1. Muhammad Wasim Raad1 2 Smart Cards & ecommerce Perceptions Were  Solution looking for a problem  Expensive and inflexible The breakthrough!  Platform for new services  Cost-effective and very flexible

2. Muhammad Wasim Raad2 3 Smart Cards & ecommerce Interface Trends Platforms  Attended POS  Unattended POS  Remote POS Interfaces  Contact  Contactless  Combination

3. Muhammad Wasim Raad3 4 Smart cards & ecommerce Functionality  Value management – e.g. EMV, e-purse  Identity or reputation management – digital ID … locally or remotely

4. Muhammad Wasim Raad4 5 Smart Cards & ecommerce Key Attributes  Secure (or economically secure)  Easy to operate  Standards – terminals, drivers, specifications e.g. PKCS#11, PC/SC, EMV, CEPS  Portable

5. Muhammad Wasim Raad5 6 Smart Cards & ecommerce Multi Channel Access

6. Muhammad Wasim Raad6 7 Smart cards in ecommerce Market Forecasts Source – Frost and Sullivan

7. Muhammad Wasim Raad7 8 Smart cards in ecommerce Frost & Sullivan, - The Asian smart card market will soar to new heights, especially in mainland China where the technology is expected to penetrate a slew of applications. IDC, Industry Trends 02/12/00 - China "already appears as the single most promising market for the coming years". Frost & Sullivan - A Look at the Asian Pacific Smart Card Market, 1999 and Beyond - “ by 2004, Asia will command at least a quarter of the revenue market shares worldwide, with China by itself commanding nearly a third of market. ”

8. Muhammad Wasim Raad8 9 Smart cards in ecommerce The new card business  One-to-One Past – every smart card application had to be lovingly hand crafted in assembler for a specific chip and OS combination  Many-to-Many future – standard smart card apps can be added or deleted, moved from one card to another because the chips are running standard multi-app OS ’ s that any developer can write code for.

9. Muhammad Wasim Raad9 10 Smart cards in ecommerce New smart card “ Food Chain ”  Chip manufacturer  Card fabricator  OS provider  Application developers  Card Issuer and designer and personaliser  Application issuers  Application managers or service providers  Card managers

10. Muhammad Wasim Raad10 11 Smart cards in ecommerce Applications Gemplus figures – (Proton Report, Sept 2000)

11. Muhammad Wasim Raad11 13 Smart cards in ecommerce Amex Blue

12. Muhammad Wasim Raad12 XII World Productivity Congress 2001 Heading for a Coinless Society with Octopus ? Rob Noble CEO Creative Star Ltd 7th November 2001

13. Muhammad Wasim Raad13 Contents Octopus Progress Todate Future Projects Being Pursued Hong Kong Becoming Coinless?

14. Muhammad Wasim Raad14 What Is The Octopus? A pre-paid stored value card utilizing contactless smart card technology Operates within wallet/purse for up to 10cm Less than 1/3 second transaction time

15. Muhammad Wasim Raad15 Establishing the Octopus Card Base 6.8M inhabitants living in high density corridors Low car ownership (15%) Nearly 11 million public transport rides per day Potential for one public transport card to reach all economically active people

16. Muhammad Wasim Raad16 Formation of Creative Star In 1994 a joint venture company, Creative Star, was formed by the 5 major public transport operators Octopus card launched in September 1997

17. Muhammad Wasim Raad17 Octopus Usage Currently 97% of total Octopus transactions on public transport Nearly 90% of railway passengers using Octopus Some 80 service providers accepting Octopus Now expanding further into private transport/non-transport

18. Muhammad Wasim Raad18 Octopus Applications Public Transport and related 3 railways, 6000 buses, ferries, Peak Tram, Tramways, public light bus Car parks Parking meters

19. Muhammad Wasim Raad19 Octopus in Off-Street Car Parks

20. Muhammad Wasim Raad20 Octopus Applications Retail Fast food Cake shops Convenience stores

21. Muhammad Wasim Raad21 Octopus Applications Unattended businesses Vending machines Payphones at MTR stations Photocopiers

22. Muhammad Wasim Raad22 Octopus Applications Recreational facilities Public swimming pools Racecourses Non-payment service Access Control for residential estates School Attendance

23. Muhammad Wasim Raad23 Add Value Service Add value service available at: Ticket Offices/Customer Service Centres Add Value Machines Retail outlets which accept Octopus for payments Maxim’s fast food and cake shops

24. Muhammad Wasim Raad24 Add Value Service (cont’d) Automatic Add Value Service with banks $250 added next use after $0 or negative value Save queuing time for adding value No worries about insufficient cash Available at nine banks so far

25. Muhammad Wasim Raad25 Future Projects Being Pursued Extend use of Octopus as access control device Extend use of Octopus as identity card Extend use of Octopus cards in schools Introduce Octopus across the border in Shenzhen

