Digital Commerce Solutions...DIGITAL COMMERCE EVERYWHERE ©2019 Mastercard. Proprietary and...

Digital Commerce SolutionsBuilding trusted payment experiences for consumers every day, every way.

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Agenda

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1

2

DIGITAL COMMERCE SOLUTIONS

IDENTITY CHECK

to enhance the consumer experience

to authenticate consumers

3TOKEN AUTHENTICATION

to secure the token

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1What’s Happening: Digital Commerce

As more consumers shop across more devices, digital commerce is evolving to keep pace.

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The digital shift is the biggest change in payments since plastic cards and is impacted by multiple trends.

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And changing how consumers think about and interact with the world.

Technology is increasing connectivity, but also creating higher complexity.

As shopping habits are shifting to digital with expectations around security and experience.

DIGITA L C OMME RC E E VERY WHERE

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Commerce: structural shift from in-store commerce to e-commerce driven by marketplaces and digital merchants

Concentration: increasing level of concentration of digital commerce with large merchants and mega commerce platforms

Regulation: PSD2 will be a reality in 2019 and will impact the competitive dynamics of payment instruments due to Strong Customer Authentication

Infrastructure: Emergence of a Pan-EU real time credit transfer infrastructure has reached 80% of banks in SEPA by the end 2018*

Devices: Mobile will be on par with PCs in e-commerce; mobile in-store will grow quickly from a small base

*BCG Analysis


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In Europe, key trends are expected to shape the digital payments landscape over the next five years

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6Source: Mastercard analysis; Worldpay; BCG

E-COMMERCE SPEND BY PAYMENT USE CASE

Cards are the most used payment tool for e-commerce in Europe …

29%

19%

13%

6%

22%

11%

TOTAL Cards 61%

Cards on File merchant

Cards in Guest Checkout

Cards in Digital Wallet

ACH in Digital Wallet

ACH

Others


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Source: Mastercard analysis; Worldpay; BCG (2017)

24% Abandonment + decline rate when 3DS is used

Fraud rate of ecom Vs card present10X

17% Decline rate when 3DS is not used


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… but they face several challenges in e-commerce in Europe

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We envisage a world with no payment friction or fraud across all sales channels and customer touchpoints

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Guest Checkout Credential-on-File Commerce Platforms Devices

CHANNELS / PAYMENTS USE CASES

In-store POS

EMV-level security & convenient experience

in digital commerce

PHYSICAL COMMERCE

DIGITAL COMMERCE

EMV-level security & convenient experience

with Chip & PIN


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Mastercard Digital Enablement Service for devices, wallets, and merchants secures the digital commerce ecosystem, while delivering a more comprehensive lifecycle management solution.

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Card on FileMDES for merchantsMDES for commerce

Digital Wallets & IoTMDES enabled

Guest CheckoutSecure Remote Commerce (SRC)


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Up to 80% of the cases Risk Based Authentication (built on tokens, 3DS data, MC RBA risk score and many others) skips SCA and so provide the best conversion rate

Infrastructure Building Blocks

The backbone of every consumer e-commerce payment will become a EMV 3DS message for Authentication

EMV

3DS

M4M

SRC

MDES for Merchant Replaces the fPANs at the merchant Card on File system with MC tokens

Secure Remote Commerce is making the guest check-out experience smoother. Also its tokenised so its also making it safer.

Card on FileGuest

Check-out

Card in Wallets

Recurring same

amount

Recurring variable amount

Mobile in-App

Mobile browser

Desktop browser

based

M4M

SRC

MDES for Devices / M4C Merchant

initiated trx

M4D

/M4C MDES for Device and

Commerce Platform replaces the card number with a token in a wallet

SCA Biometric

EMV 3DS

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The payment cards industry needs to implement and scale four building blocks to comply with the regulation and reach great card check-out user experience

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Standards get you ready. Services set you apart. Digital Commerce Solutions from Mastercard unites both, championing industry standards for security and integrating services that give you a competitive advantage.

StandardsWe champion and develop solutions that support the latest industry standards in security and convenience.

ServicesWe help you deliver a secure, relevant and rewarding consumer experience and scale it quickly across all digital commerce channels.

• EMVCo Secure Remote Commerce (SRC)

• EMVCo Tokenization

• EMVCo EMV 3DS (2.0)

• Fully-tokenized digital world: Mastercard Digital Enablement Service (MDES)

• Authentication: Mastercard Identity Check’s Smart Interface (Merchants) and Smart Authentication (Issuers)

• Value-added services: Consumer Controls, Automatic Billing Updater, Pay with Rewards, Personalized Card Linked Offers, NuData, Brighterion


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2Mastercard Identity Check:

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Consumers want a frictionless digital payment experience with unquestioned security

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Leveraging standards, data and technology to enable a seamless consumer experienceIncrease approvals, reduce fraud, enhance the consumer experience

