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MasterCard Money Transfer Solutions. Card Based Solutions to Enable Global Funds Transfer. Department Name Presentation Date. MasterCard P2P Money Transfer Solutions. Main Menu. P2P: What are the Opportunities?…and Challenges?. MasterCard Payment Transaction Solutions.

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MasterCard Money Transfer Solutions


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    1. MasterCard Money Transfer Solutions Card Based Solutions to Enable Global Funds Transfer Department Name Presentation Date

    2. MasterCard P2P Money Transfer Solutions Main Menu P2P: What are the Opportunities?…and Challenges? MasterCard Payment Transaction Solutions MasterCard P2P Prepaid Cards The MasterCard Family Account Supporting Bank Business Models Next Steps

    3. MasterCard P2P Money Transfer Solutions Main Menu P2P: What are the Opportunities?…and Challenges? MasterCard Payment Transaction Solutions MasterCard P2P Prepaid Cards The MasterCard Family Account Supporting Bank Business Models Next Steps

    4. MasterCard P2P Money Transfer Solutions Main Menu P2P: What are the Opportunities?…and Challenges? MasterCard Payment Transaction Solutions MasterCard P2P Prepaid Cards The MasterCard Family Account Supporting Bank Business Models Next Steps

    5. MasterCard P2P Money Transfer Solutions Main Menu P2P: What are the Opportunities?…and Challenges? MasterCard Payment Transaction Solutions MasterCard P2P Prepaid Cards The MasterCard Family Account Supporting Bank Business Models Next Steps

    6. MasterCard P2P Money Transfer Solutions Main Menu P2P: What are the Opportunities?…and Challenges? MasterCard Payment Transaction Solutions MasterCard P2P Prepaid Cards The MasterCard Family Account Supporting Bank Business Models Next Steps

    7. MasterCard P2P Money Transfer Solutions Main Menu P2P: What are the Opportunities?…and Challenges? MasterCard Payment Transaction Solutions MasterCard P2P Prepaid Cards The MasterCard Family Account Supporting Bank Business Models Next Steps

    8. MasterCard P2P Money Transfer Solutions Main Menu P2P: What are the Opportunities?…and Challenges? MasterCard Payment Transaction Solutions MasterCard P2P Prepaid Cards The MasterCard Family Account Supporting Bank Business Models Next Steps

    9. To Main Menu To Next Section MasterCard P2P Money Transfer Solutions P2P: What are the Opportunities?…and Challenges? P2P: A Significant Opportunity Key Corridors and Countries Who Sends the Funds? What are the Challenges?

    10. To Main Menu To Next Section P2P: What are theOpportunities and Challenges? P2P: A Significant Opportunity

    11. To Main Menu To Next Section Penetrating Cash and Checks • Until now MasterCard and its members have focused on the conversion of consumer payments to business and government • Payments to consumers are virtually untapped Full Year 2002 MasterCard GDV Consumer C2B C2G C2C Credit C2B $873 Billion B2B $73 Billion G2B $5 Billion Debit C2B $194 Billion Business From B2B B2G B2C Government G2B G2G G2C Business Government Consumer To Market Penetration Key MINIMAL LIGHT MEDIUM MEDIUM HEAVY

    12. To Main Menu To Next Section Payments to Consumers Checks and cash still dominate consumer to consumer payments • Gifts • Loans • Auctions/Flea Markets/Classified • Household services • Money transfer Checks, Cash, and On-Line Payments Consumer C2B C2G • Employee payments and payroll • Insurance payments • Investment payments • Benefits payments • Interest and dividends • Promotions • Expenses Business From Checks and Direct Deposit B2B B2G Government G2B G2G Business Government Checks, Direct Deposit, and EBT Cards • Tax disbursements • EBT • Pensions To Consumer

    13. Personal Rent Income (G&S) 20.0 25.5 Housing Purchases (Goods & Services) $ 290.0 $370.0 Personal Used Car Sales (G & S) 38.5 49.5 Flea Markets & Classified (G&S) 14.0 19.0 Personal Care Services (G&S) 22.7 28.8 Auction Market (Online Only) (G&S) 1.0 6.5 Personal Inheritance (Cash & equivalent) 100.0 130.0 Intl. Money Transfer - from the U.S. (C) 30.0 40.0 Domestic Money Transfer- within U.S. (C) 14.0 23.5 Allowances (5–18 yr.) (C) 70.0 75.0 Personal Gifts (C) 30.0 38.5 Other (Both) 63.0 80.6 Total $693.2 B $886.9 B To Main Menu To Next Section C2C Market: High Potential, Significant Challenges C2C Payments are Forecast to Exceed 800 billion in the U.S. – However, There are Challenges For Traditional Credit Cards Category 1998 2003 • New Challenges • Payees usually do not qualify as merchants • Overcoming the appeal of untraceable funds • Difficult to identify and acquire participants

