NEW LANDSCAPE IN BANKING VIRTUAL CARD

Dissertation
Submitted in Partial Fulfillment of the Requirements for the degree of

MASTERS IN BUSINESS ADMINISTRATION

SCHOOL OF MANAGEMENT
(Constituent Institute of Manipal University, Manipal)

Submitted by
RACHITHA SHETTY
(Reg. No. 141202100)

Under the guidance of

Prof. Kavitha T C

School of Management Manipal

Manipal University
March, 2016

DECLARATION

I hereby declare that the report of Course of Independent Study research work entitled New landscape in
banking - virtual card which is being submitted to School of Management, Manipal University, in partial
fulfillment of the requirements for the award of the Degree of Master of Business Administration is a Bonafide
report of the work carried out by me. The content of this report has not been submitted to any University or
Institution for the award of any degree.

(RACHITHA SHETTY)

Place: Bangalore
Date: 15/03/2016

CERTIFICATE

This is to certify that the report of course of independent study Research work entitled NEW LANDSACPE
IN BANKING - VIRTUAL CARD submitted by Rachitha Shetty (register no. 141202100) as the record of
the work carried out by her, is accepted as the report of course of independent study research work submission
in partial fulfillment of the requirements for the award of the degree of master of business administration.

Date: 15/03/2016

(KAVITHA T C)

ABSTRACT

The evolution of virtual card technology provides an interaction between the security and business
requirements. Online shopping is drastically growing and now people are access to innumerable products in
India as well as abroad. People are free to buy anything virtually from internet. However not all shopping portal
are safe because when card holder enters the credit card details, it is exposed to the online fraudsters. So the
user should be cautious of online transactions because the credit card details can be exposed to fraudsters.
This paper maps out the future for virtual card technology, discussing both opportunities and challenges. This
paper will also review the functioning, technologies involved, current trends and the security challenges
associated with them. This paper concludes with the possible future expansion of virtual card technology.
The virtual card technology is fairly new in India, though it has been around for several years abroad.
By using virtual card, the card holder is completely assured that their credit card details will be safe and it will
not fall in the hands of fraudsters which indeed will avoid credit card frauds and phishing.

TABLE OF CONTENT
Sl.no

Particulars

Page.no

INTRODUCTION

1-5

1.1 INDUSTRY OVERVIEW

1.2 COMPANY PROFILE

LITERATURE REVIEW

4
6-8

RESEARCH METHODOLOGY

9 - 10

3.1 Need and Significance of the Study

3.2 Research objective

3.3 Scope of the Study

10

3.4 Limitations of the study

DATA ANALYSIS AND INTERPRETATION

10
11 - 46

4.1 History of Cards

11

4.2 Evolution of Online Payment System in Ecommerce

13

4.3 Payment methods

13

4.4 Popular online payment solution

16

4.5 Virtual Cards

19

4.6 Virtual card way to get it

20

4.7 Virtual card features

20

4.8 Virtual card request flow

21

4.9 Types of virtual card accounts

22

4.10 Virtual Card types based on usage

22

4.11 Validity of the Virtual Card

23

4.12 Where it can be used

24

4.13 Advantages for virtual cards

25

4.14 Disadvantages for virtual cards

26

4.15 Working

26

4.16 Authorization process

27

4.17 Virtual Card Payment Security Measures

28

4.18 How Virtual Card Is Different From a Physical Card

29

4.19 In what type of application it is used

30

4.20 Technologies involved

30

4.21 Current trends of virtual payment cards

34

4.22 Growth of NFC virtual payment methods

36

4.23 The growing NFC mobile market

38

4.24 Future of Contactless cards

40

4.25 Future of Contactless mobile payment

43

4.26 Companies working on virtual payment method and its technology

45

4.27 Future Forecast

5

RECOMMENDATION AND CONCLUSION

46
49 - 51

5.1 findings

49

5.2 recommendation

50

5.3 conclusion
BIBLIOGRAPHY

51

LIST OF FIGURES

Sl.no.

Particulars

Page no.

Different types of online payment solution

18

Wallet usages and Users satisfaction

18

Cell phones with integrated NFC capability, worldwide forecast

36

4
5

Worldwide NFC enabled smartphone shipments in %

Mobile wallet purchase in japan

37
38

Security barriers to mobile wallet uses

39

Respondent receving virtual card payments if transaction price

40

8
9

is lower
Global payment cards data and forecasts
Change leader for future payments

42
44

10

Growth of virtual reality users worldwide from 2014 to 2018

46

11

Total revenue of global mobile payments

47

ACKNOWLEDGEMENT

I acknowledge my deep sense of gratitude for giving me opportunity to undergo my project on New landscape
in banking - Virtual Card. At this moment of successful completion of the project, I would like to express
my sincere thanks to all those who extended their kind help by spending their precious time in explaining the
various intricacies of the subject and suggesting the correct approach to me.
First and foremost, I would like to thank to the director Professor Dr. Raveendranath Nayak for all the
academic facilities extended.
I would also like to acknowledge my sincere gratitude to Prof. Kavitha T C for the guidance.
This project has been a great learning outcome for me and without the help it would not have possible for me to
do this project. Their contribution to the project is beyond my capacity of expression.

RACHITHA SHETTY

CHAPTER 1
INTRODUCTION

1 INTRODUCTION

World is moving towards the cashless society and frauds are also evolving in many forms. The major crime in
the world for past few years is credit card frauds. Various prevention techniques have also been initiated to
resolve the issue. From business point of view, fraud will reduce the profitability of banks and financial
institutions, so major challenge for banks is to identify the fraud and prevent them.

Today shopping online is not as safe as it was earlier. One has to be very careful while purchasing online
specially while using card. Card theft is still a biggest problem for customer who want to purchase online. To
reduce the threat, the concept of virtual card came into picture. A virtual card is not physical in nature but it can
be used like a real one.
Instead using a physical card user can use virtual card which will be issued by the issuing bank on request. The
card number will be different for every transaction and it is mostly used for online shopping.
Customers should be aware of the fact that:
Single use card or virtual card is a disposable card and the card can be used only once. The card number cannot
be kept for future transaction. The card will have a certain time limit, after that the card cannot be used for the
purchase. Not all banks provide this service and this is the reason most of people do not know about virtual
card. The term virtual card is new in India but it is not new in European countries. People over there prefer to
pay through wallets than the cards.

