smart Cards & ecommerce 2 Perceptions Were CSolution looking for a problem C Expensive and inflexible The breakthrough! C Platform for new services C Cost-effective and very flexible Muhammad Wasim Raad

  2. Smart Cards & ecommerce 3 Interface Trends Platforms CAttended POS C Unattended POS C Remote POS Interfaces C Contact C Contactless C Combination Muhammad Wasim Raad

  3. Smart cards & ecommerce 4 Functionality • CValue management – e.g. EMV, e-purse • C Identity or reputation management – digital ID • …locally or remotely Muhammad Wasim Raad

  4. Smart Cards & ecommerce 5 Key Attributes CSecure (or economically secure) C Easy to operate C Standards – terminals, drivers, specifications e.g. PKCS#11, PC/SC, EMV, CEPS C Portable Muhammad Wasim Raad

  5. Smart Cards & ecommerce 6 Multi Channel Access Muhammad Wasim Raad

  6. Smart cards in ecommerce 7 Market Forecasts Source – Frost and Sullivan Muhammad Wasim Raad

  7. Smart cards in ecommerce 8 Frost & Sullivan - A Look at the Asian Pacific Smart Card Market, 1999 and Beyond - “by 2004, Asia will command at least a quarter of the revenue market shares worldwide, with China by itself commanding nearly a third of market.” Frost & Sullivan, - The Asian smart card market will soar to new heights, especially in mainland China where the technology is expected to penetrate a slew of applications. IDC, Industry Trends 02/12/00 - China "already appears as the single most promising market for the coming years". Muhammad Wasim Raad

  8. Smart cards in ecommerce 9 The new card business COne-to-One Past – every smart card application had to be lovingly hand crafted in assembler for a specific chip and OS combination C Many-to-Many future – standard smart card apps can be added or deleted, moved from one card to another because the chips are running standard multi-app OS’s that any developer can write code for. Muhammad Wasim Raad

  9. Smart cards in ecommerce 10 New smart card “Food Chain” CChip manufacturer C Card fabricator C OS provider CApplication developers C Card Issuer and designer and personaliser C Application issuers CApplication managers or service providers C Card managers Muhammad Wasim Raad

  10. Smart cards in ecommerce 11 Applications Gemplus figures – (Proton Report, Sept 2000) Muhammad Wasim Raad

  11. Smart cards in ecommerce 13 Amex Blue Muhammad Wasim Raad

  12. XII World Productivity Congress 2001 Heading for a Coinless Society with Octopus ? Rob Noble CEO Creative Star Ltd 7th November 2001 Muhammad Wasim Raad

  13. Contents • Octopus Progress Todate • Future Projects Being Pursued • Hong Kong Becoming Coinless? Muhammad Wasim Raad

  14. What Is The Octopus? • A pre-paid stored value card utilizing contactless smart card technology • Operates within wallet/purse for up to 10cm • Less than 1/3 second transaction time Muhammad Wasim Raad

  15. Establishing the Octopus Card Base • 6.8M inhabitants living in high density corridors • Low car ownership (15%) • Nearly 11 million public transport rides per day • Potential for one public transport card to reach all economically active people Muhammad Wasim Raad

  16. Formation of Creative Star • In 1994 a joint venture company, Creative Star, was formed by the 5 major public transport operators • Octopus card launched in September 1997 Muhammad Wasim Raad

  17. Octopus Usage • Currently 97% of total Octopus transactions on public transport • Nearly 90% of railway passengers using Octopus • Some 80 service providers accepting Octopus • Now expanding further into private transport/non-transport Muhammad Wasim Raad

  18. Octopus Applications • Public Transport and related • 3 railways, 6000 buses, ferries, Peak Tram, Tramways, public light bus • Car parks • Parking meters Muhammad Wasim Raad

  19. Octopus in Off-Street Car Parks Muhammad Wasim Raad

  20. Octopus Applications • Retail • Fast food • Cake shops • Convenience stores Muhammad Wasim Raad

  21. Octopus Applications • Unattended businesses • Vending machines • Payphones at MTR stations • Photocopiers Muhammad Wasim Raad

  22. Octopus Applications • Recreational facilities • Public swimming pools • Racecourses • Non-payment service • Access Control for residential estates • School Attendance Muhammad Wasim Raad

  23. Add Value Service • Add value service available at: • Ticket Offices/Customer Service Centres • Add Value Machines • Retail outlets which accept Octopus for payments • Maxim’s fast food and cake shops Muhammad Wasim Raad

  24. Add Value Service (cont’d) • Automatic Add Value Service with banks • $250 added next use after $0 or negative value • Save queuing time for adding value • No worries about insufficient cash • Available at nine banks so far Muhammad Wasim Raad

  25. Future Projects Being Pursued • Extend use of Octopus as access control device • Extend use of Octopus as identity card • Extend use of Octopus cards in schools • Introduce Octopus across the border in Shenzhen Muhammad Wasim Raad

