project transaction clearing system

8/10/2019 Project Transaction Clearing System

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Group - 2

Transaction Clearing System and

Market Analysis

Aditya SooHarsh Bha

Kriti Arora

Lokesh Rai

Shantanu

Shiwangi

Vishwesh P

Section - A



TRANSACTION CLEARING SYSTEMProcess of settling of payments between card issuing bank and the bank of

32.90%

19.40%

47.70%

Visa

Maste

Others

Types

Closed Loop PaymentNetwork

Open Loop PaymentNetwork

Market share in card payments

Issue cards

themselves and

facilitate thesettlement

Do not issue cards,

only facilitate

settlement oftransaction

• Visa and MasterCard belong to the Open

Loop Payment Network

Visa and MasterCard Payment Value



TRANSACTION CLEARING PROCESS

1• Cardholder presents the card to the m

2• Payment request is forwarded to the

3• Acquirer contacts the issuer through

4

• Issuer shares information about balanetwork

5• The information is routed to the mer

6• In case of sufficient balance the paym

7• At the end of month cardholder pays

•One who uses the card to make paymentCardholder

•Entity to whom the payment is madeMerchant

•Bank in which the customer has an account andwhich has issued the card to the cardholderIssuer

•The merchant’s bank Acquirer

Sequential Steps



BUSINESS MODEL

BusinessModel

- Financial Institutions (Issuers and Acquirers)

- Cardholders

- Merchants

- Personnel

- Network and Communications

- Brand Promotion

- Legal Provisions

- Creates value for all stakeholders

- Cardholders get convenience, security and loyalty rewards- Merchants benefit from improved sales by offering payme

- Banks get new revenue streams like card fees, late paymen

- Multiple revenue streams

- Service revenues from bank for their participation in card programs

- Data processing revenues for transaction processing

- International revenue when cardholder issuer country is different fro



COMPETITOR ANALYSISTECHNOLOGIES DISRUPTIONS IN THE PAYMENT LANDSCAPE

SmartPhones

Tablets

QR codes

New Business

Models

Cloud computing

Bluetoothtechnology

The payments industry is in the early stages of unprecedented innovation and tr

In addition, payment preferences have evolved rapidly, as many consumers ha

payments in lieu of cheques and now are saying goodbye to cash in favor of plas

This fast-changing card landscape has provided the opportunity for alternative a point of entry. Technology has leveled the playing field for non-traditional pay

their starring role as a payment disruptor

NFC Driven Mobile

Payments

Near Field Communications,

works by establishing a radio

communication between the

two devices once they are

within a few inches of one

another.

NFC builds upon the RFID

system by allowing two-way

communication between two

NFC-enabled devices

QR – code based payment

applications

In a QR code driven system,

a mobile application

generates a QR code, which

the merchant can scan via a

mobile device to process the

payment

The unique code displayed

within the app then links the

credit/debit card account the

consumer has on file within

the app

Example : Starbucks

Plu

Plu

tur

acc

sm

into

allo

acc

Th

pro

me

ser



CARD OPERATORS

Apart from the traditional clearing s

operators are also making advances

payments providing NFC driven mob

payments, open source platforms awallets . Example: Visa

VALUE ADDED SERVICE

Disruptive players in online a

payments provide wide rang

offering ranging from plug-in

store payment. Example : Pay

MOBILE PHONE NETWORKS

Direct connection to the operator bill

which in turn provides an alternative

system where a consumer provides a

number to make a purchase. Example

RETAILERS

UK-based supermarkets have

entered the consumer finance

space with commercial banking and

payment offerings. Example: Wal-

Mart

MOBILE APP PLATFORMS

The rise of innovative mobile apps have

forced the introduction of mobile payment

apps. Example: Android Google

BANKS/CARD ISSUERS

In lieu of the advent of technology, banks are

developing in-house app stores to createmobile applications for open platforms for

further innovating the payments landscape

Example : Deutsche Bank

SEVERAL PLAYERS ARE TRYING TO GAIN A SEAT AT THE PAYM



MasterCard

PayPass

MasterPass

MasterPass APIand SDK :

Developer Zone

Visa

PayWave

V.Me

Visa API and SDK: Visa Ready

Partner Program

THE RACE TO CAPTURE ONLINE PAYMENTSInitially both networks developed the contactless technology tVisa’s PayWave and MasterCard’s PayPass. This was a foundat

Next digital wallets were released to cature digital payMasterCard’s MasterPass

The most recent move by the networks was to facilthrough developer tools with Visa Ready Partner Pr

MasterCard Ready

This allows merchants and mobile payment developease of acceptance

Through these platforms, financial institutions are alsomobile wallets with networks’ technology

This approach has a much greater likelihood of success given icommunication of all stakeholders involved in the process.