1.1 INDUSTRY OVERVIEW

Banking and Finance
The Banking and finance industry is said to change the economy of a country. They play a crucial role and have
control over the money flow in the economy regulated by Reserve bank of India. These banks and financial
institutions provides their customers with large number of products and services. They play a major role at
times like economic crisis recession and also market growth. They lend and also curtail lending depending upon
the market upturns.
They are known as backbone of global economy which provides capital for job creation, infrastructure, and
innovation and also play a prominent role in the society. The banking sector is said to have greater opportunity
for future expansion and interactions with the support of innovative technology services in the field of banking
and financial services.
With the help of the IT sectors driving innovations and delivering better efficient services, they are able to
redefine the Banking and financial services from that of traditional ones to the modern ones which are
technically upgraded for the benefit of all the parties involved in banking and financial services.
Banking sector will be the fifth largest industry in the world by 2020 and third largest by 2025 KPMG reported
recently and also stated that banking industry is growing rapidly in Indian economy with 81 trillion current
worth and are making best use of technology like internet and other gadgets to carry out the transactions. We
can expect the growth and change in style of operations which could result in incorporation of modern
technology in this Banking and financial service industry (Resham Beri KPMG 2015).
With this growth potential of banking industry, the dependence of industry on technology is also growing in the
same scale. Information technology has brought lot of changes in the activities of BFS sector and expected that
around 3.5 billion USD will be spent on BFS Vertical on Information technology in the coming year (Zinnov IT adoption in BSFI sector in India).
Technology also seems to be the driver of BFSI business values and have greater potential to explore which can
contribute to the increase in Gross Domestic Product. Coming to the IT industry, the role played by Information
technology in banking industry is crucial as always and has enabled the industry to open up efficient industry
channels.
It has always helped to come up with new challenges. Electronic banking and electronic commerce is turning
out hard to define the difference between them. The dependence of financial institutions is more when
compared to other industries like gathering, processing, analyzing and providing information to meet the
requirements of customers. (Piciu Gabriela Cornelia).

Online banking facilities like mobile banking, internet banking are few of the examples where they have opened
up for new market, product services and also for efficient delivery channels. The focus of financial sectors has
reformed to increase the speed and reliability of financial operations and Information technology is providing
the needed support for the changes and also to face the challenges that are being posed by the customers. The
development of technology and worldwide networks also have helped in cost-cutting.
The customer requirements are also changing from one generation to other where the demand is for instant
anywhere and anytime banking facilities and Information technology at its best tries to fulfill the needs and high
expectations of its customers who are tech savvy by nature.
Banking and financial institutes takes the opportunity to explore and come up with credit and debit contact less
payments, the near field communications mechanism which allows the customer to transact without swiping or
inserting the cards. The biggest driver for achieving the financial inclusion is to bring technology by which
services are provided to customers wherever and whenever they need is. It is expected that the electronic
payment. Cloud computing, big data and internet access to have enormous impact on the banking industry.
Interoperability is one thing which create value for customers.
Payment Systems
Coming to the payment system in particular from the last decade, payment industry has seen a drastic change,
an improvement in its activities in the last decade. Its a shift from cash/paper-based payments to modern
electronic payment system. However, the shift is not complete because 97% of payment transactions of public
sector and 60% of private sector are still paper based.
This payment industry is very complex in nature. It comprises of many parties involved in its activities like card
network, issuer, and acquirer. They include payment options like mobile payment, online payment, and also
competition from other non-traditional payment service provider like telecom, software etc.
A market research says the payment industry grew at 1.8 percent between 2008 and 2012 and the volume of
transactions counting for 1.5 billion transaction The site goes on to state that in terms of volume, the number of
transactions during this period grew from. Looking at the growth by 202 most banks will be adopting the latest
and convenient technology solutions regardless of geographical spread and a more fundamental change will be
observed in managing the customer relationships.

CHAPTER 2
LITERATURE REVIEW

2. LITERATURE REVIEW

Mobile banking now provides complete solution for banking operations. Despite of rapid development of
mobile services, mobile payments are not used as much as expected, it is clear that mobiles are not used for
banking purposes. People resist the use of new technology by creating barriers to the adoption of mobile
banking. The first is the usage barrier followed by value barrier and the risk barrier, according to authors
perceptive these barriers are common cause for resistance to innovation. Considering the literature discussed,
resistance is further classified into following dimensions - Lack of information, Lack of observability,
Complexity, Lack of relative advantage, Perceived risk and Unsuitable device. Cost barrier accounted for
highest percentage which included expensive internet access and service charges. The perceived risk
included functionality Confidence and service security. These are the main reasons for not accepting
mobile banking service. (Pedro Cruz, 2010)
Card not present is a threat to merchants because cards are not present for physical verification that means the
card is not present at the Point of sale terminal, so the merchant is unable to verify the identification of the card.
The crime involves the theft of card details which are then misused by the fraudsters. Fraud statistics suggests
that card not present fraud is most common type of credit card frauds. Card offenders are now becoming
organized and countries like USA and UK are been improving their fraud prevention tactics. The researcher
suggests the key areas of fraud prevention are: fraud prevention policy, fraud awareness, technology based
protection, identity management and legal deterrence. This is mainly supported by four pillars: user, institution,
network, government which is also called as four pillar of fraud prevention tool. The researcher says even
though resources are spent on prevention, frauds can still occur. (Prabowo, 2011)
With the expansion of internet and computer usage, online access will be a trend in life, with or without mobile
devices. Internet banking allows the customers to access their account at all times and place. Service quality in
internet banking is very important for the customer. Offering high quality services to customers with low cost is
the competitive advantage of internet banking. Some studies showed that internet banking has reduced
operating and administration cost, which has enabled banks to offer low service charges. From the literature
review certain factors are identified for the adoption of internet banking they are convenience, accessibility,
features availability, bank management, security concerns, privacy, design, content and speed. All the factors
significantly affect the adoption of internet banking. Meanwhile, researcher says Privacy and security appears to
be major attributes influencing the adoption of internet banking. (Poon, 2008)
Internet technology have changed the way financial services are delivered. Online financial services enables the
user to have strict control on his account at any time. Banks are providing internet banking because, it increases

the profits. Since the use of internet shopping is being growing, it is important for financial service providers to
predict the future and to provide new channels of payments to the users. Researcher stresses the importance of
financial service institutions to increase the ease of use of internet banking and gaining trust in the minds of
customer. The research stated the greatest challenge to any banking sector will be to win the trust of customer in
the matter of security and privacy. (Joaqun Aldas-Manzano, 2008)
Mobile baking is a recent innovation and is the wonder in mobile technology. This paper revealed to adopt latest
technology, system compatibility will enable consumers to enjoy high speed transaction according to individual
preferences and providing different methods to customer to make payments through different channels. To
increase the awareness banks to educate and instruct the consumers to use internet banking. Due to increasing
growth in internet and social network, banks can create a positive attitude towards internet banking and also
perceived risk is considered that it positively affected attitude. Designing secure passwords, finger prints and
biometrics can be used to enhance customers confidence and to prevent any misuse of their transaction and
providing them with the option to change the password to enhance security.(Mohammadi, 2015)
When compared to present banking system and internet banking, internet banking has unique features, such as
extensive use of technology and nature of the online payment. Prior studies states that adoption rate is still low
due to perceived risk, lack of knowledge regarding internet banking, accessibility of technology and their own
individual needs and satisfaction. Low trust in internet banking is considered as the major drawback not to
adopt internet banking. So banks should work on reassuring customers about the safety of internet banking by
enchasing customer perception. Social media provides bank to reduce information deficiencies, takes views and
feedback, enhances customer satisfaction and build banks image. Researcher concludes social media helps to
build relationship between banks and consumers. (Mohana Shanmugam, 2015)