26. Muhammad Wasim Raad26 Future Projects Being Pursued (cont’d) Combined Octopus/hotel room key Combined Octopus/credit card with AAVS Octopus mobile phones and key fobs Home personal readers for web micro- payments

27. Muhammad Wasim Raad27 Video Clips of Road Runner Railway Bus Retail

28. Muhammad Wasim Raad28 Hong Kong Becoming Coinless? Virtually everyone in Hong Kong has an Octopus Already used extensively for public transport Being readily adopted for private transport/ unattended environments

29. Muhammad Wasim Raad29 Hong Kong Becoming Coinless? (cont’d) Soon a critical mass of manned payment SPs and cardholders thinking of retail payments CS pursuing many new Octopus projects

30. Muhammad Wasim Raad30 Hong Kong Becoming Coinless? (cont’d) Big savings for operators if coinless Virtuous circle, more SPs and fewer coins Customers prefer Octopus to heavy, dirty, slower-transaction coins Large productivity gains if electronic transactions replace physical coins

31. Muhammad Wasim Raad31 Hong Kong Becoming Coinless? (cont’d) Coins been around for some 2500 years Still some HK$6b worth of coins circulating Real chance world-leading Octopus can help Hong Kong to become first coinless city

32. Muhammad Wasim Raad32 Hong Kong Smart Cards Octopus 8 million cards, 9000 readers 7 million transactions/day Visacash ComPass Visa (VME) Mondex GSM SIM ePark

33. Muhammad Wasim Raad33 Octopus Transaction time < 300 milliseconds Transaction fees: HK$0.02 + 0.75% $10 transaction costs $0.095 (0.95%) Applications Transit Telephones Road tolls Point-of-sale Access control Anonymous / personalized How does money get to service providers? Net settlement system operated by Creative Star

34. Muhammad Wasim Raad34 Entities of the E-payment System Purse Charger (Bank or third party) Identification Card Issuer (Corporate or Service Provider) Card Holder (User) Access Control/E- payment terminal.Corporate secure Log in. Retail POS collecting Highway tax Corporate Information Center (Database)

35. Muhammad Wasim Raad35 Octopus System SOURCE: WORLD BANKWORLD BANK

36. Muhammad Wasim Raad36 Smart Card Sales Leaders (2000) VENDOR # OF CARDS SHARE Gemplus185,000,00029% Schlumberger152,000,000 24% Oberthur Smart Cards 85,000,000 14% Giesecke & Devrient 76,000,00012% Orga Card Systems 53,000,000 8% TOTAL628,000,000 SOURCE: CARDWEB.COMCARDWEB.COM

37. Muhammad Wasim Raad37 Mondex Security Active and dormant security software Security methods constantly changing ITSEC E6 level (military) VTP (Value Transfer Protocol) Globally unique card numbers Globally unique transaction numbers Challenge-response user identification Digital signatures MULTOS operating system firewalls on the chip

38. Muhammad Wasim Raad38 Payment Cards 8-128 Kb Data rate 115 Kb/sec ISO 7816 compliant Visa-certified PIN management and verification 3DES algorithm for authentication, secure messaging Epurse with payment command set (debit, credit, balance, floor limit management) SOURCE: GEMPLUSGEMPLUS EMV = EUROPAY INT ’ L, MASTERCARD, VISA MPCOS = MULTI PAYMENT CHIP OPERATING SYSTEM

39. Muhammad Wasim Raad39 Wireless Card Authorization SOURCE: SAMSUNGSAMSUNG

40. Muhammad Wasim Raad40 Mondex Smart-card-based, stored-value card (SVC) Subsidiary of MasterCard NatWest (National Westminister Bank, UK) et al. Secret chip-to-chip transfer protocol Value is not in strings alone; must be on Mondex card Loaded through ATM ATM does not know transfer protocol; connects with secure device at bank Spending at merchants having a Mondex value transfer terminal

41. Muhammad Wasim Raad41 Mondex Components (Hitachi) Cashless ATM Electronic Cash Register PCMCIA Reader/Writer Electronic Wallet Key Fob Balance Reader SOURCE: HITACHI

42. Muhammad Wasim Raad42 The National Bank of Kuwait (NBK) has launched the world’s first Visa internet-only payment card program in Kuwait city Features of NBK card include: preset spending limits, automatic insurance from NBK for all purchases using the card.

43. Muhammad Wasim Raad43 Smart Cards Will Play an Important Role In Ecommerce: Provide a secure storage for digital certificates and personal identification Convenience-Multifunction Card like the JAVA Card and very portable Log recent activities Can Provide automatic Logins to designated websites without having to remember passwords and login procedures Suitable for payment over the internet

44. Muhammad Wasim Raad44 Conclusion Ecommerce will take off in Asia Smart Card will play an important role in ecommerce Security is an important issue and the smart card will add value to it Ecommerce will go wireless Asia has the highest growth rate of smart card usage in the world