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					PKI Issues: The Payment Perspective

              March 6, 2000

               Ann Terwilliger
           eCommerce Authentication

               Visa International
       EC Market Reality
         Internet sales volume continues to grow at a rapid
                rate                 $200
                       US$BIllions   $150
                                                                 178
                                     $100                     116           B2C
                                      $50 15 31       51 78

                                      $00 1998 1999 2000   2001 2002 2003




         Fraud will become a greater concern with rising
                volume
         Consumers still worry about using payment card on
                the Internet
         Non-acceptance of Visa card on ‘Net is a problem
         New threats to Visa and Member Banks
Visa Confidential                                                                 2   GF609DC. 2
       Authenticated Payment Strategy
     Objective:
        Grow Visa volume over Internet
             Providing assurance to cardholders to shop online
             Ensure Visa brand prominence on the Internet
             Provide tools to make shopping easier
             Establish a globally consistent Authenticated
                    Payment Platform
                      Reduce fraudulent use of Visa cards/accounts
                      Reduce charge backs
                      Result in increased profitability
             Preserve Visa relevance in eWorld
                     Provide added value to Members
                     Leverage existing infrastructure
Visa Confidential                                                     3   GF609DC. 3
      Major Opportunity In Non-Shoppers
      A majority of on-line users are still not shopping
                           % of On-line Users Who Shop
                    100%

                    80%

                    60%

                    40%

                    20%

                     0%
                            1997    1998         1999             2000       2001


                                   Non-shoppers                 Shoppers
                                           source: Jupiter Communications,
                                           Forrester Research


Visa Confidential                                                                   4   GF609DC. 4
    Security Concerns Are Still Important!

                                  Why Haven't You Shopped Online?
                                                        28.8%
        Too time consuming                             23.9%                                                  1997
                                                                    42.8%                                     1998
Not familiar with merchant                                          39.2%
                                                                                     59.7%
       Can not touch goods                                                          49.3%
                                                                                                 65.7%
       Security concerns                                                                         71.6%

                         0.0%       10.0%   20.0%   30.0%   40.0%   50.0%   60.0%       70.0%       80.0%
                                                                            Source:MarketFacts October’98


                                  Top Concerns Of Internet Users
             Pornography
     Depiction of violence
Government ratings system
Censorship by government
Censorship; Special Interest
         Personal privacy
       Credit card security
                              0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00%
                                                                                Source: CyberDialogue 1998
Visa Confidential                                                                                       5    GF609DC. 5
     Consumer EC Shopping Trends
         On-line shoppers tend to shop infrequently at
         only a few merchants
              Internet Shopping Patterns
               Frequency Over Past Year
                    >10 times 4%

                 13%                               The average shopper
                      5 to 10
                       time                  33%         purchases
                       s              Once         at only five sites on a
                                                       regular basis.
                       2 to 4 times

                  50%

       Goal: increase the frequency of on-line shopping
source: Ernst & Young LLP
Visa Confidential Report
Internet Shopping                                                            6   GF609DC. 6
       Potential Profitability
       Opportunity
         The key to driving market growth is adoption of
         secure electronic commerce

                                                                                                    Increase
             Increase $400                          Increase               Increase
                                                                                                 # of merchants
            # of on-line x                         purchasing      x      # of on-line       x
                        $350                                                                      cardholders =
             shoppers                              frequency              merchants
                                                                                                   shop with
                                     $300
                             $250
              US$ billions




                             $200                  Global On-line Sales
                             $150

                             $100

                               $50

                                $0

                                  1995      1996    1997    1998       1999   2000    2001       2002   2003   2004   2005

                             Source: Jupiter Communications, SIMBA, Forrrester & Visa Estimate                               7
Visa Confidential                                                                                                       7    GF609DC. 7
                    TRUST
                      =
           Internet Sales Growth

Visa Confidential             8   GF609DC. 8
       Authenticated Payments
                                         Non-repudiation
                                    Merchant         Cardholder
                                  Authentication    Authentication
                                      Transaction Encryption


            CARDHOLDER
                                                                           MERCHANT

                                          Internet

                         ISSUER                               Ac quire r


                                        Payment Service




Visa Confidential                                                                9    GF609DC. 9
       Authenticated Payment Platform

     Requirements
           :
       Must reduce fraud through some form of enhanced
         cardholder authentication
           Convenient and simple for consumer and merchants
           Quick time to market
           Must work internationally
           Interoperability - both business and technology

                    The requirements are also the hurdles that
                    need to be overcome to achieve success

Visa Confidential                                                10   GF609DC. 10

				
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