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Nur Öztin Kurak

Visa Europe Türkiye
VP - Ülke Direktörü
13 Ocak 2010
Market Leader in All Key Indicators

+%12
64 million
+ %12
99 billion TL

Total Card Number Annual Purchase

Volume
eCommerce continues to grow quickly
 eCommerce Market

The eCommerce market in Europe is limited by the number of people

who have internet access and the number of merchants that offer to sell
goods and services online:

• 49% of people in Europe have access to the internet (in United

States, the figure is 75%)
• 64% of European merchants (more than 10 employees) have a
presence on the internet through a website
– Only 26% of merchants had a facility to for online ordering,
reserving or booking
– just 10% of European merchants have the ability to accept
payments online.
 People with Internet Access

Country Population (m) No of internet users (m) Proportion of internet users

Germany 82.3 53.2 65%

Turkey 75.7 15.6 21%
France 64.0 33.0 52%
UK 60.9 37.5 62%
Italy 58.1 33.6 58%
Others 239.6 113.8 47%
Total 581 286 49%
USA 304.2 228.0 75%

Number and proportion of internet users in the Europe, 2008 Sources: US Census Bureau
 Merchants with Online Presence

Percentage of Enterprises w/ web presence in selected European countries, 2008

Website Online catalogues Online ordering Online payment

Germany 77 56 32 9
Spain 54 57 23 5
France 54 69 23 11
Italy 58 57 23 6
Poland 57 77 11 8
UK 76 43 25 19
EU27 64 57 26 10
 Current Market Value

The European commission estimates that:

– the total value of B2C eCommerce in the EU27 in 2007 was €131bn
– approximately €455 for each adult

The global online commerce market will be worth over €1 trillion in 2009.

The US is the largest global online commerce market, with transaction values of €195
billion in 2009

Japan and India are the second and third largest markets, with €182bn and €152bn of
online transactions respectively.

China and India hold huge future growth potential

(source: Report on cross-border eCommerce in the EU, European Commission, March 2009) Datamonitor.
 Who Shops Online?

• It is estimated that 125 million Europeans ordered or purchased goods

online in 2008.

• Across Europe, 49% (61.6 million) of people who shop online are between
the ages of 25 and 44.

• The 16-24 segment represents 19% of users, while those aged 45 to 54

represent 18% of all online shoppers.

• Only 3% of online shoppers are over the age of 65.

• According to a recent global survey conducted by The Nielsen Company,

over 85 percent of the world’s online population has used the Internet to
make a purchase, up 40 percent from two years ago, and more than half of
Internet users are regular online shoppers, making online purchases at least
once a month.
 What do people buy online?

In terms of value of spend, research from Euromonitor shows that:

– the biggest category of spending by product type was media

products, with €22.4 billion spent online during 2008

– the second two biggest categories were clothing and footwear and
consumer electronics, with €13.6bn and €13.3bn respectively spent
 More Key Findings

• The global online commerce market will be worth over €1 trillion in

2009.
• The top 20% most active online shoppers account for 80% of total
transaction values.
• Credit cards dominate this space, accounting for 45.3% of total
transaction values.
• Convenience, not security, is the biggest factor determining consumer
choice of payment tools.
 The Growth of eCommerce in the future

The growth in eCommerce in Europe is dependent upon several factors:

• The growth in the number of retailers offering the facility to buy online.
• The growth in the number of retailers offering to deliver goods to other
countries within the EU.
• The proportion of consumers with access to the internet.
• The confidence of consumers to buy online without security concerns
 Security on-line is key

Security 83,6

Trust 7,6

Simplicity 2,9

Speed 1,8

Choice 1,8
Technology that links retailers,
cardholders and member banks during
the online checkout process to provide
proof that a genuine Visa Cardholder and
a genuine Visa Merchant are taking part
in the transaction
What is Verified by Visa?

A secure online shopping service that

• Enhances existing Visa cards to create an even safer
online shopping environment
• Uses a personal password to authenticate customer
identity and confirm transactions
• Is the digital equivalent of a PIN/signature at point of sale
How does Verified by Visa operate?

• Global programme across the world

• Uses 3-D Secure protocol as underlying technology
• Designed to work across different channels, including PC,
mobile
Market Insight & Verified by Visa
 eCommerce acquiring across Europe continues
to grow….
$12 100

Millions
Billions

90
Amount
$10
Count 80

70
$8
60

$6 50

40
$4
30

20
$2
10

$0 -
A 2

D 3

A 3

D 4

A 4

D 5

A 5

D 6

A 6

D 7

A 7

D 8

A 8

9
A 3

A 4

A 5

A 6

A 7

A 8

A 9
-0

-0

-0

-0

-0

-0

-0
-0

-0

-0

-0

-0

-0

-0
-0

-0

-0

-0

-0

-0

-0
ec
ec

ec

ec

ec
ec

ec
ug

ug

ug

ug

ug

ug

ug
pr

pr

pr

pr

pr

pr

pr
D

August 2009
Amount: $9.4bn
Count: 86.2m
Source: VisaNet Acquiring Aug 2009
 VbV acquiring penetration across Europe
continues to grow ….

