PSP BUYER S GUIDE 2011

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PSP BUYER‘S GUIDE 2011

INSIGHTS IN THE WORLDWIDE ONLINE PSP MARKET

Authors

The Paypers

Ionela Barbuta, Monica Gaza, Mihaela Mihaila, Adriana Screpnic, Cosmin Turcu

Release

Version 1.0

October 2011

Copyright © The Paypers BV

All rights reserved

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INTRODUCTION

You are reading the PSP Buyer‗s Guide 2011, the most complete and up-to-date reference source for online

PSP (Payment Services Provider) related information at global level. This guide is published once a year by

The Paypers, the leading independent source of news and analyses for professionals in the payment industry.

The market is constantly moving with numerous new developments in the online payments space and so are

we. The PSP Buyer‘s Guide has rapidly captured the attention of service providers, payment professionals

and web merchants who have the necessary technical and/or operational expertise to bring the industry to a

new competitive level. This independent guide has been designed to function as a solid reference point for all.

E-commerce has long been heralded as having the potential to act as an engine for new revenue growth. But

at present, cross-border e-commerce is far from being utilized to a full extent, or at least this is what statistics

so far suggest. It is universally acknowledged that online fraud is the main inhibiting factor and much of the

recent discussion in online retail is indeed around fraud prevention. Solutions are constantly being proposed

and these range from the development of fraud protection services to strong calls to action towards the

industry to come up with more efficient e-payment services which are less sensitive to fraud, have more cross

border reach and lead to more sales conversion.

Web merchants have started to articulate their demands, while online consumers hold privacy dear and the

lack of confidence in both the merchants and the online payment options they use are still hurdles to be

overcome. In this context, where banks struggle with innovation delivery, payment service providers need to

constantly re-examine the basis on which they deliver customer propositions. They do offer as many payment

options as possible, but do merchants/buyers actually need all of them? After all, the merchant`s online

business depends on the service and reliability they provide.

Building on last year‘s successful first edition, this year‘s edition with a global focus has been expanded

substantially.

The first part of our overview presents some general developments in e-commerce, online payments and the

persistent problem of fraud, voiced by key industry stakeholders. This section includes key facts and trends on

the industry on behalf of the Merchant Risk Council, the merchant-led trade association focused on electronic

commerce risk and payments globally and also insights into the European online payments space, by Wijnand

Jongen, CEO of Thuiswinkel.org, advocating the European E-Payments Merchant Initiative on behalf of major

cross-border European web retailers and their representative e-commerce member organizations.

In the second part, various global PSPs express their thought leadership, with a particular focus on

developments regarding fraudsters, risk management, maximizing conversion strategies for merchants and

how the opening of the BRIC markets influence their strategy.

In the third part, driven by popular demand from players who have helped shape the industry‘s development,

the PSP Buyer‘s Guide 2011 now provides state-of-the-art information on over 300 online PSPs all over the

world.

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With this guide we hope to provide all parties involved in online payments processes with a clear insight into

the dynamic and competitive PSP market.

Finally, this document has been written with the utmost care. If you discover that, despite our efforts, it

contains information that is unclear or erroneous, we would appreciate it if you would let us know.

Chiel Liezenberg,

Partner, Innopay

Adriana Screpnic,

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Nicolas Vedrenne, Managing Director, Merchant Risk Council Europe

Near the turn of the millennium, as the internet was opening new markets and e-commerce was beginning

its rapid growth, a group of merchants joined together to form the Merchant Risk Council (MRC) as a way

to increase networking and education among merchants to better enable them to successfully fight online

fraud (3.6% of total online revenues in 2000). Today, with members representing over 300 member

companies across the globe, the MRC not only continues to provide a platform for education and

discussion, but acts as an advocate for e-commerce merchants, providing a unified voice for improving the

industry as a whole. The MRC delivers year-round programming that empowers its members with the

knowledge and tools to succeed in the online payment, security, and risk industries of today, as well as

tomorrow.

Nicolas Vedrenne developed his career in France, UK, Latin America and Spain with Société Générale,

Sema Group and Monext, specializing in payment systems, fraud prevention, risk management and credit

bureaux. In 1999, he took the responsibility of several Experian businesses as President Hispano America

and CEO Spain. A passionate advocate of cross cultural understanding, and after a 2 years round the

world trip, Nicolas Vedrenne was involved in the selection process of Madrid as a candidate city for the

2016 Olympic Games. He wrote a book on “change and business transformation” and he is a

co-founder of 1x1microcredit.org, an NGO project specializing in microcredit.

The MRC is …

the world‘s foremost global, non-profit, merchant-led trade association focused on managing

payments, preventing online fraud and promoting secure e-commerce.

The current state of online retailing is…

booming. Retailers are entering new countries where growth in online

retailing is a bright spot in sluggish national economies. Cross Atlantic e-commerce as well as roll-out into the BRIC

countries are now key components of our members‘ e-payment strategies. Large players are jumping into

cross-border operations but often meet new challenges that require a full re-thinking of their payment operations. It is not

unusual to see a multinational with a British website, a Dutch logistics center, an American PSP, a Romanian fraud

prevention team and a call center in the Philippines selling to… a Russian customer. As a result, although fraud is

down in percentage to 0.9% of online revenues, 54% of our members report an increase in fraud pressure and

21% are observing more complex fraud schemes this year.

PSPs can help merchants reduce costs and generate more revenue by …

listening more to the merchant

community, a positive trend observed in recent years. The sector has moved from a rigid product offering to

customizable solutions, mainly because of a better understanding of the payment landscape by merchants.

Traditional card brands are also improving their willingness to talk directly with merchants and a better collaboration

with PSPs has been critical for new product development. In particular, the MRC takes note and encourages

acquirers to enhance the amount of data and analysis available when it comes to chargeback management. New

niche players are also emerging with highly efficient technologies. Device fingerprint analysis is a good example,

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“Traditional card brands are also improving their willingness to talk directly with merchants and

a better collaboration with PSPs has been critical for new product development.”

