First Ecom Global E-Payment Processing

E-Commerce E-commerce boom started in 1998 –Yahoo, Amazon.com, eBay, etc Only the U.S. is participating in this boom Explosive growth expected in Asia Major limitation is lack of processing capabilities, multiple currencies

E-Commerce Worldwide According to Forrester Research: –Currently valued at US$12 billion –Expected to be US$1.1 trillion by 2002

E-Commerce in Asia According to Goldman Sachs: –End of 1998, 15 million Internet users and an e-commerce market of $700 million –By 2003, 64 million Internet users and $32 billion in e-commerce sales expected –Twice the growth rate expected in the U.S. during the same period

Internet Evolution Phase I –Static web site - Glorified Brochure –Marketing Driven –HK$ 78K - 390K –US 1995/96 –Europe 1997/98 –Asia 1997/98/99

Internet Evolution Phase II –Moving from static to basic interactivity –Content becomes more important –Marketing & IT driven –HK$ 390K - 2.0M –US 1997/8 –Europe 1998/99 –Asia 1999

Internet Evolution Phase III –Fully interactive web site –Revenue source - ROI –Requires new business model –Driven by Upper Management –HK$2.0 Million+ –US 1999 –Europe 2000 –Asia 2000/2001

Challenges Lack of online credit card processing capabilities in Asia and Europe Banks missing E-commerce processing partner Internet penetration still low Perception of security risks

Positioning Statement First Ecom provides a global, secure, easy to implement, low cost, electronic payment processing gateway.

Why First Ecom? Idea developed out of necessity Tremendous pent-up demand in the market Many different disciplines came together to create the First Ecom concept

Why First Ecom? Solutions for both banks and merchants –Offshore Payment Processor –3rd Party Processor –In-Country Processor

Bank of Bermuda (Acquirer) First Ecom Payment Gateway First Ecom - Master Merchant Approval / Due Diligence / Merchant Account / Money Transfer / Merchant Service Card Network Card Issuers Shopping / Payment Offshore Payment Processor Cardholder Internet Merchant Cardholder

Key Benefits to Merchant –Quick time to market –Multi-currency support –Tax neutral jurisdiction –Easy to implement –Low cost Offshore Payment Processor

Merchant Acquirer First Ecom Payment Gateway Approval / Merchant Account / Settlement / Merchant Service Card Network Card Issuers Shopping / Payment 3rd Party Processor Cardholder Internet Merchant Cardholder First Ecom Processor 3rd Party Processor

Key Benefits to Acquiring Bank –Quick time to market –Bank retains control on merchant evaluation, selection, and pricing –Minimal modifications to merchant operations –No modification to Bank Credit Card System –Transparent to merchant –Easy to implement –Low cost 3rd Party Processor

In-Country Processor Merchant Acquirer First Ecom Payment Gateway Approval / Merchant Account / Settlement / Merchant Service Card Network Card Issuers Shopping / Payment Cardholder Internet Merchant Cardholder First Ecom Processor POS Merchant POS Merchant Traditional Channel E-Commerce Channel In-Country Processor

Key Benefits to Banking Consortium –Zero cost for system development –Member Bank retains control on merchant evaluation, selection, and pricing –No modification on Member Bank Credit Card System –Transparent to merchant –Support of local credit & debit authorization –Support of local clearing and settlement –Provides EBPP capability In-Country Processor

Purchase Process 5) Purchase Confirmation sent to buyer 2) Merchant sends Order Form to buyer with order details 1) Buyer browses Internet & adds items to shopping cart 3) Completed Order Form & card details sent to Gateway 4) Authorization details sent to Merchant Internet Web user (Buyer) Merchant Web Site First Ecom Gateway

Process First Ecom Payment Network Issuing Bank Inquiry routed back with authorization/rejection First Ecom Sends to payment network via payment switch Payment Network (Visa Net/I.Net etc.) routes inquiry to issuing bank

Authorization Advice Online to Merchant Via Secure to Merchant Merchant Account Reporting System (MARS) First Ecom

MARS Accessible via Internet View transaction history and records Secure access Four functions: –Authorization –Settlement –Cancellation –Refunds

Merchant Payment Process Bank of Merchant Money available to Merchant in chosen currency Bank Card Association pays the money into the Bank Payment Network Issuing Bank Funds are deducted from the Buyers card by the issuing bank Money deposited in merchant account S$ US$ HK$ £ ¥ C$

Secure Sockets Layer (SSL) versus Secure Electronic Transaction (SET)

SSL vs. SET CharacteristicSSLSET Additional Cost InvolvedNoYes Vendor Software NeededNoYes Time ConsumingNoYes Difficult to UseNoYes Widely AdoptedYesNo Industry StandardYesNo Installed on Most BrowsersYesNo Who Needs It Only ISP/website Every party involved

Security Online Authorization using SSL with 40 – 128 bit encryption – prevents card fraud Content authentication and encryption: OpenPGP (RFC2440) - prevents buyer fraud The credit card number is not disclosed to the merchant - prevents merchant fraud

Opportunities Asia has many entrepreneurs who will take advantage of the low start-up costs for online businesses A global processing solution now exists

Partnerships Expert Web FedEx HKSite HLB Inter-Merchant Intershop Microsoft Modem Poppe Sterling Commerce Sun Microsystems Sybase Topsoft USWeb/CKS UUNET

Goal For Asia to fully participate in the e-commerce revolution sweeping the world.

First Ecom Global E-Payment Processing