Virtual card gained prominence as a way to pay for travel services, contractors and employees who do not have
their own card. Opportunities to use virtual numbers to pay for settlement of bookings at low cost has been
identified. The major challenge is to integrate virtual card into the agents workflow. (Cohan)
Virtual card is a trend right now in the market. Over the decades payment has got lot of attention because
airlines have been able to justify agency cost and reconciled the GDS costs fairly well. Some analysts also
questioned the use of disposable card. George Barto, analyst at Gartner group said there is no demand for single
use card. He added on that by saying merchants who accept the virtual card are affected by online security
concern. (Kaiser, 2013)
A survey conducted on the future face of payments stated that mobile devices will be a main stream for P2P
payments within 5 years. 81% agreed that payment processing will be a key business to new entrants and

innovators. PayPal will be the largest payment processor and apple and Google will dominate mobile payments.
Cheques will no longer be used and plastic will be disappeared and in the span of 10 years our society will be a
cashless society. Most banks will have direct access to payment clearings and payment data analytics will be a
major source of revenue in payments. (Tony Virdi, 2015)

CHAPTER 3
RESEARCH
METHODOLOGY

3 RESEARCH METHODOLOGY

The study is scientific in nature. Statistical tools such as percentage, growth trends are been used. To analyze
the progress made by banks in adoption of virtual card, growth and future of the industry is determined. The

primary source for this research study is secondary information. The available information on internet
regarding virtual card gas been used to complete the report. All the available articles, papers and journals have
contributed for the completion of the research study.
3.1 Need and Significance of the Study
Banks are able to satisfy the demanding needs of the customers which is growing extensively with the help of
the developing Information technology in banking industry. Technology is no more a mere transaction
processing rather it acts as the fuel that brings about a change in the economy which the customers are
expecting to see in the future days.
E banking is an emerging trend in banking and it is strengthening the banking sector and it is also improving
the service quality. India is in initial stage of e banking. But foreign banks are pioneers in it. Private Banks have
introduced it earlier and now public banks are also implementing e banking, a shift from traditional banking to
E banking.
Since virtual card has bought a revolution to e banking. Identifying frauds and ensuring good security systems
while enabling customers to purchase online. Virtual card have changed the usage of card. Virtual card ensures
that transaction details will be safe in the hands of the bank.

3.2 Research objective

Understand the current payment methods

Capture perceived uses and risks of the virtual payment
Explore future functionality for virtual card payments
Gain insights into how to support partners in transitioning to virtual card

3.3 Scope of the Study

In the current scenario industry and financial revolution is undergoing a rapid change because of information
technology. Especially in financial sector new technologies are leading to overall development. After referring

to the past literature, it is found that most of the literature, security and privacy have a wide application area.
Due to this changes in the banking industries I have chosen to study the growth of virtual card.
3.4 Limitations of the study
1. The study is limited only to banking industry.
2. The report is prepared by considering the information available on internet.
3. Difficulty in collecting information through web portal because the usage rate is very small when
compared to foreign countries.

CHAPTER 4
DATA ANALYSIS AND
INTERPRETATION

4 DATA ANALYSIS AND INTERPRETATION

4.1 History of Cards

Over the past 50 years the practice of using plastic cards like debit, credit and other electronic cards has
emerged as an effective force in the global economy. The enlarged ability to handle business on a worldwide
has brought a huge economic growth.
The evolution of plastic or electronic cards has made it easier for customer to access their accounts with the
help of automatic teller machine (ATM). This way it has helped the bank to automate themselves along with the
reduction in cost and on the other hand it helps the customer as well.
When the cards was first introduced it borne out account balance information and balances. The bearer of the
card would get his card to the branch and the branch offal's would credit money on to the card, based on the
available balance as per the actual account of the customer. Later the cardholder can withdraw money from any
convenient ATM according to the balance available on the card, the ATM that would update the information on
the card as money was withdrawn. For every advantage there is a disadvantage as well, even the card systems
had problems as it was too vulnerable to fraud, supervision of multiple account was not possible.
Net banking or online ATM offered a solutions to the obstacles. As ATM was interlinked with banks its was no
longer a mandatory to maintain account balances in the card itself, which has helped to overcome a major cause
of fraudulent activity, along with that it has made easier to access multiple accounts with help of additional
services by the bank.
As banks commenced purchasing and installing ATMs, they soon visualized that it is very expensive to maintain
a huge number of ATMs but customers started demanding for more and more ATMs so that they could have
easier to their accounts and funds. Since different banks have their ATMs in an area, the best solution was to
interlink the bank hosts so that customers could use their card in any banks ATM irrespective of their card
issuing bank.
Then there emerged the evolution of mobile payment for better security to the customer. Before mobiles where
used make phone calls and to send texts. In the present days due to the emerging of smart phones mobiles can
be used make video calls, to use internet, phone banking, book tickets and to find the location and many more.
Even though the technology in mobile and near-field communications (NFC) advanced, the process of paying
for goods and services or sending money to overseas has been changed in the area of financial services with the
help of smart phones replacing wallets. The use of mobile application payment has reduced the use of electronic
plastic cards.

There are three types of payment where Consumers can make payments with these devices:

P2P payments or P2P payments including noncommercial payments from C to C and commercial

payments from a C to B
Goods and services purchased online from a mobile device.
(POS) terminal at a retail establishment

There is a problem in the mobile payment as well, as customers personal information can be exposed to the
companies that would not be present in a credit card transaction. Along with the card issuers and payment
process, mobile payment may associate mobile Internet service providers, mobile payment providers and third
party applications that the customer download. These companies can get customers bank information revealed
during a credit card transaction from mobile payments which may lead to the misuse of the information.
Customers can order products from computers connected to the internet where the customer is billed for the
ordered gods or services based on a virtual payment where accounts are maintained by a gateways, thus virtual
cards evolved.
What initially started as focus on home banking or online banking has spread into broad array of world class
solution for better and safe online purchase and transaction. In September 10 UNIBANCO introduced the first
credit card "E- CARD".
4.2 Evolution of Online Payment System in Ecommerce

In the modern world the concept of electronic commerce has changed the way of doing business. E-commerce
is about the advancement of technological and increasing customer satisfaction. With The help of E-commerce
one can even download music, book tickets and can be used for many more applications.
As of January 2014 e-commerce users in India has raised to 243.2 million. Cash on delivery is the highly
preferred payment method in India accounting for 75% of the retail revenue. Beside cash on delivery other
payment systems like electronic cash, E-pay card, net banking, PayPal. To create good trust on the product or
services a company should go for good payment system as well.
E - Marketer projects electronic commerce sales will cover $3.5 trillion within five years. Global retail sales this
year account for 7.3%, growing to 12.4% by 2019 says E - Marketer.