As a conclusion, with 34% of players expecting to

increase their budget for fraud management and

65% focusing on improving automated detection

and sorting capabilities in 2011, the merchant

sector clearly deserves full attention from PSPs.

In the online world, online transaction fraud is

one of the greatest challenges for web

merchants. What connections, if any, do you

see between the use of different payment

methods and the amount of fraud?

Employing different payment methods does not

necessarily produce a higher risk in itself but rather

a higher complexity in payment and fraud

prevention management. Simple convergence is

not a likely solution as consumers will always want

to have the choice when it comes to paying over

the web. Offering different payment methods is a

very critical aspect of a successful checkout process for our merchants. Amongst new trends, large players adapt

their checkout screen depending on the country the consumer is located in or charge the consumer a premium if

the operation is flagged as risky with a specific payment method.

Merchants also monitor carefully the balance between risk and sales transaction completion rate. An example is

the adoption of 3D secure authentication by consumers: some cultures adopted it very quickly; others are

struggling and find it invasive. The MRC recommendation is to have merchants customize their own strategies as

every business is different. So far, complex mandatory regulations have proven unsuccessful in countries where

they were tested.

In your opinion, what are the most common types of fraud in the financial ecosystem and the best ways to

mitigate them?

The shape of fraud is changing. From the friendly fraud observed at the beginning of 2000, we are moving to a

more organized type of fraud. Massive data and security breaches have been observed recently. This

organizedcrime is more complex to tackle as stolen payment and identity data are then sold over the internet,

ending up being used by non-frequent / first time fraudsters. So nowadays, a typical fraud case would involve a

large criminal organization taking over a large amount of data and a soft fraudster/customer using this data for his

personal benefit. For solutions, the MRC observes that specific tactics and tools typically lose their effectiveness

after about 18 months as fraudsters adapt their operations. This is why merchants understand the importance of

having multiple tools supported by excellent analytic skills. Our benchmarking surveys show that, on average, large

merchants use a combination of over 8 detection tools/ techniques.

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“The MRC observes that specific tactics and tools typically lose their effectiveness after about

18 months as fraudsters adapt their operations. This is why merchants understand the

importance of having multiple tools supported by excellent analytic skills.”

Are certain sectors that have online revenue streams particularly susceptible to fraud, as compared to

others?

We divide the e-commerce ecosystem into 4 categories: travel and ticketing, online gaming and gambling, physical

goods and digital content. But unfortunately fraudsters operate across these sectors. Services for immediate

consumption are heavily targeted but physical goods, with a higher value, are also attractive to fraudsters.

Therefore the real need is to understand the impact of fraud on the merchant‘s business. For physical goods or

travel, there is a big loss in goods/services. For digital goods, the focus is more on the loss of potential revenue.

The true cost of fraud is the combination of the loss of goods or revenue + the cost of the fraud prevention tools

and teams + the amount of good business transactions not accepted as a result of a false positive analysis. MRC

merchants reject an average of 2.6% of orders due to suspicion of fraud. That latest aspect attracts a lot of

attention lately as rejected transactions can be the source of legitimate business and can be turned into a revenue

generator.

Chargebacks represent a big hurdle for e-commerce merchants and online business owners. In your

opinion, how can they be prevented?

In 2011, 45% of the typical MRC merchant‘s fraud losses

came from chargebacks. But the recovery rate increased

from 25% in 2009 to 41% in 2011 due to better analytics

and to a higher rate of representation. Large players

have better automation of their chargeback operations

but manual review staff still represents the largest part of

fraud prevention costs (44% of suspicious transactions

are reviewed manually) which causes some concerns

from top management when it comes to budgets.

Therefore, a careful analysis of the balance between

manual review supported by powerful data and

automated tools is the best way to prevent chargebacks.

As mobile commerce becomes more popular, are there unique security concerns associated strictly with

the mobile channel? Or is it affected by the same security issues as e-commerce?

There are no clear trends when it comes to mobile payment. Apart from micro-payments such as Premium SMS for

very specific sectors, the mobile device is mainly used as a web browser and payment solutions are ―as if‖ on a pc.

But yes, there is an additional layer of security concerns: apart from the possibility of the device being stolen,

mobile devices are more vulnerable to infection and consumers are still on a learning curve: for example, most

mobile users have Bluetooth activation without password protection. It is therefore possible to infect many devices

with spyware in a small amount of time. Therefore the concern is more on how to protect the data that could

potentially reside in the mobile device. Last but not least, the traditional fraud prevention systems using

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geo-“Payments and fraud prevention are areas in which merchants have a common interest and

they should learn from their counterparts (as fraudsters do!).”

Is interoperability between online authentication solutions possible?

Although this is a trendy topic, we do not think that this is a panacea. Past experiences have shown that there is no

ideal solution. In addition, recent developments in security breach, cyber-mafias, and account take-overs mean that

interoperability could lead to more risk by concentrating on a single set of data in a unique system/environment.

Interoperability may be an improvement for consumer convenience, providing it is user friendly, but not necessarily

good for fraud prevention. Tokenization is also a potential improvement along those lines. Finally, some

government initiatives are being reviewed but the MRC would suggest a close cooperation with the merchant

community to ensure proper implementation as well as more interaction with consumers to encourage adoption.

Directions of development for online fraud

prevention systems: what does the industry lack

and where should improvements be made?

There are tools such as data sharing that could be

very effective for crime prevention. As proven over the

past decade in national banking systems with Credit

Reference Agencies, exchanging data on fraudsters is

key for crime prevention and the technology exists.

However, the cross-border nature of e-commerce is

not compatible with most of the national Data

Protection Laws in place and international regulations

are

still limited on the matter. Therefore, the merchant community should encourage governments to unlock the power

of technology by carrying out a proper review of the sector and e-crime associated with it. Law enforcement,

currently under-resourced, could also benefit from this next step in its prosecution duties as shown in the US.

Finally, all stakeholders of the ecosystem should increase their level of collaboration and experience sharing.

