EMV Overview PREPARED AUGUST 2012

INTRODUCING DPS | PAYMENT EXPRESS

WE EMPOWER PAYMENT TECHNOLOGY FOR YOUR ADVANTAGE

SOLUTIONS Innovative full-end-to-end cloud-based payment platform

Full Web-Based Reporting

On/Off Street Parking

Vending

POS Terminals

E-Commerce

OUR SERVICES

Core disciplines for your advantage

24/7 Support Service

Business Analysis

Project Management

Development

Quality Assurance

WE EXECUTE THE ATTITUDE AND KNOWHOW TO CONSTANTLY DELIVER GREAT RESULTS

SNAPSHOT

DPS AT A GLANCE

Established 1997

Subsidiaries in Sydney,

New York and London

Certified in 10+ regions with

multiple banks and schemes

All IP and infrastructure

owned by DPS

EVIDENCE

OUR CREDENTIALS

15,000+ merchants

Direct VISA link

Per $20b of transactions p.a

Exceeds global security

standards

Largest independent IP

Payment Gateway in

Australasia

Interwoven team

skills striving to

provide the best

solutions

Leaders in

payment

development

Product innovation.

Excellence in

deployment and

support

Openness,

enthusiasm,

and a passion

for customer

satisfaction

HOW WE

CONVERT

OUR

TECHNOLOGY

FOR YOUR

ADVANTAGE

Industry leading payment

solution provider

OUR

PEOPLE

OUR

VISION CULTURAL

FIT

EXECUTION

OUR

ESSENCE

WE UNDERSTAND

PAYMENTS TO THE FULL, AND WORK WITH A LEADING NETWORK OF PROVIDERS

SCHEME PARTNERS

VISA

MasterCard

AMEX / JCB

Diners

Discover

China Union Pay

BANKING RELATIONSHIPS

ANZ

ASB

Bank of New Zealand

Bank of South Australia

Bank West

Barclaycard

BOQ

Citigroup

Commonwealth Bank

Elavon Europe

EMS

HSBC UK

HSBC International

Kiwi Bank

National Australia Bank

Standard Bank South Africa

Standard Chartered (Asia)

St George

US Bank (Elavon)

Wells Fargo

Westpac AU / NZ

Westpac Pacific Islands

EMV is a global standard for credit and debit payment cards based on chip card technology

EMV is also known throughout the world as “Chip and PIN”, ICC, and “IC Credit”

EMVCo is the governing body maintaining EMV specifications and Approvals

EMVCo members are American Express / JCB, MasterCard, and Visa

Advanced security measures and advanced cryptography reduces exposure to fraud

Aims to establish a common foundation for global payments and acceptance

UNDERSTANDING EMV

WHAT IS EMV?

Global interoperability of services

Secure contactless payment methods – reflects current trends in technology

Allows for offline card verification and approval

Designed for the future, allowing the delivery of payments beyond traditional mag strip cards

Carries Risk Management Parameters to reduce unauthorised payment risks

Digitally signs payment date for reduction of fraudulent transactions via advanced security

Protects against counterfeit fraud through authentication of the chip card

UNDERSTANDING EMV

WHY GO EMV?

EMV - Europay, MasterCard and Visa developed standard to reduce transaction fraud

EMV Level1 - Covers physical, electrical and transport level interfaces

EMV Level2 - Covers payment application selection and transaction processing

NFC - Near Field Communication (used in smart phone / m-commerce payments)

PCI - Payment Card Industry Standards Security Council that sets payment security standards

CAT/UPT - Cardholder Activated Terminal/Unattended Payment Terminal

PCI PTS 3.x – PCI Device certification, formerly PCI PED.

No Customer Verification Method - No CVM

2 Key Triple Encryption - K1 !=K2; K1=K3 - Data Encryption Standard – 168 bit encryption

Digital Signatures - Data authentication

PCI-DSS - Payment card industry data security standard

Unattended/Attend/Semi-Attended - Levels of supervision for card readers

TERMINOLOGY

KEY WORDS

THE EMV PROCESS

UNDERSTANDING EMV

Terminal Verification Results

Application

Selection &

Reading Offline Data

Authentication Card Holder

Verification Terminal Risk

Assessment Terminal

Action Analysis

Determine the

application to use

(Visa, MasterCard)

& then reads the

data

Static Data

Authentication (same

Key), dynamic Data

Authentication (a

new key each time)

e.g. signature, PIN,

No CMV

e.g. Floor Limits

Terminal decides on

what it is going to ask

the card

TC – Offline

Approval | ARQC

– Online

Authorisation |

AAC – Offline

Decline

Card Action

Analysis

Designed to ensure the TERMINAL CHIP READER conforms to the EMV SPEC

The transfer of data between the credit card and terminal

UNDERSTANDING EMV

LEVEL 1 – L1 EMV KERNEL APPROVAL

Designed to ensure the SOFTWARE conforms to the EMV SPEC

EMV Applications i.e Payments.

Non-EMV application functions such as POS hardware. Messages to an Acquirer

host are not viewed as a KERNEL function

LEVEL 2 – L2 EMV KERNAL APPROVAL

Terminal Application

EMV Kernel

High Level API

Lower Level API

Terminal Hardware

EMV Certifiable

Certifying Device; Software, Gateway & Switch with Merchant’s Acquirer and

Schemes e.g. Visa ADVT and MasterCard MTIP certifications

LEVEL 3 – END TO END APPROVAL

EMV AT WORK

CARDHOLDER / ATTENDED BY MERCHANT EXPERIENCE

Step 1 – Swipe card

Service Code = 2xx

“2” = Chip Present

“Please insert the Chip

Card”

EMV AT WORK

CARDHOLDER / UNATTENDED EXPERIENCE

Step 2

Leave in reader but retain

possession of the card until

prompted to remove after

transaction completed

Step One

Insert into dual Chip &

Track2 magstripe [non

motorised] reader

EMV AT WORK

OFFLINE VS. ONLINE PIN

Online PIN is in the Issuer’s Host

Offline PIN is in the Chip

Issuer Host

Self selection of PIN to cardholders should typically be offered by issuers

A secure process for PIN change and PIN unblock will be necessary (if PIN is forgotten)

Synchronisation must occur when the online or offline PIN is changed

WHERE IN THE WORLD IS EMV?

