KYC (Know Your Customer)
Miloslav Kozler
Prague, 23 May 2012
VSFS
Presentation Identifier.2Information Classification as Needed 2
Agenda
• Visa on the Czech market
• Market position & Results
• Fraud, Risk & Chargeback
• AML policy
• Innovations, Contactless, Mobile
• AOB / Discussion
Presentation Identifier.3Information Classification as Needed 3
Over 20 years of history in the
Czech Republic
Visa has driven the evolution of the cashless payment market in
Czech Republic
First Visa card issued
(1990)
First Visa contactless
card
(2011)
First Visa EMV chip card
issued (2003)
Opening Visa dedicated
local office
(2010)
Presentation Identifier.4Information Classification as Needed 4
2011 CZ Headlines
ATV at POS
€36.7
spend
+15.3%
Double digit growth in POS
+22.1%
5.602 million
number of cards
transactions
Presentation Identifier.5Information Classification as Needed 5
Cards Issuance Rolling Year to Q4
2011
2011201020112010
POS
26.79%
POS
25.45%
POS
59.95%
POS
56.39%
CASHCASHCASHCASH
Gross CEVTransactions
Share of POS transactions: 59.95%
Cards
Rolling Year to
Q4 2011
Rolling year YOY
growth
Cards (000) 5 602 1.57%
Gross CEV (€ 000) 22 969 308 9.50%
POS CEV (€ 000) 6 153 961 15.28%
CASH CEV (€ 000) 16 815 347 7.52%
Transactions (000) 278 180 14.85%
POS Transactions (000) 166 779 22.10%
CASH Transactions (000) 111 401 5.47%
POS ATV (€) 36.9 -5.59%
CASH ATV (€) 150.9 1.95% Rolling Year Rolling Year
Presentation Identifier.7Information Classification as Needed 7
% of intra-regional Visa transaction
volume from EMV POS (July 2010)
%ofEMVVisa
cards(Q22010)
0%
20%
40%
60%
80%
100%
0% 20% 40% 60% 80% 100%
Germany
Poland
Spain
Switzerland
Turkey
Italy
LuxemburgVisa Europe
VisaEurope
Norway
Portugal
Ireland
Sweden
Finland
Netherlands
Austria Denmark
Belgium
France
UK
Czech Rep
63.2%
78.5%
Estonia
Israel
Iceland
Bulgaria
Romania
Cyprus
Malta
Greece
Slovakia
Hungary
Slovenia
Andorra
Lithuania
Latvia
>95%
Status EMV Card & POS migration
Presentation Identifier.8Information Classification as Needed 8
Managing risk: Visa Europe fraud to sales ratio %
(2005–2011)
<4 € cents
fraud per €100 spent
YE 2006 YE 2007 YE 2008 YE 2009 YE 2010 YE 2011
0.070
0.060
0.050
0.040
0.030
0.020
0.010
Visa Europe as of Sep 2011
Presentation Identifier.9Information Classification as Needed 9
AML
-Mandatory annual employee AML training course, introduction
Op Reg on ML requiring Members to be compliant
- Bank AML Self Certification (with supporting guidelines, policies
etc that they use)
-Third Anti Money Laundering Directive (2005/60/EC) (the “Third
AML Directive”) Visa view delivered to SBK
-Section 352 of USA PATRIOT ACT requires every financial
institution to adopt and implement an AML programme,
Visa and MasterCard are subject to this law
-Example of local law is KYC which generally means:
– Verifying customer at outset
– Understanding customer’s identity
– Understanding customer’s pattern of transactions
Presentation Identifier.10Information Classification as Needed 10
Czech Republic - Issuing: Fraud to Sales Rate
0.00%
0.01%
0.02%
0.03%
0.04%
0.05%
0.06%
0.07%
YE
2009
Q
3
YE
2009
Q
4
YE
2010
Q
1
YE
2010
Q
2
YE
2010
Q
3
CZECH
REPUBLIC
VISA
EUROPE
Presentation Identifier.11Information Classification as Needed 11
Czech Republic - Issuing: Split of Domestic and CrossBorder
Fraud
€0
€100,000
€200,000
€300,000
€400,000
€500,000
€600,000
2008
Q
4
2009
Q
1
2009
Q
2
2009
Q
3
2009
Q
4
2010
Q
1
2010
Q
2
2010
Q
3
Domestic Fraud En Crossborder Fraud Amt Eu
Presentation Identifier.13Information Classification as Needed 13
Czech Republic - Acquiring: Fraud to Sales Rate
0.00%
0.01%
0.02%
0.03%
0.04%
0.05%
0.06%
0.07%
YE
2009
Q
3
YE
2009
Q
4
YE
2010
Q
1
YE
2010
Q
2
YE
2010
Q
3
CZECH
REPUBLIC
VISA
EUROPE
Presentation Identifier.14Information Classification as Needed 14
Czech Republic - Acquiring: Split of Domestic and CrossBorder
Fraud
€0
€100,000
€200,000
€300,000
€400,000
€500,000
€600,000
2008
Q
4
2009
Q
1
2009
Q
2
2009
Q
3
2009
Q
4
2010
Q
1
2010
Q
2
2010
Q
3
Domestic Fraud Eu En Crossborder Fraud Amt Eu
Presentation Identifier.17Information Classification as Needed 17
51
acquirers
60
issuers
15
markets
Where are we now?