Payments and fraud prevention are areas in which merchants have a common interest and they should learn from

their counterparts (as fraudsters do!). Is it the most efficient approach? MRC members who collaborate on a

regular basis on fraud prevention with other industry members have reported an average of 33% lower revenue

loss due to online payment fraud over the past three years, with chargeback rates 24% lower and manual reviews

three times lower than similar merchants.

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Wijnand Jongen, CEO of Thuiswinkel.org

Thuiswinkel.org is the branch association for businesses that sell products and services to consumers (b-to-c) via

the internet, catalogues and/or the post. The association promotes the interests of its members both nationally and

internationally.

In addition, Thuiswinkel.org also strongly attaches considerable importance to the interests of the consumers that

purchase from its members. Wijnand Jongen has been for 10 years the CEO of Thuiswinkel.org, the association for

the online e-commerce industry in the Netherlands, serving 1300 plus web merchants. Thuiswinkel.org took the

lead in the E-Payments Merchant Initiative, uniting European merchant interests via major cross border web

merchants and 7 other e-commerce organizations from Belgium (Becommerce), France (Fevad), Germany (BvH),

Denmark (FDIH), UK (IMRG), Finland (Verkkateollissuus), Sweden (Distancehandel).

E-commerce development

In the past 15 years e-commerce has become a mature market and is still growing. This trend is expected to

continue in the coming years due to the further proliferation of mobile devices (smartphones, tablets) and the trend

of consumers being ‗always online‘. Following this market success, e-commerce payments have seen a

tremendous development in the past decade. Cards have become today‘s most important online payment methods

in most countries and will continue to be so for the foreseeable future. However, cards have important product

flaws when used for web transactions since ‗cards were never designed for the web‘. The customer is not

physically present with his card, therefore e-commerce payments are known as Card Not Present (CNP)

transactions. Without the card present, the main flaw for (credit) cards as a means of payment is their vulnerability

to fraud. There are alternatives for cards, but these have their own flaws, mainly fragmentation and a lack of user

friendliness. These imperfections affect merchants and consumers strongly and threaten trust online.

For the payment world these imperfections bring opportunities to create new more efficient methods to consumers

and merchants. Many positive developments have taken place to optimize payments for the web. Innovation has

seen traditional payment methods come under pressure as consumers and merchants migrate to more convenient

and efficient and secure payment methods. However the journey is far from complete and does create operational

issues for merchants who have to operate within this complex market. The online industry (both merchants and

providers of financial services) should listen more carefully to consumer needs if we want to maintain growth as we

did the past decade. In the next paragraph, I will highlight some of the most pressing customer needs. The last part

is dedicated to four trends that, in my belief, will shape the next phase in e-commerce payments.

Consumer needs

Issues like the lack of confidence in online payment methods, privacy concerns and the lack of trust in the web

merchants form barriers for the growth of e-commerce. On a more practical level, they hinder conversion. It is in the

interest of the e-commerce sector to eliminate these barriers. Today‘s payment issues are numerous and it is not

obvious to categorize them in a practical and meaningful way. When we take the key barriers for e-commerce from

the EU‘s Digital Agenda we see the following issues:

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“Each type of payment puts bespoke requirements on merchants in terms of usability, security

and functionality. Regarding payments this means consumers want more trust in online

payment methods.”

● Lack of confidence in the online payment methods

● Privacy concerns. For a consumer it is comprehensible that he should identify himself in order to enable the

delivery of goods or services online. However this should be able with providing the right set of personal data,

affecting the consumer‘s privacy as little as possible

● Lack of trust in the web merchant. Consumers expect fair agreements, conditions and delivery, whether or not

supported by (international) trust marks.

We can safely conclude that trust is the critical factor. On top of this we see that future developments will impact

the need for new services. i.e. the rise of mobile devices. Each type of payment puts bespoke requirements on

merchants in terms of usability, security and functionality.

Regarding payments this means consumers want more trust in online payment methods. Consumer needs and

autonomous developments form three trends that will have an impact on e-commerce:

New banking payment services will be developed

A trend we will certainly see in the future is the development of new services that use the existing banking payment

schemes for online use. It might be a way for the banks to address the most urgent issue in payments that I

mentioned before. Bank payment schemes such as credit transfers and direct debits are core banking services

since payments became digital more than fifty years ago. Over time, every country around the world has developed

its own national standards and mechanisms. For a few years we now have SEPA within the European Union,

which aims to standardize these core banking payment services, including cards. The SEPA project (since 2002,

banking self-regulation) led to the introduction of the SEPA Credit Transfer (SCT) in 2008 and the introduction of

the SEPA Direct Debit (SDD) in 2009. The uptake of these new services by market and public sector has been

limited so far.

Therefore an end-date will be mandated by the European Commission, which will probably be 1st January 2013. It

is with these core banking products (credit transfer, direct debit) where merchants see the opportunity for new

payment developments when they would be made suitable for use on the web. One example is the SEPA Credit

Transfer which has no chargeback risk for merchants because the buyer initiates the payment through his own

bank. Since SCT is not designed for the web either, a new breed of payment method has come to market in

various countries across the globe, which is called Online Banking ePayments (OBeP). With OBeP in the checkout

process, the buyer is redirected from the merchant site to the site of his bank, where he authorizes the transaction

with his online banking credentials. The merchants receive a real-time payment guarantee as a result of this

authorization. Today OBeP services are not based on SEPA payments yet, but they can be made suitable for the

SEPA payments requirements.

A strong point for the OBeP category is that users are directed to their online banking environment. This

guarantees a high level of security, but is also familiar to the user and thereby enhances trust and ease of use. The

OBeP has a 90% market penetration in the Netherlands with similar systems in e.g. Germany (giropay), Austria

(eps), USA (Secure Vault Payments), Canada, Colombia and Poland, but very limited cross border reach. This

fragmented and non-interoperable landscape is not beneficial for the proliferation of this type of payments. The

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“The development of new services that can enhance trust in the e-commerce market is a key

responsibility for the industry. If we succeed, I’m confident that e-commerce can sustain growth

and keep on serving consumers in the best possible way.”

initiative from a technical point of view. However, proper pricing models are still a decisive factor as well for

successful European proliferation of this category of payment services. OBeP systems based on SCT are a viable

alternative to cards because of the absence of chargeback risks. Therefore merchants want more cross-border

OBeP payment options, including an international solution while reducing fragmentation and optimizing the buyer

experience. Buyers should be able to pay internationally with their online bank credentials.

