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Payment Cards in AFC

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Lina Nur

on 15 September 2014

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Transcript of Payment Cards in AFC

Payment Cards in AFC
astercard and
isa is a global standard for cards used at point of sale (POS) terminal and machines, for authenticating credit and debit card transactions.
Offline and Online EMV
Pre-authorisation (Offline)
Debit card:
It may be subject to daily limit or a maximum limit that is equal to the positive current account balance.
Transactions conducted with offline debit cards require 2–3 days to be reflected on users’ account balances.

Credit card:
It enables the cardholder to purchase goods or services without paying cash upfront.
It is a type of loan where the cardholder can spend on purchases using the card based on a credit limit set by the card issuer.
Point of Sale Transaction
EMV Reader and Terminal
What payment methods are used in AFC?
Pre-pay (e.g.: buy a valid ticket before boarding)
Pay-as-you-go (PAYG)
What is Electronic Purse (e-purse)?
A stored value on a card, which can be used in a manner similar to cash, to pay for travel or for other small-scale transactions.
It is usable anywhere; transit, retail, toll, etc.
Card Reader's Role
Provision of data entry by the merchant
Communication of authorized messages and clearing records
Cardholder verification by signature Card Verification Method(CVM), online or offline PIN CVM
Transaction processing, timeouts and cancellations
What is EMV?
There are 3 ways of PAYG:-
Electronic Purse card
EMV-compliant card, usually bank-issued credit, debit card
It supports standards such as:-
ISO/IEC 7816 for contact cards
ISO/IEC 14443 for contactless cards
Difference between EMV and MagStripe
What is Point of Sale?

A place where retail transactions are completed, by customers making payments to the merchant in exchange for goods or services.

The retailer or merchant would calculate the amount owed by the customer and provide options for the customer to make payment (cash or cards).
Merchant and Merchant Account
Any retail store that accepts credit, debit and e-purse cards are

Acquiring banks open accounts that allows businesses to accept payments by debit or credit cards. This is called
merchant account

An agreement with the acquiring bank for the settlement of payment card is required.
A customer who obtains a credit or debit card from an issuing bank, is known as cardholder.

As for the non-bank issuer such as Touch ‘n Go, they issue e-purse cards to the cardholders.

Cardholder presents card to the merchants as payment for goods or services.
Acquirer (Merchant Bank)
Bank or financial institution that processes credit or debit card payments on behalf of the merchant. (E.g.: HSBC, Bank of America, Chase)

debit & credit card transactions from cardholder's debit/credit cards issued by the issuer banks
Card Associations
Issuer (Bank/Non-Bank)
Bank that offers card-association brand payment cards to the customers. It
payment to the acquiring bank on behalf of its customer. (E.g.: CIMB, Maybank)

Another issuer is non-bank companies (e.g.: Touch 'n Go). They are "application owner" that owns the card
for banks or other entity to place their product into their applications.
Online Authorisation
London Underground or "LUL", authorises the patron's card while the patron is travelling.
Visa and MasterCard are card associations. Their roles are to:

Establish and maintain primary networks for
Settlement and Claims
Arbitrating on disputed transactions
Cash movements
Governing set of rules
What happens from POS > Gateway > Processor?
POS system such as

credit card terminal is widely known. Modern POS system has payment gateway implemented on their processors.
Front-end processors
works on behalf of ISO/Acquirer. It sends the transaction for authorization via Visa or MasterCard. Then, the response is sent back to the POS via gateway.

Back-end processors
works with ISO/Acquirer to ensure transactions are clear through interchange and bill the merchant. It manages billing and risk of every transaction, in other words, settlement.

Problems and Effects
Patrons bought tickets instead of multiple and monthly passes
Causes bottlenecks while buying tickets at the counter.
Visa payWave

GHL VR300 Contactless Reader
VeriFone VX510 TCP/IP capable terminal
YTLE Gate Systems and controllers (existing)
netAccess L-200 network controller
Reconciliation back-end server
EON Bank (Hong Leong Bank) is the Acquirer
Overseas cards delay might be longer, but comfortably time-set by ERL

Patrons prefer payWave since it applies 30% discount

KLIA Express Malaysia
A ticket is issued by a railway operator that enables the bearer to travel on the operator's network.
Tickets can authorize the bearer to travel, either in a set itinerary at a specific time, any time or multiple times.
What is ticket (train)?
Terminal's Role
Initialize communication with the contactless cards
Application selection and kernel activation
Manage "no card" response timeout
Manage the contactless fields

Initiation of new transactions
Display messages to the merchant
Provision of data included in online responses
Indication of "unable to go online"
Exchanges between terminal and reader:
In short, with the evolution of payment cards, it has become much easier to use public transport by tapping cards.

However, the security issues should be addressed since the technology of fraud is rapidly advancing.
Chip & PIN
Differences of Payments
Closed loop payment network

American Express/Discover/Diner's Club

payment services are provided
to merchants and cardholders
involving third-party financial institution intermediaries as
Issuer or Acquirer

AmEx/Diner's Club
Issue their own cards,
Authorize purchases and settlement with consumers and merchants.

AmEx charges merchants a higher fee than Visa and MasterCard.

E.g.: Oyster card
Open loop payment network

operates through a system that connects to the;
; which issues card to the cardholders, and
; which manages information and the flow of value between them.


does not:
Issue cards
Set fees
Determine interest rates charged to the cardholders

E.g.: CIMB Kwik Card, Maybank VISA.
2 types of transactions:
Chip & PIN
Chip & Sign
Chip & Sign
Most secure type of credit card technology.

It requires to enter a 4-digit Personal Identification Number (PIN) that must correspond to information contained in a computer chip embedded within the card.

Chip-and-PIN cards are accepted except certain unmanned payment terminals.
Not as secure as chip-and-PIN cards but better than magnetic stripe credit cards.

It verifies identity with signature, rather than via PIN.

Chip-and-signature credit cards are generally accepted everywhere.
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