    14. To Main Menu To Next Section Person-to-Person (P2P) Money Transfer is a Logical First Step Category 1998 2003 • Characteristics • Established industry & economics • Audit trail regulation increasing (AML) • Existing identifiable participant base Personal Rent Income (G&S) 20.0 25.5 Housing Purchases (Goods & Services) $ 290.0 $370.0 Personal Used Car Sales (G & S) 38.5 49.5 Flea Markets & Classified (G&S) 14.0 19.0 Personal Care Services (G&S) 22.7 28.8 Auction Market (Online Only) (G&S) 1.0 6.5 Personal Inheritance (Cash & equivalent) 100.0 130.0 Intl. Money Transfer - from the U.S. (C) 30.0 40.0 Domestic Money Transfer- within U.S. (C) 14.0 23.5 Allowances (5–18 yr.) (C) 70.0 75.0 Personal Gifts (C) 30.0 38.5 Other (Both) 63.0 80.6 Total $693.2 B $886.9 B

    15. To Main Menu To Next Section Significant Opportunity • Total P2P Money Transfer is forecast to reach at 200 Billion USD Globally by 2003 • Estimated 800 million transactions annually between 200 million consumers • Growing at a compound annual rate of 10% • Both formal channels, (e.g., banks, Western Union) and informal channels, (e.g., mail, personal courier) Source: Datamonitor and the Inter-American Development Bank

    16. To Main Menu To Next Section Remittance Growth is Being Driven by Increased Global Migration Foreign-Born People as a % of Total Population Foreign-Born Population in the U.S. Origin of Foreign-BornPopulation in the U.S.

    17. To Main Menu To Next Section Remittances Channelsare Formal or Informal • Formal • Western Union • Money Gram • Bank Wire Global Money Transfer 200 Billion USD Informal 40% Formal 60% • Informal • Mail Funds (Cash/MO) • Carry Funds • Hawallas, Mulas, & Aiajeros • Informal Money Transfer Channels are Under Pressure • Informal flows have declined from 50% in the 90’s to almost 40% by 2002 • New alternatives • New AML reporting regulations • Governments want to gain control

    18. To Main Menu To Next Section P2P: What are theOpportunities and Challenges? Key Corridors and Countries

    19. To Main Menu To Next Section 10 Key Corridors Projected to Grow at 10% Annually Top 10 P2P Funds 2000 Volume 2005 Volume Projected Transfer Corridors (Estimated) USD (Projected) USD CAGR U.S. to Mexico 5.0 – 10.0 B 9.0 – 19.0 B 10.0% U.S. to Central America 3.5 – 6.0 B 6.3 – 10.8 B 10.0% Saudi Arabia to Egypt 3.5 – 5.0 B 6.3 – 9.0 B 5.0% Saudi Arabia to India 3.0 – 4.5 B 5.4 – 8.1 B 5.0% UAE to India 2.0 – 3.0 B 3.6 – 5.4 B 5.0% North America to China 2.0 – 3.0 B 3.6 – 5.4 B 10.0% U.S. to Philippines 1.0 – 2.0 B 1.8 – 3.6 B 10.0% North America to India 1.0 – 2.0 B 1.8 – 3.6 B 10.0% Germany to Turkey 1.0 – 2.0 B 1.8 – 3.6 B 12.5% Germany to Italy 1.0 – 2.0 B 1.8 – 3.6 B 12.5% Total 23.0 – 39.5 B 41.4 – 71.1 B 10.0% Source: Datamonitor – 2001, World Bank Reports, Internal Calculations

    20. United States $30 B India $13 B Philippines $10 B China $9 B Mexico $9 B UK $5 B To Main Menu To Next Section Focus on a Few Key Countries Can Achieve Scale Quickly 6 Key Countries Account For Approximately 35% of Total Opportunity outbound United States While the U.S. is the largest outbound sender of funds, the intra-U.S. business is also significant inbound inbound inbound United Kingdom The UK does not rank as a top corridor, however, the total outbound and inbound remittance volume makes it one of the most attractive inbound inbound

    21. To Main Menu To Next Section P2P: What are theOpportunities and Challenges? Who Sends the Funds?

    22. To Main Menu To Next Section Profile of theRemittance Consumer • Participants in cross-border remittances vary by remittance corridor • Overall, senders are characterized as: • Male • Younger • Employed • Having minimal bank relationships • Using technology less • Sending money cross border 8 to 12 times per year • An average of 2,800 USD per remitter is sent annually

