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The International EMV Software Market. Author Antti Öfversten Supervisor Professor Heikki Hämmäinen Instructor M.Sc. Sakari Ranta. The International EMV Software Market. Introduction. EMV is an internationally agreed standard for payment cards

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the international emv software market
The International EMV Software Market

Author Antti Öfversten

Supervisor Professor Heikki Hämmäinen

Instructor M.Sc. Sakari Ranta

the international emv software market1
The International EMV Software Market

Introduction

  • EMV is an internationally agreed standard for payment cards
  • The name EMV is an acronym of ”Europay MasterCard Visa”
  • The main purpose of the EMV standard is to introduce a more secure payment method by using a chip card instead of a magnetic stripe card
  • The risk with regard to fraudulent transactions is much higher when magnetic stripe cards are being used
  • This risk will be shifted to them who do not support the EMV functionality
    • Points of sale
    • Card Issuers
the international emv software market2
The International EMV Software Market

Research Problem

  • How can target market characteristics be measured?
  • What are the key factors that make the target market suitable for EMV software products ?
  • When should market entry take place? When is the shift from magnetic stripe cards to EMV cards going to happen?
  • What strategy should be applied at market entry?
  • Which markets should be targeted?
the international emv software market3
The International EMV Software Market

EMV Payment System Model

  • Issuer (ex.g. banks, oil companies)
    • Issue chip cards to the payment system
  • Acquirers (ex. g. Luottokunta)
    • Release payment accepting terminals to merchants
    • Process the terminal transactions
    • Pay the merchants for the transactions
  • Merchant
    • Obtain terminals that accept EMV Payments
  • Cardholder
the international emv software market4
The International EMV Software Market

EMV Security Mechanisms

  • The actual EMV functionality for authorising transactions resides with the issuing bank
    • Authorisation requests
  • Asymmetric algorithms
    • Authenticate the card as valid to the terminal
  • Symmetric algorithms
    • Generate and verify transaction cryptograms based on key shared between the card and the issuer bank
the international emv software market5
The International EMV Software Market

Payment Applications

  • EFTPOS
    • PC POS / standalone terminals
  • Mobile EFTPOS
    • Uses the GSM or GPRS networks
  • Contactless Payment (RFID, bluetooth, infra red)
    • Contactless cards
    • Mobile phones
    • Payment tokens
the international emv software market6
The International EMV Software Market

Foreign Market Entry Modes

There are several methods of foreign market entry including

  • Exporting
  • Licensing
  • Joint ventures
  • Direct Investment
  • The chosen method depends on a variety of factors…
the international emv software market7
The International EMV Software Market

Selecting Foreign Markets

  • Target market indicators:
  • Not yet fully mature
  • Credit card liability shift
  • Number of independent payment terminals vs. PC POS software
the international emv software market8
The International EMV Software Market

Credit Card Liability Shifts

the international emv software market9
The International EMV Software Market

Credit Card Liability Shifts

the international emv software market10
The International EMV Software Market

Software Entry Strategies

Most interesting target markets can be divided into two groups:

  • Group:
  • Percentage of PC POS systems and standalone terminals capable of EMV payment 0..50 %
  • Total number of PC POS and standalone terminals: 0 .. 100000
  • 2. Group:
        • Percentage of PC POS systems and standalone terminals capable of

EMV payment 0..50 %

        • Total number of PC POS and standalone terminals > 100000
the international emv software market11
The International EMV Software Market

Software Entry Strategies

  • The design of a market entry strategy is actually iterative with many feedback loops
  • The strategy proposed in the thesis can be used as a starting point for iterative development of the international marketing plan
  • As some of the markets are entered, more detailed information of the EMV situation is inevitably collected
  • Further research for more detailed information should excercised so that target markets can be included or limited out of the marketing plan
  • Finding useful data for the internationalisation plan will be an ongoing challenge
  • No literature study can replace the information and data that can be obtained through a visit to a potential foreign market