M-commerce develops rapidly

Only recently the mobile device (phone, tablet) has become a serious alternative to the PC when it comes to

e-commerce. However, because of the different user settings and screen sizes as well as the uncertainty of security

risks, not every online payment method is applicable for a mobile device. Payment methods and apps which are

optimized for mobile devices are developed which can be offered in a competitive fashion. This goes beyond the

native payment options of the app stores offered by the major platforms (Apple, Android, Blackberry etc.) and the

keying in of credit card details on a mobile device. E-commerce via mobile devices will also benefit from generic

e-authentication solutions: consumers can then re-use profile data stored elsewhere to reduce input on the device

itself. This will improve the shopping experience, hence increase conversion.

Online identity and authentication development

The last trend I would like to highlight is that of ‗online identity‘. Consumers have more and more online identities of

various natures. They vary from verified credentials (e.g. bank passes) to unverified credentials with stored

preferences (e.g. social media credentials; the expectations of ‗social sign in‘ are high amongst many marketers

and web merchants). Initiatives are developed to re-use these identities in the online commerce context, with

security levels that can be adapted to the risk or the value of the transaction (basic security for low value, high level

of security for higher values). There are many benefits, including the improvement of the security of cards, credit

transfers and direct debits. By using a similar international online identity solution for all payment types, the buyer

experience will be harmonized. This leads to a better experience, more trust and therefore more sales if

implemented in a way that the consumer‘s privacy is warranted.

Buyers can store profile information (address, name etc.) and disclose them to merchants of their choice. This

gives a merchant more certainty and leads to a better buyer experience (more conversion). All channels will benefit

as an online identity improves all shopping experiences. I.e. mobile screens are small and have small keyboards.

Using already stored online identity profiles will reduce the need for input by buyers and will therefore make the

mobile channel easier to use.

Exciting times for e-commerce payments

Overall we can conclude these are exciting times for e-commerce payments. We‘ve come a long way, but there are

still a lot of challenges. The development of new services that can enhance trust in the e-commerce market is a key

responsibility for the industry. If we succeed, I‘m confident that e-commerce can sustain growth and keep on

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Adyen

Adyen: A next generation global Internet

Payment Service Provider

Adyen is a highly specialised International Payment

Service Provider working for large international

e-commerce companies. Adyen works with companies

that are based all over the world that are active in a

wide variety of industries. This gives a fascinating

insight into the major trends in the field of global

e-commerce.

Looking at what drives the larger, international

e-commerce companies, we have identified key trends

across the markets. In this article we would like to

outline these trends, and at the same time layout

Adyen's approach to helping merchants successfully

deal with these trends.

PCI Compliance

The pressure on merchants to be PCI Compliant

continues to grow year-on-year. Over the past year

we have again seen a number of data breaches

which further drives regulation in this field. It is

estimated that for medium sized merchants, being

compliant costs between USD 300.000 and USD

400.000. This explains why we see that the largest

e-commerce businesses are changing their payment

infrastructure to a completely outsourced solution.

As an illustration Adyen has gone live with a number

of airlines that have fully adopted the Adyen hosted

payment page model which relieves them fully from

PCI compliant responsibility.

True globalisation of e-commerce

Emerging markets are now mature and serious

markets. Some facts:

● Average GDP growth in Latam is 4.4% vs 1.7%

in Europe

● Internet penetration growth in Brazil and

Argentina is the fastest in the world

Where a few years ago everybody spoke about

doing business in emerging markets, today many

e-commerce companies are processing serious

volumes in these countries. Countries in Latin

America, most notably Brazil, are experiencing the

most growth. It's not only the global, experienced

e-commerce companies that are paving the way.

There is a highly dynamic market with many

successful domestic e-commerce businesses in

Brazil. For Adyen this has been the reason to open

offices in Sao Paolo during the past year.

Furthermore we have invested heavily in

―tropicalising‖ our payment platform for the local

Latin American markets. This means that we have

developed connections directly into the local

acquiring banks and have developed support for

processing credit card payments in installments – a

very common way of paying online in Latin America.

Local payment methods are also key, especially the

cash based ―boletos‖ are a requirement for this

region. Cash is still king...

Fraudsters never give-up

Here at Aden we are convinced that fraud will never

go away. This is what we are seeing throughout the

last few years. New authentication tools like 3D

Secure are by now quite well penetrated – especially

across the northern European countries. Fraud

continues to be at the top of the agenda for the large

players in e-commerce. Patterns continue to evolve,

fraud prevention tools need to follow...

Adyen runs a next generation Fraud Prevention Tool

which is highly customisable. We have helped

merchants reduce their fraud losses for up to 90%.

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Last year Adyen has taken its own Device

Recognition Software live which in combination with

our self-learning fraud pattern recognition

technology provides the latest standard for Fraud

Control.

Conversion, Conversion, Conversion

A/B testing is now everyday business for any serious

e-commerce business. Ensuring that a consumer

has the most seamless and enjoyable checkout

process is the highest priority. For Adyen, making

sure our payment platform contributes to this goal is

one of our core priorities. This means that we

continuously measure and optimize the

effectiveness of our payment page solutions. This

gives very interesting insight along the way.

Did you know that:

● Supporting 3D Secure in southern European

countries can still reduce conversion with

20%...

● Processing credit cards in Spain with a local

Spanish acquirer can increase conversion with

25%...

● Offering consumers a single-screen payment

page over a 3-page payment screen has shown

a 90% higher conversion rate....

Adyen's conversion analytics tool was designed to

provide merchants with ongoing insight into

conversion % across their markets.

The rise of the mobile sales channel

It was ten years ago when we saw the first WAP

payment solutions. Back then this was very much a

marketing gimmick. Today Adyen sees many

millions of transactions running through its payment

solution for iPhone and Android. These transactions

come from ticketing companies, online retailers and

group-buying business that all have very quickly

adopted the mobile sales channel. One of the

fascinating observations is that anytime an

established web retailer launches a mobile sales

channel, it almost instantly generates volume. It is

clear that the global consumer is ready and eager to

buy any product on a mobile.