4.3 Payment methods

Electronic Cards.

E - Wallets

E - Cash

Contactless payment

Stored-value card payment

Virtual credit cards

Prepaid Cards

Gift Cards

Smart Card

Cash on delivery methods

Loyalty cards

E-cards:
A greeting or post card which is customized online on a website and sent to recipient through the internet. This
term is also called as I-card, digital post card or digital greeting card.
E-wallets:
It is online prepaid account which can store money and the money can be used whenever required. As it is preloaded facility, consumers can buy products, bus, train and air tickets, grocery shopping and many more.
Smart Card
A smart card includes embedded integrated circuit chip that can either be a comparable intelligence with
internal memory or a memory chip alone or a secure microcontroller.
Electronic Cash

Electronic cash is the debit card system of the German Banking Industry group, the federation which shows the
top German financial interest groups. E cash users can download money into the wallet in any currency desired.
Merchants can also accept any currency and convert into any local currency when the cash is uploaded into the
account. Since, e-commerce globalizes the economy.
Wireless Payments
Wireless payment systems can be debit cards, smart cards, key fobs or any other devices like Smartphone's that
uses radio-frequency or NFC for secure payment. The antenna and chip enables to wave consumers card at or
handheld device over a reader at the point of sale.
Stored Value card Payment
A monetary value stored in the card and no external account is maintained by bank or financial institutions and
its similar as debit cards where money is on deposit with the issuer. This kind of card is known as stored - value
card payment.
Loyalty cards
Loyalty cards are a system of the loyalty business model. In UK it is typically called a loyalty card, in Canada a
rewards card, and in the US either a discount card or a rewards card. Loyalty card is an identity card which is
issued by a retailer to its customers as part of a consumer motivation scheme, whereby credits are added for
future discounts every time while the purchases have been recorded.
Cash on delivery methods
When cash is paid by the buyer when the goods are received at the purchasers place also called collect on
delivery. Cash on delivery is preferred by most of the customer. In This type of transaction cash is paid only
when the product is received. This is usually done through a shipping company and it allows both the seller and
the buyer to minimize the risk of fraud or default in the transaction.
Prepaid cards:
It's payment card which is loaded with money by a user or someone else and which is issued by a bank or
financial institutions. It looks like a normal debit and credit card with a card number, company branding and
signature strip. Prepaid card is different from credit and debit card as user can't borrow money with prepaid
card, but can spend the money loaded in it.
Gift cards:

Preloaded debit card that allows the holder of the card to use it for the purchase of services and goods. Some
gift cards can only be used at particular retailers, but some can be used anywhere.
Virtual payment card:
It's a web based version of credit card swipe system or device that allows seller to process order made over
phone, mail or online. It's a secure payment system, it's also a more environmental friendly compared with
plastic cards.

4.4 Popular online payment solution

ICICI pockets:
It allows a user to download and instantly active an e-wallet. It helps the users to fund it from any bank account
and immediately start transaction without any documentation. With the help of ICICI pockets users can pay on
all sites and apps in country.
Google wallet
Its developed by Google for peer to peer payments services that allows users to receive and send money from
mobile or computer. Google wallet is linked with an existing bank account or debit card. Google wallet comes
with a Google wallet app and wallet card. The app allows users to do purchases at point of sale with the money
in their account.
Pay Wave
It's a new contactless payment for low-value payments in the name of visa's with the amount of 30 or less (or
domestic market equivalent, e.g. RS 2860 in INDIA). It's the fastest way to make payment as the transaction is
complete in less than a second without the need to insert or swipe cards.
Pay Pass
Its issued by Master card with the technology added to the proximity card. MasterCard Pay Pass grants
contactless transactions at retail furnished with a special terminal. IT can be used for the purchase which does
not exclude more than 50 PLN in Poland and $15 US, The transaction does not need a signature or pin. If the

value of transaction goes higher, the transaction still goes contactless but the user must confirm it in a standard
way, by entering the PIN.
Apple Pay
It allows mobile or tablet devices payments at contactless sales and in purchase of paid apps in iOS apps. It's
comparable to contactless payments already used in many countries, with extension of two-factor
authentication.

State bank buddy

It can be used in wallet apps by android and iOS supported phones. Its launched by State Bank of India with
Accenture Company. State it helps to send money to anyone, recharge mobile/ DTH, pay bills, book movielight-bus tickets. . User can also Add money to wallet by using users debit card or net banking.
Ping pay
Ping pay allows the user to transfer funds to anyone who ae connected to WhatsApp, email, twitter and
Facebook. Ping pay is only the social banking app which helps the user to share content like video, texts,
images, sending or asking for money or mobile recharge. An innovative app which is designed to provide
convenience while transferring money.

Fig 4.1: Different types of online payment solution

Fig 4.2: Wallet usages and

a Users satisfaction

The usage have doubled since 2013, with the increase of 15% mobile wallets have been used and additional 22
%is likely to adopt mobile wallets. Rewards and discount are compelling the user to adopt mobile wallet.
Barriers to mobile adoption are decreasing, security concern remains the major barrier to mobile adoption.
However 62% of the respondent list security as the major barrier and it was 73% in 2013. About 86%
customers have made a purchase from desktop and laptop which says perceived risk is reduced in the mind of
customer.
Still mobile payment adoption, consumers dont yet see the benefit using mobile phones in the 12overcome the
barrier. Nearly 40 % who like to buy with mobile wallet, the presence and absence of mobile wallet will have an
impact on the purchase decision of the consumer.

4.5 Virtual Cards

In modern era where technology is extremely growing, the best alternative for debit and credit cards are virtual
cards to prevent internet frauds and phishing.

What is virtual card?

A web based version of credit card swipe device which allows sellers or merchants to process order online,
made by mail or over the phone is known as virtual payment card. The process of Virtual payment is a secure
system, closed system comprising registered sellers and buyers. Its an environment friendly compared to
plastic cards.
The payment industry is moving hugely towards paperless payments. Virtual payments have likely heard the
excitement over the last few years and it is important to know how they can benefit the business.
4.6 Virtual card way to get it

Form filling or other registration is not required just the deposit account is enough.
Login to banks site and click on request e-cards then select Virtual card account.
Enter required amount you wish to deposit and do transaction.
You will receive on phone.
When validated it will display on screen.

4.7 Virtual card features

People now a days has become so busy that they don't even get proper time to visit banks to perform their
important financial transaction. But the evolution of modern technology has
Helped to improve the banking services. When financial transactions are involved security and safety is most
important. Most of them fear to give information of cards online. Virtual card is better when compared to cards
as you prepay a certain amount in account to complete a transaction.
Online shopping is gaining huge popularity in the country as it's easy to shop top brands and numerable
products just sitting at home. People are free to buy anything from apparel, fruits, foodstuffs and electronics
from the internet. Not all shopping sites or portals are safe as when customer enters card info and CVV number

the information may be used by cyber fraudsters. Virtual cards have expiry period and most of the last from 24
hours to 48 hours of issue when it's not used.
The virtual credit card credit limit can be fixed by the user and the maximum credit available to you is within
the entire limit of your primary card. The card limit between hundred rupees up to fifty thousand in case of state
bank of India. Only primary card holder can have virtual card facility holder and not to the secondary card
holders.