    23. To Main Menu To Next Section P2P: What are theOpportunities and Challenges? What are the Challenges?

    24. To Main Menu To Next Section Until Now, Banks Have Not Focused on Cross-border Remittances • Traditional wire transfers are highly manual and time consuming Branch economics are unfavorable for providing “one off” services for non-customers No cost-effective systems to support small dollar transfers ($280) • SWIFT and ACH networks were designed primarily for large funds movement A significant percentage of P2P participants have been a low priority • Banks historically have not developed strategies to attract immigrant consumers into branches • Recipients are largely underserved • Certain immigrant populations retain a distrust of traditional banks and use them infrequently

    25. To Main Menu To Next Section Banks are Well Positioned to Offer Cross-border Services Core competencies and assets include: • Transaction risk management • AML compliance methodologies • Technology platforms and networks • Card program capabilities • Retail merchant relationships

    26. To Main Menu To Next Section MasterCard P2P Money Transfer Solutions MasterCard Payment Transaction Solutions Leveraging Card-Based Technology MasterCard Payment Transactions Money Transfer Service: Online and Agent-Based

    27. To Main Menu To Next Section MasterCard PaymentTransaction Solutions Leveraging Card-Based Technology

    28. To Main Menu To Next Section Banks Can Leverage Card-based Technology to Capitalize on P2P Money Transfer • 67% of recipients indicate their desire to receive funds on a money transfer card instead of going to an agent to get cash • 58% of recipients indicate interest in adding their own funds to a card • Penetrating the global money transfer opportunity requires the global processing and connectivity of today’s modern electronic payments industry • Card-based capabilities and economics offer improved security, convenience, and value

    29. Different Customer Segments Require Different Business Models... To Main Menu To Next Section

    30. To Main Menu To Next Section Bank P2P Funds Transfer Programs Fall into Three Business Models Intra-bank Systems– Facilitates transfers among a bank’s customers. Uses bank branches or bank agents • Uses proprietary platforms such as c2it and Chase ReadECash • Bank provides origination capabilities to send funds or load prepaid cards over a platform limited to bank customers(Example: HSBC and Yahoo PayDirect) Bi-lateral Arrangements– Two banks agree to provide funds transfer services among their respective customers • Closed system to only participating banks (Examples: Citi/Banamex, BofA/ Santander, HSBC/Bital, Wells/Bancomer) Open Alliances– Banks participate in a centralized funds transfer program • Association offers platforms and networks that can serve any member’s customers (Examples: MasterCard MoneySend, VISA PayDirect)

    31. How Do We Tap Into the Billions in Cash That are Sent Globally Between Family and Friends? To Main Menu To Next Section

    32. Products MasterCard Payment Transaction Maestro Payment Transaction Prepaid Cards Family Account Platforms RPPS Prepaid Service MoneySend (Pilot) To Main Menu To Next Section MasterCard Flexible Solutions MasterCard products and platforms can be configured to meet a wide variety of business strategies

    33. To Main Menu To Next Section MasterCard PaymentTransaction Solutions MasterCard Payment Transactions

    34. To Main Menu To Next Section MasterCard Payment Transactions MasterCard has created the payment transaction to support a variety of off-line and online P2P Money Transfer Models • What is the “payment transactions” • How does it work? • What P2P Money Transfer Models does it support? • What does a member have to do to use the new payment transaction?

    35. To Main Menu To Next Section What is the Payment Transaction? • The payment transaction is “a credit to an account without an off-setting debit” • The payment transaction brings positive interchange for the issuing member posting the credit • Payment transactions have been created for both MasterCard and Maestro branded products • The current interchange on both the MasterCard and Maestro account is $.53 USD plus 19BP

    36. To Main Menu To Next Section How Does it Work? • MasterCard/Maestro payment transactions are used in end-to-end P2P Money Transfer solutions that rely on a Payment Service Provider to accept value, create the payment transaction, and enter it into the MasterCard system • The payment service provider acts as a merchant and pays the reverse interchange • The payment service provider interacts with the sender and receiver and charges a service fee • Originating value can be from cash, bank accounts,or credit cards

    37. To Main Menu To Next Section What P2P Money Transfer Solutions Do They Support? The MasterCard/Maestro payment transactions were designed to enable P2P Money Transfer services that provide both online and offline service, domestically or globally. Models include, but are not limited to: • Internet P2P Money Transfer services accessed by PCs, kiosks, or other internet devices • Agent based services that can accept cash • Bank to bank services that move money onto credit or debit accounts