Roelant Prins, CCO, Adyen

Adyen is the leading provider of global internet payment and e-commerce solutions for e-commerce merchants. Adyen‘s internet payment solution enables merchants to increase online conversion by optimizing the online payment process. This ―one-stop‖ solution can be implemented within days and connects companies to global customers through a growing offering of payment methods. For more information please visit

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Chase Paymentech

Are You Getting The Best From Your Payments

Solution?

Merchants cannot afford to ignore the impact of

fraud and hidden costs associated with

e-commerce.

No matter what your industry, fraud is a part of it and

is clearly not going to diminish. In fact, in research

recently conducted by Chase Paymentech, 62% of

British mid-sized and large companies that handle

customer-not-present (CNP) payments lost money

through fraudulent transactions in the twelve months

up to March 2011

1

.

With a long and successful history of working with

some of the world‘s largest e-commerce merchants,

we at Chase Paymentech believe that we have a

good understanding of merchants‘ fraud concerns.

We understand that in order to compete successfully

and maximize sales, e-commerce merchants need

solutions that filter fraud and encourage legitimate

shoppers to transact in a secure environment

without materially increasing headcount or costs.

In response to this need, Chase Paymentech has

developed an innovative suite of solutions designed

specifically to combat fraud utilizing continuous

transaction monitoring, a customizable rules engine

and advanced fraud detection technologies.

According to some merchants, Safetech

SM

Fraud

Tools have helped them to notably reduce their

chargebacks. In fact, one top internet retailer using

Safetech Fraud Tools has consolidated its fraud

review to a single full-time employee managing fraud

on more than 25,000 orders per day. Before a

transaction is completed, Safetech Fraud Tools are

at work determining the location and device

identification of your customer through custom

scripts run on your payment page. Once the

consumer completes the purchase, data is sent to

Chase Paymentech with the authorization request.

Chase Paymentech then sends this request to the

payment brands and receives an authorization

response that includes approval or decline, as well

as Address Verification Service (AVS) response

data. This data is routed through our Risk Inquiry

System, analyzed and checked against custom rules

that you may have implemented. A fraud score is

calculated and returned with the authorization

response. You may then choose to approve or

decline the transaction (or auto-decision based on

your custom rules).

The Chase Paymentech approach combines

multi-layer device fingerprinting, proxy piercing, dynamic

order linking, dynamic risk scoring, custom rules

management and auto-decisioning that together

provide a unique solution that can dramatically

enhance your current risk management activities.

Best of all, Safetech Fraud Tools can be used

effectively regardless of currency and payment

method, simplifying the cost and complexity of your

fraud management initiatives.

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Looking ahead to the future, UK online sales are

predicted to rise 18% this year to a total value of GBP

69 billion

2

. And yet, cart abandonment rates are said

to have risen to 88%, up from 75% in 2010

3

.

Merchants are therefore behoved to ensure that they

have taken a strategic approach to payment

processing. Issues such as preventing a customer

from paying in their chosen currency or payment

method, a cumbersome payment process and not

offering the level of security and protection demanded

by consumers, all have the potential to lead to cart

abandonment.

Similarly, when implementing a multi-channel

approach, merchants should take time to review their

checkout process. For example, inputting a 16 digit

card number on a mobile phone may not be the most

convenient for your customer and forcing 3D Secure

may cause issues with some smartphones. There are

many ways that Chase Paymentech can help

merchants maximize conversation strategies and

sales opportunities through implementing a smart,

strategic payment process.

Currently, Chase Paymentech provides solutions to

merchants looking to trade in over 130 currencies

worldwide. Our strategic focus is influenced by a

number of variables including our merchants‘ strategy

and other opportunities for growth. As e-commerce

continues to grow globally, markets change. The

opening-up of the BRIC market represents a growing

e-commerce opportunity and one that we continue to

evaluate and assess.

Chase Paymentech‘s consultative approach provides

each client with a dedicated relationship manager who

works closely with that merchant to understand their

business, challenges, constraints and future growth

plans. This familiarity allows us to focus our expertise

on the issues of real concern to the individual

merchant.

As more and more merchants strive to reduce

operating costs and increase revenue in order to

compete profitably in today‘s price-sensitive market,

our focus remains on providing our clients with the

business intelligence and solutions needed to meet

their specific requirements. Client success has always

been our primary goal – and will remain so in the

coming year.

Notes:

(1) ―CNP Payments at Risk‖, independent market research conducted by Dynamic Markets on behalf of Chase Paymentech

(2) IMRG Capgemini: e-Retail Sales Index: January 2011 (3) Digital Trends: Shopping Cart Abandonment Rate: March 2011

Chase Paymentech Europe Limited, trading as Chase Paymentech, is a subsidiary of JPMorgan Chase Bank, N.A. (JPMC) and is regulated by the Central Bank of Ireland. The information herein does not take into account individual client circumstances, objectives or needs and is not intended as a recommendation of a particular product or strategy to particular clients and any recipient of this document shall make its own independent decision. Information in this document has been obtained from sources believed to be reliable, but neither Chase

Paymentech Europe Limited nor any of its affiliates warrant the completeness or accuracy of the information contained herein. This document and the information provided herein may not be copied, published, or used, in whole or in part, for any purpose other than expressly authorised by Chase Paymentech Europe Limited. © 2011, Chase Paymentech Europe Limited. All rights reserved.

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GlobalCollect

Fraud is not a local issue

One of the key challenges for web merchants and

e-commerce growth in general is mitigating online

fraud. Fraudsters have become more sophisticated

and built organized fraud networks across the world.

Guided by a knowledgeable Payment Service

Provider such as GlobalCollect, online merchants

can reduce fraud by offering alternative payment

options which inherently have a lower fraud risk, for

example real-time bank transfers.