Secure- Account details like name, address card detail are not shared with the merchant, so chances of

misuse of details are remote.

Card remains valid for a limited period of 48 hours, because the amount is deposited for some particular

purchase; it remains valid till transaction is done before 48 hours are over.
Validation through OTP (one time password) is done through mobile of the user before transaction, so

for next transaction same process will be repeated. So security is automatically taken care of.
Flexibility in allowing card users to pay online to bank for transaction, through any of the valid account.
There is no limit for minimum account but maximum as per the cards maximum limit
Cards are acceptable at any merchant account site with VISA acceptance.
Easy Operation- Any customer having banking and internet facilities, and has permission for transaction

can create virtual card account.

Zero loss- card is only facilitated when amount for transaction is deposited and paid as per card holders
directions, hence no interest is payable to bank by card holder.

4.8 virtual card request flow

B2B/B2C

Physical cards

Virtual cards

Customer InitiatedAgent Initiated

4.9 Types of virtual card accounts

Dynamic credit adjustment accounts are given to trusted suppliers. These accounts are set with zero
credit limit, therefore suppliers cannot enable payment until they receive a notice about the account limit
has been raised to the approved payment amount. In dynamic credit adjustment accounts, suppliers keep
account number on file, cancelling the need to retrieve enter the card number for each payment

manually.
Single use accounts can be sealed down for use only by a specific supplier, for a specified amount and
within the time limit. Unlike dynamic credit adjustment accounts, where one account is given per
supplier, a single use account is given per payment. As it's a onetime use nature of account, it gives more
security and reconciliation to buyers. With single use accounts, suppliers must login to a gateway to

retrieve the unique card number that is created.

Buyer initiated payments on the other hand enable the purchaser to push the payment straight to the
merchants bank account. No processing is required on the merchants side, the purchaser can maintain
complete control over the payment amount and timing.

4.10 Virtual Card types based on usage

There are two types of virtual cards based on their properties.

a. One time use virtual card -When a different card number is issued each time by some banks to
clients who wants to purchase. It protect the card from theft, however payment process poses some
issues.
b. Multiple use virtual cards - When a virtual one time use card on the same bin as debit or credit
card are issued by financial institutions and banks. The virtual card number are allowed to keep with
issuer for multiple use. For payment process and online business such kind of cards are slightly
reliable.

4.11 Validity of the Virtual Card

Virtual card is valid for single use and expires automatically within 24 hours even if it's not used. Due to this
reason there is a minimum risk of credit card frauds or misuses when compared to plastic cards.
The virtual credit card which are issued by most of the banks are valid worldwide and users can use them on the
websites outside India. Some banks issues virtual cards which are only valid in India like state bank of India.
Some people have doubt whether with the help of a debit card virtual cards can be created. Virtual cards can be
created with the help of debit card in most of the banks. If a person does not have credit card but if he had debit
card he can use that card to create virtual card online. As people want to transact online always these days, but
there are times when they do not hold a credit card. But now it has become much easier as people can now
create a virtual credit card and use it to administrate online.
One of the most important virtual cards feature is that users can get refund from the supplier site. In some cases
users might want a refund of the amount paid through virtual cards to the merchant site. The reason might be
defect in product or in services or other situations. As user has made payment through virtual cards, users can
get refund, the refunded amount will be automatically transferred to users main account.
If there is balance left in a virtual credit card as the cards are not fully utilized, the amount will be credited back
to main card within the time period as per bank rules.

4.12 Where it can be used

When customers are doing transaction on an online site they fear about the security still they have to use it.
When a customer does not have a card he can do transaction using net banking by creating virtual card.
Consumers can also use virtual cards where they just want to experience service, but the website starts charging
the card on renewal basis. If customer use virtual cards, the card will get cancelled after one use and there won't
be any renewal charges later.
A virtual credit card gives a secure payment method by which the online travel agencies pay their suppliers such
as car rental, hotel or tour operators. It provides global supplier acceptance through their existing credit card
terminals

For example:
1. When customer book a hotel room with the tour operator. There may be irrelevant payment options offered
by the tour operator. Virtual credit card is generated by the tour operator for this payment and bookings. At
this stage, the card does not have any credit limit.
With the help of booking code hotel confirms the booking. Customers name, booking code and other
information details are added by the tour operator to the card information.
On the date of payment tour operate loads card with the quoted amount.

Booking and payment are

reconciled automatically and via credit card acceptance contract hotel receives the amount.
2. Freelancers and bloggers have to regularly pay online for goods and services like webhosting and adds. In
this situation virtual cards play an important role for easy and well secured payments.
3. For international shoppers International prepaid virtual debit cards can be used. Due to country restrictions
shipping services by a site many people cannot order products, or bank still may not support some online
payments. International virtual debit cards are very useful during these situations.
4. On Any merchant location accepting Master Cards / Visa Cards online Virtual Cards can be used, without
any difference from a regular plastic card.

4.13 Advantages for virtual cards

The number generated in virtual card is valid for only one time online transaction, once the transaction
is complete then it expires.
One can set a limit in virtual card for the particular online transaction they want to make. This virtual
card advantage make sure that the merchant cannot charge more for an online transaction. This helps the
customer to take control of finances so that their financial budget stays in limit.
As virtual cards are largely recognized it can be used by anyone to make online transactions. Virtual
credit card are accepted by most merchants giving the online shopper freedom.
Virtual credit card ensures Data safety and security as actual account number of the credit card is not
visible to the merchant. Therefore fraudster cannot use the information for fraudulent online
transactions.

 As virtual cards flexible to use it can be used only when there is a requirement for online transaction. As
the number created fir virtual card is temporary the purchaser can use the card when they are ready to
make online purchases.

4.14 Disadvantages for virtual cards

Consumers who used disposable credit cards complained that they're inconvenient and time-consuming to
use.

Even though virtual cards are widely accepted, some sellers still have not accepted it.

Citibank notes that the virtual card cannot be used in on site buying or transaction including where
consumer needs show that card during the time of pick up as the number on card and the number which is
used to purchase will differ.

As it is valid for only 24 to 48 hours the consumer has to constantly update them to automatically pay bill.

As use of virtual credit card is very inconvenient and consumers felt safe storing there card details on online
site and use plastic card for shopping American express stopped the services in 2004 due to less number of
consumers.

