1. Introduction to payments:

- Cash o (Anonim – as an advantage. Disadvantages: security, printing, distributing, carrying

and counting the money. People don’t see as very obviously the costs of cash; it is called the hidden costs). Another disadvantage – you can’t keep track of your budget/expenses.

- ACH (credit transfer, direct debit)o See overview of the methods of payment across Europe (page 5). The champions of

card payments: Iceland – 80% of transactions - CARD- Parties in a (Payment) Transaction (page 8)

o It is a 2 party model – cash transaction/ private label (Cash)o Card: 4 party model (actually there are five parties in the model).

Acquirer takes merchant risk, issuer takes cardholder risk. The issuer – an institution that issues the plastic cards (a bank) Merchant, cardholder. Issuer, acquirer, and MasterCard

o 3 party model : Non cash: extra party to guarantee payment Challenge: handling merchant AND cardholder risk. Ex: Paypal, Amex. The

customer pays Paypal who pays to the merchant.

- MasterCard’s business model – (see page 10)

o MasterCard, Maestro, Cirrus. o Priceless campaign – has run in 112 countries and 53 languageso Cirrus is mostly used in the USo The brand is valued at 27 billion $o Ranking 20 as a company, on an increasing trendo The network of MasterCard is built with a back-up plano The third pillar of the MC’s business is Advisory Role. It is the only global consultancy

focused on the payments industry.o Overview:

i. 8 200 employeesii. 210 countries

iii. 38 billion processed transactions2. Trends in the online payments

o Economic: new trends shaping the payment industryo Regulatory: a changing environmento Technology: digital paymentso 20% of transactions in the world – cash

3. Key trends creating opportunities:o Financial inclusion (make sure that all the people that don’t have access to financial

services will be included. Ex: Ryanair – if you don’t pay online, you’re out of their services)

o Continued urbanization o Growing importance of youtho Growing affluent and middle classo Secular shift to electronic payments – encouraged (in Belgium – pronounced) o Key evolutions:

i. internet and wwwii. contactless technology

iii. mobile devices- proximity payments and remote payments

4. Innovation in Payments:- Contactless payments

o First card payments: 1960o First contactless card: 2003, USo Watches, keys and stickers applied for payingo With smartphone o Fast, safe, displace cash, increases card usage for lower value transactions.

- What is inside of it?o Embedded Antenna that communicates with the terminalo Used in

Fast food restaurants Supermarkets Grocery stores Drugstores Major retailers Airport/transit Most used: Supermarkets and grocery stores

- E-Commerceo The major issues- safety and convenience o Security: SecurePay - generates a fictive number used only for – a limited number

of transactions; for specific companies, specific limited amounts. Real details are never revealed.

o Seamless shopping experience

Idea – categorize and submit report at the end of the month