34+
million
cards
€100mPOS in last 12 months
In the next 12 months forecast €400mPOS
200K+
terminals
Presentation Identifier.18Information Classification as Needed 18
21.2m cards 6m cards
109.5k terminals 0k terminals
7 issuers 22 issuers
0.3m cards
1.2k terminals
1 issuers
0.4m cards
5.1k terminals
2 issuers
0.8m cards
24.4k terminals 0m cards 0m cards
7 issuers 0k terminals 0.3k terminals
3 issuers 0 issuers
0m cards
1.1k terminals
0.6m cards 1 issuers
7.9k terminals
5 issuers 0.3m cards
1.9k terminals
5 issuers
3.9m cards
54.8k terminals
11 issuers
Launching in 2012
Launching in 2012
Launching in 2012
Pilot
The story so far across Europe
Launching in 2012
Launching in 2012
34 million cards and 206k terminals
Launching in 2012
Study
phase
Consumer
rollout
Iceland
Norway
UK
Ireland
Germany
Finland
Sweden
France
Austria
Poland
Slovakia
Hungary
Czech Rep
Lithuania
Estonia
Latvia
Italy
Spain
Portugal
Turkey
Greece
Romania
Luxembourg
Bulgaria
Switzerland
Cyprus
Slovenia
Denmark
Netherlands
Belgium
Israel
Presentation Identifier.19Information Classification as Needed 19
New for 2012 –
Terminals are “mobile
ready”?
Presentation Identifier.20Information Classification as Needed 20
Different implementations and business
models will require Visa to work with
multiple external parties
MMC WithMMC With
NFCNFC
SIM Centric
Secure Element is
the SIM
Mobile Centric
Secure Element embedded
on the handset
Accessory
Can contain both
SE and antenna
For secure mobile payments, a chip or “Secure Element” in the device is
needed – an antenna is also need for contactless payments
Visa Europe Confidential 20
Presentation Identifier.21Information Classification as Needed 21
Mobile Contactless High Value Payment
with passcode entry
+ New and unknown … including service enhancements due to location based functionality
Transaction is
initiated and consumer
is prompted to holds
his/her phone
to the contactless
symbol on the reader
Consumer holds
his/her phone
to the contactless
symbol
on the reader
Payment is confirmed and
consumer can choose to add
information on the transaction
Reader
directs
consumer to
his/her phone
Consumer is prompted for his/her passcode
to authenticate, enters it and is asked to hold
his/her phone back to the contactless symbol on
the reader
Consumer holds again
his/her phone
to the contactless symbol
on the reader
£ 23.50
£ 23.50
Presentation Identifier.22Information Classification as Needed 22
Passcode the winning CVM for mobile
Online PIN
applicable only for contactless HVP
Passcode
examples of Passcode use cases
P2P
Card
details
DPA
Top-up
Balance
enquiry
Loyalty
m-
commerce
Automatic/Manual
modes are supported
Automatic mode is supported or in
manual mode customers need to insert
passcode first and online PIN later
Security
settings
On-line POS (Spain, Turkey)
Passcode supported on
all HVP POS terminals
in Europe
Off-line POS terminals
(UK, France, Sweden)
Customers with on-line PIN
implementation will be forced to
authorise payment by Passcode
Dynamic
CVV2
Alerts
Inconsistent and
confusing customer
experience
Presentation Identifier.23Information Classification as Needed 2324/05/2012 23
General
Olympic/Destination/Athlete Branded Card
Designs
Custom and pre-designed
NB. Use of assets subject to strict Visa / Governing body usage guidelines found at www.visaeuropepartnerships.com
MARKS &
DESIGNATIONS
MERCHANDISE MASCOTS
CARD DESIGNS GUEST
PROGRAMMES
LONDON 2012
CUSTOMER
JOURNEY
INTRODUCTION APPROVALS
Presentation Identifier.24Information Classification as Needed 24