  26. Future Projects Being Pursued (cont’d) • Combined Octopus/hotel room key • Combined Octopus/credit card with AAVS • Octopus mobile phones and key fobs • Home personal readers for web micro-payments Muhammad Wasim Raad

  27. Video Clips of Road Runner • Railway • Bus • Retail Muhammad Wasim Raad

  28. Hong Kong Becoming Coinless? • Virtually everyone in Hong Kong has an Octopus • Already used extensively for public transport • Being readily adopted for private transport/ unattended environments Muhammad Wasim Raad

  29. Hong Kong Becoming Coinless? (cont’d) • Soon a critical mass of manned payment SPs and cardholders thinking of retail payments • CS pursuing many new Octopus projects Muhammad Wasim Raad

  30. Hong Kong Becoming Coinless? (cont’d) • Big savings for operators if coinless • Virtuous circle, more SPs and fewer coins • Customers prefer Octopus to heavy, dirty, slower-transaction coins • Large productivity gains if electronic transactions replace physical coins Muhammad Wasim Raad

  31. Hong Kong Becoming Coinless? (cont’d) • Coins been around for some 2500 years • Still some HK$6b worth of coins circulating • Real chance world-leading Octopus can help Hong Kong to become first coinless city Muhammad Wasim Raad

  32. Hong Kong Smart Cards • Octopus • 8 million cards, 9000 readers • 7 million transactions/day • Visacash • ComPass Visa (VME) • Mondex • GSM SIM • ePark Muhammad Wasim Raad

  33. Octopus • Transaction time < 300 milliseconds • Transaction fees: HK$0.02 + 0.75% • $10 transaction costs $0.095 (0.95%) • Applications • Transit • Telephones • Road tolls • Point-of-sale • Access control • Anonymous / personalized • How does money get to service providers? • Net settlement system operated by Creative Star Muhammad Wasim Raad

  34. Entities of the E-payment System Identification Card Issuer (Corporate or Service Provider) Purse Charger (Bank or third party) • Access Control/E-payment terminal • .Corporate secure Log in • .Retail POS • collecting Highway tax Card Holder (User) Corporate Information Center (Database) Muhammad Wasim Raad

  35. Octopus System SOURCE: WORLD BANK Muhammad Wasim Raad

  36. Smart Card Sales Leaders (2000) VENDOR # OF CARDS SHARE Gemplus 185,000,000 29% Schlumberger 152,000,000 24% Oberthur Smart Cards 85,000,000 14% Giesecke & Devrient 76,000,000 12% Orga Card Systems 53,000,000 8% TOTAL 628,000,000 SOURCE: CARDWEB.COM Muhammad Wasim Raad

  37. Mondex Security • Active and dormant security software • Security methods constantly changing • ITSEC E6 level (military) • VTP (Value Transfer Protocol) • Globally unique card numbers • Globally unique transaction numbers • Challenge-response user identification • Digital signatures • MULTOS operating system • firewalls on the chip Muhammad Wasim Raad

  38. Payment Cards EMV = EUROPAY INT’L, MASTERCARD,VISA MPCOS = MULTI PAYMENT CHIP OPERATING SYSTEM • 8-128 Kb • Data rate 115 Kb/sec • ISO 7816 compliant • Visa-certified • PIN management and verification • 3DES algorithm for authentication, secure messaging • Epurse with payment command set (debit,credit, balance, floor limit management) SOURCE: GEMPLUS Muhammad Wasim Raad

  39. Wireless Card Authorization SOURCE: SAMSUNG Muhammad Wasim Raad

  40. Mondex • Smart-card-based, stored-value card (SVC) • Subsidiary of MasterCard • NatWest (National Westminister Bank, UK) et al. • Secret chip-to-chip transfer protocol • Value is not in strings alone; must be on Mondex card • Loaded through ATM • ATM does not know transfer protocol; connects with secure device at bank • Spending at merchants having a Mondex value transfer terminal Muhammad Wasim Raad

  41. Mondex Components (Hitachi) Electronic Cash Register Cashless ATM PCMCIA Reader/Writer Key Fob Balance Reader Electronic Wallet SOURCE: HITACHI Muhammad Wasim Raad

  42. The National Bank of Kuwait (NBK) has launched the world’s first Visa internet-only payment card program in Kuwait city • Features of NBK card include: preset spending limits, automatic insurance from NBK for all purchases using the card • . Muhammad Wasim Raad

  43. Smart Cards Will Play an Important Role In Ecommerce: • Provide a secure storage for digital certificates and personal identification • Convenience-Multifunction Card like the JAVA Card and very portable • Log recent activities • Can Provide automatic Logins to designated websites without having to remember passwords and login procedures • Suitable for payment over the internet Muhammad Wasim Raad

  44. Conclusion • Ecommerce will take off in Asia • Smart Card will play an important role in ecommerce • Security is an important issue and the smart card will add value to it • Ecommerce will go wireless • Asia has the highest growth rate of smart card usage in the world Muhammad Wasim Raad

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