10x more data

Decision Intelligence

Smart Authentication

Merchant & Third-Party Providers Smart Interface Issuer

Location, device, behavior, biometrics, network

BiometricsIdentity Check

EMV 3DS

❷IDE N TITY C HE C K

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Smart Authentication uses machine learning andAI to deliver intelligent insights in real-time

Reduce Cardholder Abandonment / FrictionSA’s enhanced intelligence enables a true “one-click” customer experience - transactions can be authenticated with little to no friction

Increase ApprovalsSA helps increase approval rates, which in turn generates

higher spend/GDV for issuers and merchants

ComplianceHelps issuers and merchants in EEA to

comply with PSD2 Transaction Monitoring requirement

Continuous LearningSA uses machine learning to measure consistency and changes in behavior against historical patterns to constantly improve scoring

Data InsightsSA delivers insights in real-time to ecosystem to help make more robust authentication decisions

Lower Fraud & Reduce CostsSA helps identify not low risk authentication

requests to reduce fraud, thereby decreasing costs associated with fraud and chargebacks

SMART AUTHENTICATION


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It all begins with an EMV 3DS transaction…

In addition to a standard EMV 3DS transaction requesting authentication, Mastercard supports an innovative “Data Only” construct BUT Smart Authentication intelligence is generated in either case

10x more data

Data Only is a way for the merchant to share data with the issuer via EMV 3DS to influence approvals but guarantees a frictionless experience for the consumer

EMV 3DS authentication request

“Data Only” request

Merchant & Third-Party Providers

SMART AUTHENTICATION

Mastercard authentication network


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Solid foundation to support the PSD2 regulation onStrong Customer Authentication (SCA)

How to reduce fraud and friction while complying with PSD2?


REDUCE FRICTION

20% to <10%

REDUCE FRAUD

20 to <13bps

REDUCE DECLINES

15% to 5%

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Solid foundation to support the PSD2 regulation onStrong Customer Authentication (SCA)

How to reduce fraud and friction while complying with PSD2?

• Maximize SCA Exemptions

• Biometric Authentication

• Issuer final say with EMV 3DS data is the best way to achieve PSD2 compliance

• Risk scores in authentication and authorization

• Issuer delegation of SCA

REDUCE FRICTION

20% to <10%

REDUCE FRAUD

20 to <13bps

REDUCE DECLINES

15% to 5%


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3Token Authentication: No matter where or how consumers pay, deliver security they trust, convenience they choose and an experience they prefer.

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Token cryptography data and 3DS deliver securityWHY DY N A MIC DA TA IS IMPORTA N T

Token cryptography data – is the token valid?

Cardholder authentication – is the cardholder whom they claim to be?

Token methods

Token Verification Code/Expiry Date DSRP Cryptogram DSRP EMV Future Technologies

3DS methods

No SecureCode or Identity Check

SecureCode or Identity Check

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increasing security

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Provide security to consumers when paying via remote commerce regardless of the capabilities of the merchant or issuer

Unlike the consistency of EMV technology that brings security and a similar consumer experience at physical point of sale.

Apply similar methods from the physical point of sale world to ecommerce. In physical, transactions secured through an EMV cryptogram to authenticate the account, and a consumer PIN to authenticate the cardholder. In remote commerce environment, DSRP cryptogram authenticates the token and Identity Check authenticates the cardholder.

DSRP cryptograms help protect against account take over. Fraudsters are challenged when tokenized payments require cryptograms. Even when a fraudster takes over a consumer’s identity they are blocked by the need for token related cryptography data in order to perform a transaction.

Introduction of stronger domain controls linked to cryptography, like merchant locking further protects as the token and cryptogram can’t be used outside the defined domain

Authorization rates are optimized when issuer can validate the authenticity of the token and the accountholder

WHY DY N A MIC DA TA IS IMPORTA N T

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TOKE N DY N A MIC DA TA ROA DMA P

Official announcement

April 2 - DSRP Liability Rules Change Announcement

April 30 – 19Q4 release documentation detailing technical changes in support of liability rules change and new DSRP field

APRILTVC Launch

Token Verification Code (TVC) & 3DS AAV capabilities

JULY/AUGUSTDigital Payment Data Intro

Nov 9 – DSRP Cryptogram & 3DS AAV – New Digital Payment Data field allows acquirers to provide both AAV and DSRP cryptogram

Nov 9 – Merchants can initiate tokenized transactions with a merchant attempt AAV & DSRP cryptogram

NOVEMBERCompliance

April 17 – DSRP Liability Rules Change effective globally

Require presence of DSRP cryptogram or Token Verification Code, in addition to 3DS AAV when provided

APRIL

2019 2020

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PSD2 enforcement

TVC shall be used in combination with 3DS AAV to ensure PSD2 compliance where applicable

September 14

Digital Commerce Solutions...DIGITAL COMMERCE EVERYWHERE ©2019 Mastercard. Proprietary and...

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Transcript of Digital Commerce Solutions...DIGITAL COMMERCE EVERYWHERE ©2019 Mastercard. Proprietary and...