The future of fraud prevention will largely depend on

further cooperation across Payment Service

Providers, merchants, financial institutions, security

experts, trade associations such as MRC, and local

law enforcement to accelerate the detection of fraud

and develop the appropriate counter measures. The

advent of mobile payments brings further challenges

related to this payment channel and related devices.

To help combat online crime, GlobalCollect‘s

scalable Fraud Screening Service features a range

of integrated fraud reduction tools from renowned

partners to maximize transaction safety prior to

payment authorization. These include customized

business rules, online account validation, neural

networks to detect suspicious patterns, IP

geolocation data to determine the real-world location

of a web visitor, pre-check for fraudulent use of

credit cards, and more.

GlobalCollect is also fully Payment Card Industry

Data Security Standards (PCI DSS) certified and an

active member of the PCI Security Standards

Council‘s Participating Organization program. Using

our Hosted Merchant Link solution allows you as a

merchant to design your checkout section in line

with your branding while letting GlobalCollect take

care of meeting compliance rules - such as PCI DSS

- regarding processing and storing sensitive data.

Safety in numbers: how to turn browsers into

buyers

Next to successful fraud mitigation, there is a

demonstrated correlation between the number of

localized payment methods offered and increased

customer conversion rates. Meaning, the more

locally preferred payment options you present, the

higher the chance your customers will not abandon

the checkout procedure. Two examples are

Germany, where credit card purchases accounted

for only 20% in 2010 and Russia, where cash

payments are still very popular. Good to know:

GlobalCollect offers an unrivalled portfolio of

international, local, and alternative payment

methods in almost 200 countries and 170

currencies. As part of its service portfolio,

GlobalCollect also offers currency conversion of

sales volumes collected in up to 150 local currencies

into a desired remittance currency. This enables you

as a merchant to conduct business online with fixed,

negotiated foreign exchange currency conversion

fees, leading to a reduced FX risk for globally

collected revenues. In turn, you can offer your

customers the convenience to pay in their domestic

currency – another conversion driver.

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Implementing a winning payments strategy in

alliance with our clients

Depending on the analyst, you will see the forecast

for online payments grow from USD 700B to more

than USD 1T by the end of 2012. Mature markets

such as the US and EMEA will continue to show

very attractive growth rates but the prime growth will

clearly come from new and emerging markets in the

years to come. GlobalCollect‘s strategy for the next

12 months will be developed in close cooperation

with its online merchants to help grow their

e-commerce business across the world, including a

strong focus on:



Mobile payments - further development of

both enabling payments via mobile devices

(mobile interface) as well as using Premium

SMS/carrier billing



Vertical-specific fraud prevention

enhancements



Expanded product offering in emerging

markets

The rising star: BRIC markets

The so-called BRIC countries all show up to 50%

YoY growth figures in e-commerce and online

payment adoption so they offer tremendous

potential. That said, each BRIC country has its own

intricacies and is rapidly developing a local payment

culture combining best-of-breed and hybrid payment

methods – so one strategy will not ―fit all‖.

To seize opportunities in these markets and

maximize checkout conversion rates, merchants

need to offer local acquiring and alternative

payments - the latter alone can increase conversion

rates by up to 40%. Most of these alternative

payments require a local legal entity and local bank

account, adding a tremendous work load to your

operations, accounting, and legal departments.

Unless you as a merchant have the above capacity

and knowledge to set up your e-commerce business

in these markets, outsourcing is by far the best

solution. GlobalCollect has profound BRIC

experience plus extensive knowledge of the various

local market requirements, customer payment

preferences, and repatriation issues, as well as the

legal entities in place to help you tap into these

markets. Accordingly, GlobalCollect will continue to

grow its portfolio of alternative and local payment

methods alongside the relevant fraud screening

tools. Headquartered in the Netherlands to serve the

EMEA region, GlobalCollect also has offices in North

and Latin America and the Asia Pacific region to

consult clients interested in targeting BRIC markets

locally.

GlobalCollect is the world's premier Payment Service Provider of local e-payment solutions for international Customer Not-Present (CNP) channels such as internet, mail, and telephone orders, and specializes in a wide range of industries such as travel, retail, online gaming, financial services, telecommunications, publishing, portals, and digital content. Through a single-interface online payment platform, we offer access to an unrivalled portfolio of local and international payment methods in almost 200 countries, including all major credit and debit cards, direct debits, bank transfers, real-time bank transfers, eWallets, cash at outlets, prepaid methods, checks, and invoices. For more information please visit

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Wirecard

How merchants maximize revenues and

simultaneously combat fraud

Merchants with cross-border operations are faced

with an ongoing challenge to manage fraud, no

matter whether they sell goods, travel services or

digital services. In the card-not-present area in

particular they have to realize that these fraud trials

often correlate with their chargeback rate. They

should not underestimate how this measurement

relates directly to their fraud rates.

That is why professional case management is the

most important goal. A stand-alone payment service

provider has to work very closely with one or more

acquiring banks with whom the merchant has a

contract. This is mostly lacking in terms of getting all

necessary information together properly.

New business intelligence tools which the Wirecard

Group provides enable shop operators to estimate

the effectiveness of the risk management strategy

that they employ. In addition, they also benefit from

the maximum amount of transparency on how

central fraud parameters develop over time. In

concrete terms, the new business intelligence tools

portray information to online retailers using

transparent graphs. This allows, for example,

changes in fraud parameters such as the

chargeback or fraud rate to be tracked over time.

If retailers use the Verified by Visa and MasterCard

SecureCode security methods, the card-issuing

bank is liable in the event of fraud. This reversal of

liability means that the retailer is only informed of

cases of fraud the in the event of a return debit.

Additional information, which can be provided as a

result of the close links between acquiring and

technical services within the Wirecard Group, gives

retailers a top-level view of the overall picture. This

end-to-end data allows the company to constantly

adjust its risk management. At the same time,

retailers ensure that they meet the card companies'

formal requirements with regard to permissible fraud

rates. The advantages are obvious: shop operators

have greater control of fraud as it occurs, thus

allowing them to optimize their revenues.