45%
38.69%
40% Total VbV as % of total ecom (ECI 5 & 6)
35% Fully authenticated (ECI 5) as % of total ecom
27.79%
30%

25%
20%

15%

10%
5%

0%

Mar-09
Jun-09
Mar-08
Jun-08
Mar-07
Jun-07
Mar-06
Jun-06
Mar-05
Jun-05
Mar-04
Jun-04
Mar-03
Jun-03

Sep-08
Sep-07

Dec-08
Sep-06

Dec-07
Sep-05

Dec-06
Sep-04

Dec-05
Sep-03

Dec-04
Dec-03
Dec-02

Source: VisaNet Acquiring Aug 2009

 Verified by Visa issuing volumes….

45%
39.88%
40% Total VbV as % of total ecom (ECI 5 & 6)
Fully authenticated (ECI 5) as % of total ecom
35%
28.77%
30%

25%

20%

15%

10%

5%

0%
Mar-03

Mar-04

Mar-05

Mar-06

Mar-07

Mar-08

Mar-09
Jun-03

Jun-04

Jun-05

Jun-06

Jun-07

Jun-08

Jun-09
Dec-02

Sep-03
Dec-03

Sep-04
Dec-04

Sep-05
Dec-05

Sep-06
Dec-06

Sep-07
Dec-07

Sep-08
Dec-08
Source: VisaNet Issuing Aug 2009
Verified by Visa Penetration

• Over 50 million cardholders registered

• Over 450 issuers certified for VbV and enrolling cardholders

• Majority of European acquirers VbV capable

• 300,000 online VbV merchants

VbV - Activation During Shopping
Verified by Visa Acquirer &
Merchant Proposition
VbV Commercial Framework

Verified By Visa
• Liability shift: Protection for the merchant against
cardholder denying making the purchase.
– All ECI 6 (merchant ‘attempted’) transactions benefit
from the liability shift except Inter Regional Commercial
transactions
• Interchange differential favouring acquirer / merchant
Identified VisaNet EC:
Chargebacks Addressed with Authentication

Authentication is expected to substantially reduce or eliminate chargebacks from

the following reason codes:
• 75, Does Not Recognize 78% Addressed With
Authentication
• 83, Non-Possession of Card
The actual percent of
chargebacks that could be
Code
eliminated may be smaller "Other"
due to errors in using the 22,07%

correct reason code.

Code 83
63,66%
Code 75
14,27%
Merchant / Acquirer Benefits
Benefits:
• Liability shift: Protection for the merchant against cardholder denying making
the purchase. Liability shift even if Issuer or cardholder are not participating.
• Ease of use for the cardholders:
• Possible reduction in merchant fees.
Some important considerations:
• The occurrence of fraud results in financial losses as well as damage to the
brand.
• Merchants only VbV does not “kill” fraud. The fraud moves elsewhere.
• Both the Issuers and the merchants have a role to play in preventing fraud.
• Major VbV merchants fully appreciate that continued fraud prevention is in
their and everybody’s interest.
• Therefore, merchants must retain fraud prevention (including CVV2 checking).
 ECI
VbV – ECI Codes
Values

ECI 5 – Fully Authenticated VBV Transaction

• Card enrolled, authentication process followed and
cardholder authenticated. Liability shifts to the card Issuer.
ECI 6 – Merchant-Only VBV Transaction
• Merchant offers VbV but card not enrolled in VBV. Liability
shifts to card Issuer.
ECI 7 – Unauthenticated Transaction with SSL
• Cardholder to merchant connection secured by SSL.
Merchant unable to offer VbV, or card enrolled but VbV
authentication process unable to be completed. Transaction
liability with Merchant.

ECI 55 and
ECI and 66 transactions
transactions qualify
qualify for
for liability
liability shift.
shift.
Future trends...
 Future ... Codesure

Security 83,6

Trust 7,6

Simplicity 2,9

Speed 1,8

Choice 1,8
Pay quickly and easily: Visa payWave on mobile
Send money to any mobil: Peer-to-Peer payment
Buy online with Visa mobile ... easy, quick and secure:
Remote Payment