4.15 Working

When customer have decided to go for shopping, he or she will request for a virtual card from the bank.
Customer will know at that point in time how much he is going to spend. So when he is requesting for a
virtual card, depending on the spending, customer will set a maximum limit that he will be using for this
shopping. The spending will depend on the balance in customers account and the expiration date will be
for 24 or 48 hours. After the expiration date the virtual card is no longer valid and it cannot be used.

Once the card has been used, it cannot be used again. If only partial amount is utilized the balance will be
credited back to the customers account. Customers should re request for another virtual card for the next
purchase.

That means customers can shop online with virtual card too without having a physical card thereby
preventing any theft of sensitive information.

Even though its sounds good, customers who have stopped using credit or debit cards complain that
getting virtual card takes lot of time and it is cumbersome.

For instance, virtual cards requires extra security check for verification, or maybe even a call to customer
care to verify the transaction.

There is great happiness using physical card, Says Johnson. Anytime if you try to convince customers to
do something different which is worth doing that will be a tough proposition.

4.16 Authorization process

A virtual card is requested from the bank through the bank app

Virtual card number is used for transaction

The merchant receives and submits the transaction details to the merchants bank

The merchants bank submits the transaction to the authorization and clearing network to verify the
transaction

The transaction is authenticated and authorized

The virtual transaction is approved and submitted to the clearing network for authorization processing

The clearing bank sends on the transaction to the issuing bank for the processing and posting to the billing
account

Issuing bank provides detailed reporting with enhanced data elements for reconciliation.

The account payable will be same in most of the organization but only payment method changes. Virtual card
replaces the expensive manual check, payment procedure, reconciliation and reporting.

4.17 Virtual Card Payment Security Measures

The card information is generated securely and integrated into the system. Only when the payment are ready

to be sent card numbers and the expiration dates are assigned.

For each payment card number is assigned and the monetary value of the card will be the maximum limit of

the amount which has been issued.

Virtual card number will be of 16 digits like other debit or credit card and will have certain value, as well as

expiration dates and CVV. Optional account number or reference number can also be provided.
The process the transaction, customer must correctly input the card number and the expiration date. Some

POS terminal will also ask for CVV number if card is not swiped.
A card will be only valid up to the expiration date and to the issued amount. Once the value has been

reached it cannot be further used. Thus, customers need not keep the card details in the file.
Security restriction can be added to health care related accounts by adopting a specific merchant code.

4.18 How Virtual Card Is Different From a Physical Card

Category

Physical Card

Virtual Card

Validity

Valid for more than 5 to 10 years

Valid only for 1-2 days.

Generation of

Can be generated once and used

Can be generated any number

card

many times

of times and can be used only

once

Credit Limit In a physical card, the credit limit is

decided by the bank. However

In a virtual card, customer

decides the credit limit

customer can request for an increase

or decrease of the limit
Credit of
money

For a Physical card, customer need To get a virtual card customer

not pay the money upfront

have to pay the money

upfront

Credit card

Physical card number does not

Virtual card number expires

number

change for a long time

after 24 - 48 hours

4.19 In what type of application it is used

1. Even if customer dont have credit card or a debit card, he can still have a virtual card. The virtual card
will be connected to the customers bank account. The unused amount will be credited back to the
customers bank account.
2. Virtual payment through NFC: Many retailers already have NFC based contactless terminals, making
mobile payments easy. Google wallet, apple iPhone can also use these terminals. The biggest concern in
NFC is security but mobile payment is complex, hacking is very difficult in mobile payment. Host card
emulation is the technology used to perform card emulation on a NFC without relying on secure
element.
3. Google wallet was introduced by google, which allows to send and receive money from merchants using
mobile phone. Google account is linked to customers account
4. NFC mobile phones are used to book tickets. For example when customers books ticket through a
simple touch. He can later transfer the ticket to any other person via phone.
5. By just entering a password user can accept the transaction and it also enable peer to peer transfer of
data such as music, images and address book.

4.20 Technologies involved

Background
Banking industry has been constantly evolving and new type of payments innovated for the sole purpose of
providing ease of access to the customers with security as a distinguishing factor.
Payment transactions today are mostly online using mobile and other channels, but physical cards are still used
for Card Present transactions at ATM, POS etc.
The drastic increase in payment card transactions gave rise to mobile wallets and Near Field Communication
(NFC) technology, wherein the mobile can replicate the physical card and make contactless payments over an
NFC terminal. Through host card emulation (HCE) Android KitKat 4.4 enables NFC based transactions.

Near Field Communication (NFC)

Near Field Communication, is a card not present connection between the devices like mobile phones, tablets
etc. contactless connection allows the user to receive information from one device to another without touching
the devices. NFC is fast, secure and convenient technology in digital days and technology is growing in parts of
Europe and Asia and its already spread throughout USA.

NFC maintains compatibility between other wireless devices like NFC and Bluetooth. Standards including
FeliCa without compromising with security. FeliCa is more popular in Japan through the NFC forum which is
founded by Sony, Nokia and Philips in 2004. NFC forum imposes strict guidelines to the manufacturers when
designing NFC compatible devices. Compatibility is the key to growth of NFC as a popular money and data
communicating technology. Forum ensures security and easy to use with different NFC versions of technology.
NFC Technology device may act as a passive or active device. The passive device contains the information
which other device can read but cannot read information itself. Active device can read and also send the
information to other devices. A best example for the active device is smart phone that not only collect
information but also share or send information to other compatible device.
Peer to peer communication is also possible in NFC which allows both the devices to send and receive data. To
ensure security, NFC has developed secure network which uses encryption while sending sensitive data such as
credit card number or any details regarding the card. Users can further secure their information by installing
antivirus software or by having a secure password so that fraudsters cannot use the information when stolen.
NFC Wallet
NFC wallet is a mobile wallet that supports business applications with communications using secured devices
that use a special chip on the smart phone called Secure Element. With the advancement of Secure Element in
NFC Chip, wallet can store access cards, credit/debit cards, coupons, loyalty cards, prepaid cards, voucher and
many other information in the same wallet and manage them.
This wallet requires to log in to the app, using a password or a pin. This will work how EMV codes. The wallet
app can be then used for contactless interaction with contactless terminals, NFC devices or transport gateways.
HCE Mobile Payments
Host Card Emulation (HCE) Replacing Secure Element (SE) Technology

Contactless payment solution was initially offered with SE (Secure element) in Mobile devices. The Secure
element stores the card data on the Carrier-issued SIM/Memory card/Smart chip. The card data is securely
installed within the device. Though the solution is contactless, the card data resides on the mobile device which
exposes the device for data theft and hacking during transmission.
The risk associated with card data in SE, gave rise to the innovation of HCE Mobile payments; the technology
used to emulate or replicate the Credit card in software application. Here the card data will be stored in
cloud/Card Issuer location, making it safe for payments at NFC Merchant terminals. Tokens generated through
tokenization and transmitted to device enables secure payments.