A risk management strategy should start by

analyzing each market-proofed payment solution

that merchants should offer in order to successfully

develop their business in each single country. Once

this has been done, a top-level view of how fraud

can be managed is required.

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It goes without saying that preventing fraud before it

happens is the best option.

Wirecard`s solutions cover consumer identification

and credit rating, strategy management in

combination with fraud prevention methods and the

company‘s Fraud Prevention Suite provides

maximum protection against payment default. This

comprises fraud pattern analytics, rule and decision

management, fraud screening and pattern

(behaviour) detection, performance monitoring and

case management.

Despite the fact that we offer the world‘s leading

payment methods, we have already positioned our

company already in the BRIC area. What is more,

Wirecard not only meets customer-specific

requirements with its highly flexible and

customizable range of products and services. In

order to deploy and maintain tailored solutions and

features, we offer a set of professional services

spanning consulting, project management, business

and system analysis, implementation and quality

assurance, operations as well as customer support.

The sophisticated analysis features show the extent

to which rule-based fraud recognition impacts the

success of the business. We believe that this type of

overview will also be of interest to shop operators

who were previously skeptical about automated

tests.

Heiner Kallweit, Head of Product Line

Risk & Fraud Prevention

Wirecard AG is one of the leading international providers of electronic payment and risk management solutions. Worldwide, the Wirecard Group supports over 12,000 companies from a wide range of industry segments in automating their payment processes and minimizing cases of default. Wirecard Bank AG is a Principal Member of Visa, MasterCard and JCB and operates as a credit card acquirer in 69 countries around the world, involving over 100 transaction currencies and 18 payout currencies. Part of the Wirecard Group, Wirecard Bank provides innovative solutions in the fields of corporate banking, prepaid and co-branded cards, along with account products for both business and private customers. For more information please visit www.wirecard.com

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WorldPay

Building a global strategy, brick by BRIC

It‘s with good reason that many retailers are eyeing

the BRIC (Brazil, Russia, India and China) countries

with such eager interest.

A report launched at the end of August by

PriceWaterhouse Cooper suggests that while these

fast growing countries delivered just 17% of global

GDP in 2010, their contribution is set to rapidly soar

and that they will provide an astonishing 40% of

GDP growth during 2011 and 2012 (1) .

Indeed, in AT Kearney‘s 2011 Global Retail

Development Index (2), Brazil, India and China all

maintained positions in the top ten, with only Russia

slipping out of the upper echelons. Brazil in

particular excelled, awarded a 100% ‗attractiveness‘

rating as an investment location, in part due to the

upcoming Olympics and World Cup.

For online retailers, this creates an immense

opportunity. In our experience of working with

numerous online retailers, we have found that with

much of their mission-critical infrastructure in place,

the process of expansion can be much simpler than

for a bricks-and-mortar competitor.

Capitalising on the BRIC opportunity

Although emerging markets present online

merchants with near-limitless opportunity, naturally

they also create a number of serious considerations

that need to be taken into account.

At WorldPay, we‘re doing all we can to help retailers

and merchants expand their reach into the BRIC

countries and other developing territories. We‘re

focusing on three key areas: we‘re making it as easy

as possible for merchants to take payments across

borders, helping them maximise conversion rates

and also fight fraud head-on.

Payments without borders

The popularity of payment methods between

countries can vary hugely. Failing to provide

payment methods that suit the local audience can be

one of the quickest ways of limiting business

expansion.

For a retailer without experience of those local

markets, that can create some unexpected

requirements. In China, for instance, where many

consumers want to inspect an item before parting

with their money, Cash-on-Delivery (COD) is the

most popular method of payment for goods

purchased online. As a result, AliPay - an escrow

service that manages the transfer of funds between

retailers and buyers – now provides access to more

than 550 million users. A similar situation exists in

Russia, where only a small percentage of the 130

million credit cards in circulation are usable online.

Issued primarily for the collection of salaries, and

missing essential CVC information, these credit

cards are increasingly shunned by many retailers in

favour of e-wallet solutions, such as WebMoney.

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As a result, the most successful online retailers are

now adopting multiple payment strategies. Taking

the simple step of moving from a single payment

method to two or three can boost conversion rates

by as much as 10%. WorldPay, thanks to its recent

acquisition of Envoy Services, is now the world‘s

leading provider of alternative payment solutions

and offers a range of options for any business

looking to expand its payment offering to customers.

Maximising conversion rates

Making it as easy as possible for the customer to

purchase and pay is absolutely key to improving

conversion rates for any retailer. Something as

simple as presenting webpages or an online store

can have a major impact on sales patterns.

Research conducted recently shows that shoppers

are four times as likely to buy from a shop that

communicates to them in their native language.

At WorldPay, we provide a service that allows

merchants to present payment pages in multiple

languages with the minimum of effort, greatly

simplifying the situation for anyone expanding into

foreign territories.

Linguistics aren‘t the only consideration however, as

currency conversion also needs to be taken into

account. A website presented in the local language

is a great first step, but offering the choice to pay in

local currency can also be a major driver for sales.

As a result, retailers need to find a payments partner

that can offer Foreign Exchange services enabling

shoppers to pay in their own currency.

Tackling fraud

When it comes to global retail fraud, we‘ve seen a

growing trend of what is termed ‗clean fraud‘.

Increasingly sophisticated fraudsters have found

ways of placing orders with highly consistent

attributes, including IP geolocations, card issuing

countries, phone numbers and more. As a result,

fraudulent transactions look almost exactly like good

transactions, causing frustration for merchants.

Sophistication is also breeding coordination. We‘ve

witnessed a number of fraud rings ‗teaming up‘ to

make coordinated attacks, which require equally

high-level fraud strategies to counter.

There is no single solution to fraud. Instead, we

believe that it‘s vital that merchants adopt a number

of complementary risk strategies that work together

to both optimize the number of ‗good‘ transactions

that they accept whilst minimizing the fraudulent

ones. Services such as WorldPay‘s RiskGuardian,

which provides a high specification fraud screening

service can be the perfect addition to an overseas

risk management strategy.