Europe • More than 70% of cards

are EMV

• 90% of ATMs/POS are EMV

Canada

• 66% of cards

• 75% POS

• More than 40% of ATMs

EMV enabled

Latin America • More than 80% of

acceptance now EMV

enabled

• Most prominent in Brazil,

Mexico, Peru, Venezuela

and Colombia

Asia Pacific • 30% penetration of cards

and over 50% of POS

services

• ATM migration growing

over 200% year on year

Middle East & Africa • 7 markets at over 40% EMV

infrastructure penetration

• 10 markets at over 80% ATM

penetration

• EMV year on year growth of

36% cards, 25% POS and 39%

ATM’s

Data sourced from MasterCard, May 2012

WHERE IN THE WORLD IS EMV?

GLOBAL EMV STATISTICS PART A

Figures sourced from American Express, JCB, MasterCard and Visa. As reported by their member financial institutions globally

Region EMV CARDS Adoption Rate EMV Terminals Adoption Rate

Canada, Latin

America and the

Caribbean

182,185,043 26.4% 2,000,000 55.6%

Asia Pacific 305,126,927 26.6% 3,200,000 41.6%

Africa & the Middle

East

16,841,874 13.7% 348,000 62.5%

Europe Zone 1 555,688,434 65.4% 9,400,000 84.7%

Europe Zone 2 22,817,271 11.5% 457,800 61.2%

Total 1,082,659,549 36% 15,405,800 65%

WHERE IN THE WORLD IS EMV?

EMV MasterCard-branded cards (35% of all MasterCard cards)

EMV POS terminals that accept MasterCard-branded EMV cards (62% of all POS terminals accepting MasterCard)

New MasterCard-branded EMV cards each year

Global EMV-Compliant cards

Global EMV-compliant POS Terminals

Global EMV penetration (75% excl. US)

Global EMV POS terminal growth rate (mid 2010-mid 2011)

EMV-compliant ATM terminals that accept MasterCard-branded EMV cards (39% of all MasterCard ATM terminals)

MasterCard Chip Migration Services delivered globally

Customer banks supported on EMV Chip deployment to date

Countries in which EMV is being rolled out for MasterCard products

Global EMV Card growth rate (mid 2010-mid 2011)

Sourced from MasterCard customers, regional offices and QMR May 2012

1 Billion+

18 Million

+60%

+18%

+32%

633 Million+

20 Million+

740,000+

100 Million+

3,000+

1,700+

130+

GLOBAL EMV STATISTICS PART B

US LIABILITY SHIFT

UNDERSTANDING THE SHIFT

Liability shift for domestic and cross-border counterfeit card-

present point-of-sale (POS) transactions

A card-present counterfeit fraudulent chip enabled card transaction is

performed on a Non-EMV POS device the liability shifts to the merchant

If performed on a EMV approved device then the liability shifts to the

issuer / acquirer

Merchant needs to discuss with their Acquirer how this liability shift

applies to them

HOW WILL IT AFFECT THE PARKING INDUSTRY?

KEY IMPACTS

EMV incorporates advanced encryption algorithms, increasing security

and reducing fraud

Will help decrease losses from card-related fraud by enabling

cardholder verification methods, which can offset CAPEX investment

With the implementation of “contactless”, payment and exit times are

accelerated which can combat longer EMV processing times

Adapting point of sale systems to accommodate new cardholder

experience

Facilitates the introduction of new payment technologies e.g. NFC,

Contactless, m-commerce.

Card Acquirer / Issuer

Confirm Liability

Parameters

Upgrade & Maintain

Systems to support

manage EMV data

THE EMV FOOD CHAIN

EMV

STAKEHOLDERS

Merchant Acceptor

Invest in EMV technology

upgrades

Comprehend what EMV /

PCI obligations it has as a

merchant

Look to establish working

groups

Training of staff

Vendor Supplier

Integrate certified EMV

hardware and/or software

technology

Integrate technology to best

practices

Manage relationships with

EMV equipment suppliers &

payment processors

Payment Processor Gateway

Assist Merchants and Acquirers

Facilitate merchant transactions

Be an interface provider

between merchants’ systems’

and the acquirer / issuer

Stay EMV & PCI compliant

STRATEGIES FOR PARKING AUTHORITIES

Develop a EMV technology upgrade and staff training roadmap

Consider & analyse the cost of upgrading parking meters, pay stations, entry & exit barriers

Research and Invest in EMV certified terminal hardware and software technology

Analysing traffic flow and determining the best location to pilot EMV before a complete rollout

Understand traffic flow to maximise use of EMV in most traffic congested areas

Plan to implement “contactless” for improved efficiency of payment

Monitor best locations for EMV to minimize time spent searching for payment

Understand the liability shift and impact on processing fees, charge-backs and fines

CONSIDERATIONS / PLANNING / IMPLEMENTATION STRATEGIES

CONTACT

Stuart McGregor Business Development Manager

Stuart.McGregor@paymentexpress.com

@ Linkedin

@ Twitter

www.paymentexpress.com