Features of HCE

Tap and Pay

Offline payment
Mobile wallet Integration
Payment secured with Tokens
No Card data stored on Mobile device
PIN for higher value payments

Current Trend in HCE

Consumers across Europe and US have already started off with contactless payments using HCE technology providing simple, secure and effective payments
Adoption of the same in real-time at locations below;

Retail Outlets
Fuel Stations
Travel Terminals
Restaurants

Benefits of HCE

Payments at Merchant terminals - Increasing the sales for the Merchants

Banks would onboard more customers As part of technological Initiative
Increasing mobile usage - Customers to prefer HCE based payments
Convenience - Quick and easy mode of payment

Banks need to constantly upgrade themselves to meet the ever demanding technological innovation either from
the competitors or the customers. Customer convenience and future of mobile banking provides preference to
make transactions on demand with ease and secure payment options. Hence, HCE is deemed to be the future of
contactless payments with quick tap and pay option added with security of tokens.
4.21 Current trends of virtual payment cards

Use of virtual payment methods gained drastically improvement over the past few years in many areas like
tourism, shopping etc. Edgar, Dunn and company conducted a survey on global trends in payment systems.
Survey was conducted payment professionals globally. During the survey questions were asked on five main
topics:

1.
2.
3.
4.
5.

Current & future importance of individual payment products.

Current & future importance of individual payment channels.
Expected future importance of payment technologies.
Most influential market participants.
Key industry events that will shape payments markets.

Survey was carried out in more than 50 countries. Overview of findings are,

Card based payments and electronic bill payments are most important payment methods in global.

Cash is lower importance as a payment method in USA/Canada compared to other regions like

Europe or Asia.
Growth in mobile/NFC continues to be the event expected to have greatest impact in payment methods

over the years in USA/Canada, Europe.

But in Asia unlike other regions, contactless and mobile payments did not gained growth as expected
possibly because of technical/acceptance issues.

The usage of mobile payment options as well as other modes such as gift cards and virtual wallets has been
increasing. In United States, master card, euro pay. Visa will provide merchants to upgrade with new method of
payments which help them with security compliance and also to accept additional payment options.
For example, Starbucks has integrated mobile payment, thereby streamlining the process of mobile payments.
PayPal has introduced PayPal here which can read magnetic strip card, NFC, apple pay, Samsung pay and
android pay.
QR codes, NFC, Bluetooth low energy beacons are providing retailers with an opportunity to engage customers
via smart phones. 2016 will see e-commerce website providing additional payments.
Current trend in e commerce retailers is on mobile friendly website rather than mobile application, Gartner has
predicted by 2017, mobile e-commerce revenue will account for half of digital commerce revenue. In 2016,
more e-commerce companies will provide live chat on the mobile phones. Offering consistent and reliable
advices via mobile phone also have added customer loyalty. Citibank, discover, and bank of America are the
major institutions that provide virtual card through a company called Orbison.
4.22 Growth of NFC virtual payment methods

BBVA, the 2nd largest bank in Spain introduced HCE based BBVA wallet in the year of 2014; now
more than 200K users are making use of this application and end of 2014 BBVA expanded its virtual

payment service to the other countries like US, Chile and Mexico.
Europes most trending prepaid service provider Prepay Solutions in collaboration with Proxama
introduced HCE based mobile payment solutions for prepaid users. It enables brands, retailers, and

financial service providers to deliver branded mobile payment services with secure mode of payment.
DCR strategies, Canada based loyalty/prepaid service provider launched Trucash NFC mobile wallet in
April 2014 in 30 markets globally. Using this mobile wallet, reward points on prepaid cards are
converted to cash and can be used in virtual payment.

CUA, Australias largest credit union launched HCE based redi2PAY mobile payment application. This
application offers a secure and card-less payment option for the customers. This is the first Asia-Pac
bank to launch mobile payments use HCE.

Fig 4.3: cell phones with integrated NFC capability, worldwide forecast

Fig 4.3 :Cell phones with intergarted NFC capability,

worldwide forecast

220000

50000
2010

80000
2011

125000

2012

160000

2103

2014

Source: iSuppli, Dec 2010

As per Craigs market study, mobile payments are more than any other methods to make purchases, pay for
goods and services. It will eliminate the use of debit and credit cards, cash and checks.
ISuppli released a forecast for NFC enabled cell phones, 13% of the cell phones shipped in 2014 will be enables
with NFC technology, up from 4.1% in 2010

Fig 4.4: worldwide NFC enabled smartphone shipments in %

Fig 4.4: Worldwide NFC enabled smartphone shipments in %

23%
2014

46%

34%
2015

2016

81%

72%

58%

2017

2018

2019

Fig 4.4: Market forecasts expect an 81% NFC penetration in the worldwide by 2019. In addition users are
showing more interest to use mobile phones for making payments for their daily purchases. According to the
study by ING, 185 million users in Europe will make use of mobile payment application for their daily
purchases in 2016, up 51% on 2014.

Fig 4.5: mobile wallet purchase in japan

Fig 4.5: Mobile wallet purchase in Japan, Dec 2010

77.50%
15.30%

26.50%

27.60%

32.70%

Source: comScore: The 2010 mobile year in review

Fig. 5 dissipates the importance of application of NFC based mobile wallet in day to day life. Mobile wallet is
more useful in purchase of goods. As per 2010 japan Market survey, 77.50% of mobile wallet users are utilizing
the service in purchase of items. 9.8 million Japanese mobile users carried out purchase with mobile wallets in
Dec 2010.

4.23 The growing NFC mobile market

The sales of NFC equipped phones in 2013 exceeded 75 billion. For example 5 Out of 1 cell phones
worldwide will use NFC technology.

NFC transaction alone approached $50 billion in 2014. Google predicted that 50% of mobile phone will use
NFC technology in coming years.

By 2015, the mobile money transaction will reach to $670 billion 40% of the market has taken over by
digital goods. 75% of the mobile payment transactions is because of Asia, Western Europe and North
America.

According to a survey by wireless watch market survey, japan has more than 70 million NFC enabled
device when compared to 3 million in US. In japan NFC technology itself creates branding for mobile
payments.

Shares of Fleet Cur Technologies, Inc. increased nearly five times more over the past five years as the
virtual payment market began gaining momentum.

Deutsche Bank maintained a Buy rating on Fleet Cur Technologies with a price target raised to $184 in 2015
from $170 of year 2014. The company is expecting growth in virtual card market from $83 billion in 2015
to $160 billion in 2018 and over $500 billion by 2024.

Fig. 4.6: Security barriers to mobile wallet use

Jim Garrity, J. K. (2015). The Future of the Mobile Wallet: Barriers and opportunities for the next stage of the
mobile payment revolution. consumer pulse.
The said graph depicts Identity theft is the major barrier in the mobile wallet use and virus has least barrier in
the usage of mobile wallets .

Fig. 4.7: Respondent receving virtual card payments if transaction price is lower

Source:http://aitegroup.com/report/healthcare-virtual-cards-small-providers-transaction-cost-impactsacceptance
This graph underscores price range of virtual card payments and also the impact of lower price for transaction
leads to small providers receiving virtual card payments.