Notes:

(1) www.investmentinternational.com/news/latest/bric- economies-set-to-soar-as-g7-recovery-slows-economists-predict-4860.html (2)www.atkearney.com/images/global/pdf/Retail_Global_E xpansion-GRDI_2011.pdf

WorldPay is a leading global provider of payment and risk services, processing millions of transactions every day. WorldPay is a unification of seven leading retail payment solutions and offers a range of services including acquiring, gateway, alternative payments, risk

management, and mobile payments. WorldPay became an independent company in December 2010. For more information, visit www.worldpay.com

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Mobile/SMS/IVR

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≈

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Company ABN Amro

Website www.abnamro.com/en/index.html



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Mobile/SMS/IVR

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AcceptEmail provides a comprehensive e-billing & payment service based on e-mail, SMS and

social media via a wide variety of local payment methods that we categorize in credit cards, debit cards and online banking.

Company AcceptEmail

Website www.acceptemail.com

Keywords E-billing, e-invoicing, e-bill, e-invoice, e-mail, payment, credit management, invoice-to-cash Contact Mr P.J. Kwakernaak, CEO, [email protected], +31 20 7470123

Geographical presence Europe, Middle East/Africa

Market segment(s) Retail, insurance , telecom, utilities, ticketing, charity, education, internet, publishers Active since (year) 2006

Payment methods

Credit cards Amex, MC, VISA, CB, JCB

Debit cards Dankort, Bancontact/Mister Cash, Maestro, Giropay, BCMC

Pre-paid cards N/A

Online banking All local online banking systems

E-wallet N/A

Mobile/SMS/IVR AcceptSMS is available in The Netherlands Alternative payment methods Sofort

Offline N/A

Connected companies (#) #3 Acquirers

Companies PSP is connected to WorldPay, Ogone, ICEPAY, iDEAL, PBS, PayDutchGroup Settlement currencies (acquirers) EUR

Services

Unique Selling Points Lower costs for invoicing and collection; debtors pay quicker, increase of customer satisfaction and environmentally friendly replacement of paper for digital; no duplication of data and no errors in creating the payment

Core services E-Billing Presentment and Payment by email, SMS and social media Pricing Monthly license fee + transaction per AcceptEmail

Collecting payments Via partners Distributing payments Via partners Fraud prevention (measures)



Fraud prevention partners



Credit management (services) Credit management is applicable in all stadia in the invoice-to-cash process Other services Integration with Credit Management System, AcceptSMS and voicecast

Third Parties Microsoft, Exact, RICOH, Mastercard, Triloq Payments, Fundtech, Litas Prie Lito and various resellers

Technology

Adyen is the most innovative and experienced PSP currently on the market. Adyen combines highly

sophisticated, fully customizable hosted payment pages, unprecedented reporting capabilities with transparant and no-frills pricing. Adyen is specialised in least-cost transaction routing. In

combination with Adyen's conversion management software merchants are capable to vastly improve conversion rates at lowest cost per conversion. Adyen provides fully integrated state-of the art fraud control.

Company Adyen

Website www.adyen.com

Keywords Innovation, conversion, fraud control, multi-channel, global, experience, independent, flexible Contact Sander Maertens, VP, [email protected]; +31202401240

Geographical presence Global, specifically strong in Americas and Europe

Market segment(s) Retail, travel, digital content, gaming, gambling, ticketing, social networks, social buying Active since (year) In payments business since 1997, current platform operational since 2006

Payment methods

Credit cards Visa, MasterCard, Amex, JCB, Diners, Discover, UATP, AirPlus, co-branded

Debit cards (e)Maestro, Visa electron, MrCash, Dankort, Laser, Delta, Carte Bleue, CartaSi, Postepay Pre-paid cards Wallie-card, PaySafeCard, PostePay, Cash ticket, Ukash, local (national) brands

Online banking iDEAL, sofortüberweisung, DIRECT ebanking, Nordea, suomen verkkomaksut and the whole range of local Scandinavian and Polish banking methods

E-wallet Paypal, MoneyBookers, Netteller, Click&Buy, Hyves Afrekenen Mobile/SMS/IVR Global coverage

Alternative payment methods Mobile payment pages, open invoice (post-payment), electronic invoicing / pay by e-mail Offline Bank transfers in over 30 countries, a selection of local voucher payment methods Connected companies (#) #25+ Acquirers and capable of working with 3rd party providers of (risk & loyalty) solutions Companies PSP is connected to Acquirers, fraud services, logistic partners, credit management services, e-commerce platforms Settlement currencies (acquirers) ARS, AUD, BRL, CAD, CHF, CLP, COP, CZK, DKK, EUR, GBP, HKD, HUF, ILS, IND, JPY, LTL,

LVL, MXN, NOK, NZD PLN RUB SEK SGD THB TRY USD ZAR Services

Unique Selling Points Increased conversion by simplifying the payment experience for shoppers; strong, configurable and real-time fraud screening, including device fingerprinting, artificial learning., more insight and control by providing statistical insight into payments; transparent, real-time interchange-plus pricing; short time-to-market of new features with bi-weekly releases; strong in new technologies, such as mobile payments, connected TV, in-app payments

Core services Multi-channel payment platform, fraud management, payment advise, reconciliation, reporting Pricing All-in pricing matrix, maximum transaction price of EUR 0,10. No set up or maintenance costs. Get a

price quote now!

Collecting payments Yes, Adyen is operating a full service model, being capable to reconcile all payment methods Distributing payments



Fraud prevention (measures) Flexible & state-of-the-art risk module, incl. consistency & velocity checks, referral lists, persistent cookies, device fingerprinting, proxy piercing. All checks are fully configurable & extendable. Due to operating a collecting model, Adyen can enrich risk module with payment behavior

Credit management (services) Yes, via third party, but fully integrated

Other services Fully customisable payment pages; Recurring and one click payments; Global electronic invoicing; Native mobile payment pages; A fully mobile accessible back-environment; MOTO (call center environment); Pay out; Point-of-Sale

Third Parties Everything is developed and managed in-house Technology

Direct connections Yes, when merchant is PCI compliant

Batch processing

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