    38. To Main Menu To Next Section What Does a Bank Have to Do to Use the New Payment Transactions? Member banks can use the new MasterCard/Maestro payments transactions in two ways: • Recipient Banks: complete the maintenance required to become certified to accept the payment transactions and complete the AML* compliance review • Sending Banks: develop in-house capability or partner an outside payment service provider platform to generate the payment transaction, (e.g., Yahoo, CertiPay). Complete an AML compliance review • *AML = Anti-money laundering – See U.S. Patriot Act and FATFA

    39. To Main Menu To Next Section Benefits of the Payment Transaction Enabling the MasterCard/Maestro payment transaction provides instant access to P2P Money Transfer • Banks can accept transactions from any participating funds transfer service • Banks can receive P2P Money Transfer transactions from any domestic or global originating point • Banks require no special development after becoming certified to create or accept the payment transaction • Banks can rely on the MasterCard global systems for P2P Money Transfer settlement and connectivity • Banks can use the payment transaction in a wide range of service designs

    40. To Main Menu To Next Section Consumer Benefits Using the MasterCard/Maestro Payment Transactions will provide a P2P Money Transfer Service that is: • Usually less expensive than agent-to-agent funds transfer services • Easier and safer than receiving and keeping cash • Easily accessed a hundreds of thousands of ATMs • Used immediately in millions of merchants worldwide

    41. To Main Menu To Next Section The Role of the Payment Service Provider Money Transfer Services:Online and Agent-Based

    42. To Main Menu To Next Section What is a Payment Service Provider? A payment service provider stands between the sender and the receiver Business Model – Qualified merchant or Acquirer Target Consumer Segment – Fully banked or underserved Channels – Online or Face-to-Face Economics – Transaction-based fees, interchange, and FX Key Challenges – Ensure banks in the receiving markets are prepared to accept the payment transaction

    43. To Main Menu To Next Section Payment Service Provider in an Online P2P Service Banks leverage online payment service providers to support money transfer MasterCard Solution – MasterCard/Maestro Payment Transaction Target Consumer Segment – Fully banked and technology aware Channels – Online or kiosk Economics – Transaction-based fees, interchange, and FX Key Challenges – Ensure banks in the receiving markets are prepared to accept the payment transaction

    44. To Main Menu To Next Section Online P2PMoney Transfer Service • A member or co-brand partner offers the ability to send money to family and friends over their online website • Sender and recipient register to be a part of the service • The sender selects the account that will be used to fund the transfer and identifies the sender and a pass code • The sender reviews and accepts the fees and foreign exchange rates if applicable • The recipient receives an email message with a link to the P2P Money Transfer Service • The recipient enters their name, the pass code, and the MasterCard account to which the money will be transferred

    45. Online P2P Money Transfer Service Debit Card Issuers Kiosk MasterCard SystemsPayment Transactions PSP Provider Acquirer Website Credit Card Issuers Email link to Payment Service provider To Main Menu To Next Section MasterCard/Maestro Payment Transaction enables funds to be place on any credit or debit card from bank or card account via an online payment service provider.

    46. To Main Menu To Next Section Online P2PMoney Transfer Service How a Member Makes Money Service Provider • Service fees • Foreign exchange Acquirer Bank • Discount Rate Receiving Bank • Account fees • Interchange (Payment Transaction and Usage)

    47. To Main Menu To Next Section Online P2PMoney Transfer Service How the Member Will Sell It Online Promotion • Pop-up ads • Portal ads • Email ads

    48. To Main Menu To Next Section Payment Service Provider in an Agent-Based P2P Service Banks leverage retail agents and a payment service provider to support money transfer MasterCard Solution – MasterCard/Maestro Payment Transaction Target Consumer Segment – Underserved Channels – Retail agent Economics – Transaction-based fees, interchange, and FX Key Challenges – Establishing a retail relationship that appeals to the under served market—developing internalor outsourcing payment service provider capability

    49. To Main Menu To Next Section Agent-based P2PMoney Transfer Service • A member or co-brand partner offers the ability to send money to family and friends through a network of retail agents • Sender and recipient register to be a part of the service – recipient is given an registration number and provides it to the sender • The sender goes to the retail store with cash, the name of the recipient’s name and ID number • The retail agent submits the transaction to the payment service provider who translates the ID number to the recipient’s registered PAN • The transaction is sent to the MasterCard system through the acquirer • The payment transaction is accepted by the recipient’s card issuer

    50. Agent-based P2P Money Transfer Service To Main Menu To Next Section MasterCard/Maestro Payment Transaction enables funds to be place on any credit or debit card from bank or card account via an online payment service provider Debit Card Issuers Bank Branch MasterCard SystemsPayment Transactions PSP Provider Acquirer PSP Provider Agent Credit Card Issuers