THREAT OF MOBILE PAYMENT SYSTEMS

AT&T, Verizon Wireless and T-Mobile are reportedly partnering with Discover Financial Services and Barclays PLC, a global

challenge the status quo.

These new partners want to allow consumers to complete purchases with a simple wave of their smartphones. Technolog

one of the most significant challenges to credit card companies to date.

R F I D E m b e d d i n g The RFID would act as a

radio version of themagnetic strip on yourcredit card.

S w i p e Y o u r P h o n e The Phone's screen acts

as a super-securenumeric pad foraccessing your PIN

R e t a i l e r C o

m m u n i c a t e s Retailers can

back to yourthe form of aloyalty card-

points.

THREATS AND OPPORTUNITIES



THREAT OF BITCOIN

Bitcoin, introduced in 2008 by a programmer or group ofprogrammers under the name Satoshi Nakamoto, has nocentral issuing authority and uses a public ledger to verifytransactions that are authenticated bycryptographic signatures.

Authorities in Russia, China and Israel have sought to restrictbitcoin, while the U.S. seeks ways to prevent money-laundering and illicit sales without killing the digital currency.

The threat of regulation and disruptions, including hackerattacks on online exchanges, have caused bitcoin valueto plummet.

Therefore, Visa and MasterCard are not to worried aboutbitcoin emerging as a major competitor.

EMERGING MAROPPORTUNIT

Globally, 85% of payments are still made wit

Consumer spending will drive growth for Visdeveloped world, but the potential for much

exists in the developing world as people switcard and mobile payments.

To move into this new field, Visa has acquirecompany, Fundamo, for $110 million. Fundaproviding financial service offerings to mobiloperators in developing countries, and with iit understands regional means of business



PREPAID CARDS OPPORTUNITY

The use of prepaid cards is increasing rapidly as consumers fear using de

following the recession. Annually, the amount of money put onto prepacards is increasing by 42%, and Visa is a strong player in the market

Visa is using Fundamo’s technology to introduce prepaid cards todeveloping markets where Visa’s product may be seen as more safereliable than cash

Prepaid cards are not purely issued through banks, so Visa can avoid somthe increasingly aggressive negotiating process and keep fees higher



FUTURE OF TRANSACTION CLEARING SYSTEM Near field communication: A cloud payment system where a user can do transactions u

NFC mobile contactless payments can be made at both attended POS locations (such as stor

locations (such as vending machines) that use the existing merchant payments infrastr

consumer simply brings the phone to within a few inches of a contactless payment-capable

transaction occurs

Bit coin: Transaction is done through virtual currency. Payments work peer-to-peer without

and transfers value between Bit coin wallets. It can be installed in a PC or mobile to perform t

E-wallet: E-Wallet provides the ability to store multiple credit cards, debit cards and back ac

in a secure environment for making faster payments. You can create up to ten separate profil

and debit cards, and up to ten separate profiles for checking and savings accounts. You can eprofiles as needed. Using E-wallet, a user can send/receive money anytime to his e-wallet usi

RuPay: A payment gateway launched in India, which will work on ATMs/merchant outlets an

cash transactions. A variant of pre-paid RuPay card would shortly be launched by IRCTC, whic

booking railway tickets



References

http://www.portal.euromonitor.com/Portal/Handlers/accessPDF.ashx/Alternative_ders_Starring_as_Payment_Disruptors.pdf

http://www.euromonitor.com/mastercard-international-inc-in-consumer-finance/r

http://www.livemint.com/Money/tz1Pjm3WnRJvcfrisif66L/Indias-own-payment-gatlaunched.html

http://www.pcadvisor.co.uk/how-to/mobile-phone/3472879/what-is-nfc-how-nfc-wdoes/



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project transaction clearing system

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