4.24

Future of Contactless cards

While virtual cards are in use for several years, that payment technology is now rapidly climbing in popularity
for B2B transactions. Many payments experts predict that virtual card use will surpass traditional plastic cards
within the next 10 years.
Accenture predicts that by 2020 an estimated 15% of traditional banks revenues could shift to online payment
service, including branchless banks and new technology entrants. But the more interesting question is who
stands to benefit the most from the ongoing banking revolution.

Expansion to airlines: Now traveler looking for more virtual payment options for their air travel. These
options will save corporate travel programs time, simplify bookings for infrequent travelers, job aspirants
and contractors.

Growth in emerging markets: In some countries alternative payment systems are common to make
and receive payments without a credit/debit card merchant as a middleman. This is particularly emerging
economies in Latin America and Asia making them fertile ground for virtual credit card expansion.

Widespread acceptance: Apple Pay, Google Wallet, Samsung Pay Bitcoin are some of the alternative
payment options which eliminate the need for a physical card. Meantime Virtual credit cards are likely to
gain worldwide acceptance in future.

Mobile capabilities: In the future, a business travelers own mobile device can be used to generate a
virtual credit card number. This service would be more convenient for the traveler, it also provide travel
programs with all suitable and reporting benefits virtual cards offer but with even less administration.

Greatest opportunity that the banking and financial services industry stands to gain through
increased virtual card use: If bank stay away from the growth, then the answer becomes unaware.
Single use virtual cards have a lower risk of fraud, misuse, a lower cost to serve and higher opportunity for
automation. Virtual card will eliminate paper and associated errors prone to manual processes.

Contactless cards are in line to experience atmospheric growth in the next few years as Europe is expected to
eyewitness nine times rise in volume of contactless payment by 2020, when compared to 2014, according to
research from RBR. NFC card have truly overcome the slow rate of growth from 2013 to 2014. There were 223
million contactless card user in Europe in the end of 2014 i.e. 65 percent up compared to 2013.
Despite the technology being deployed in countries such as UK and Czech Republic with other new payment
method, it is just as much about need as it is about convenience. Till the end of 2014, no contactless cards were
allotted in Denmark, Lithuania, Norway, Estonia, Sweden, while more than sixty percent of all cards are in use
in Czech Republic, Poland and Slovakia. According to RBR, Sweden dispensed contactless cards only in 2015,
because physical cards were already finely established and consumers were continually using them for low
value payments. So the business for contactless payments was reduced when compared to other markets, where
cards were commonly used for transactions.

Along with this need factor and the cost factor comes into play. In Russia, for example, considering the high
cost of converting cards to contactless, initially banks focused on issuing only premium and high - tier
contactless cards.

Fig 4.8: global payment cards data and forecasts

Fig 4.8: Payment Cards Data and Forecasts to 2020 (RBR)

14000
12000
10000

12618

8000
6000
4000

1389

2000
0

2014

2020

Source: RBR market research

Despite all these obstacles, RBRs data suggests that there is only one way the technologys popularity can go
up. The volume of contactless payments is expected to rise almost nine times to 12.2 billion in 2020, RBR
predicts the number of contactless cards will rise 700 million in 2014 - 2020, which will represent 40% of the
regional card.

4.25 Future of Contactless mobile payment

Payment Tokenization:
Payment tokenization is a logical evaluation for payment transactions. It provide security benefit for issuers and
merchants. It will reduces the PAN exposure to unauthorized use.

For issuers, payment tokenization simplifies the issuance and life cycle of digitized cards in digital wallets
(mobile or internet wallets):

Fraud risk is better contained by limiting the domain of use of a Token to a specific mobile phone or

merchant.
Digitized Card life cycle can be managed more easily and independently from the associated physical
card. For instance, if a mobile phone is stolen, its token may be revoked without incidence on the
cardholder physical card.

For Merchants, Payment Tokenization relieves them from the burden of storing sensitive information in a PCI
DSS certified environment. After the release of EMV Co tokenization specifications, Visa and MasterCard
announced deployment of their tokenization platforms. Technology will gradually spread in payment industry
and token based payment soon become the de-facto standard for payment transactions not performed from a
chip card.
Retail payment services by cloud computing versus card
Future trend in retail payment is through software cloud technology. The notion of storing data in cloud which
is universally shareable and accessible by authorized person is more appealing. Whether the cloud technology is
compatible for the secured storage and access of any kind of data is a question. For retail payment system
whether cloud technology is short term realistic alternative or the existence of technology will be a preferable
option is a question for SPA.
Biometrics for financial services
Biometrics gives an authentication to the user that ensures the presence. This is more comfortable for finance
transactions because it is hard to fake. A research states the biometric security will be worth 1.8 billion by the
end of 2015 compared to 900 million 2012.biometric has the ability to reduce financial and operational risk by
20% in next 10 years.
Instant issuance solutions
Instant issuance solution allows the cardholder or user to walk into any financial institution and open an account
or replace or stolen debit card, and walk out with personalized secured card in a minute. This enables the user
immediate purchasing power and also to increase customer satisfaction and improve portfolio management.
Fig. 4.9 Change leader for future payments

Around 23% virtual currencies are leading change. Interestingly banks have voted for virtual schemes. 11% of
the bank use single processor rising to 18% in ten years.
4.26 Companies working on virtual payment method and its technology
Lot of companies have begun investing on newer technology like NFC, HCE etc. A lot of well-known
companies such as Google, apple are involved one or the other way with Near Field Communication
technology.

Google has enables a NFC chip in android nexus s to roll out the payment system in New York and San

Francisco in partnership with vivo and VeriFone.

Microsoft also have planned to introduce payment technology in mobile phones in its operating system

to lead in software.
In Apple pay NFC technology was introduced by Apple. Apple Pay has changed payment system that
have changed the way of shopping, as the company has been making an effort to move customers from

physical cards to iPhone app or Watch which can do all the work.
Apple pay is initially introduced in US and debuted on October 2014. Then launched in United
Kingdom on July 2015. Apple Pay will be launched in Europe, Australia and some countries of Asia by

the end of 2016.

Bell ID has extended its support for Android Pay to its Token Service Provider (TSP) solution, allowing
its customers at issuing banks in payment methods and processors to keep tokenization and
detokenization in house by offering secure payments by NFC technology on Android phones using
Googles payment system.

More than 200 banks across northern Europe are now able to initiate token-based secure mobile payments
services to the customers via a partnership between digital payments services provider Nets and Carta
Worldwide.

Giesecke & Devrient (G&D) has received Amex Enabled certification for Convego Cloud Pay, a host card
emulation (HCE) based solution that lets a banks customers use their mobile banking application to enter
payment card credentials onto their smartphone and make contactless payments.
ANZ bank in Australia launched Host Card Emulation (HCE) based mobile payment system ANZ mobile pay
service. Using this service customers can withdraw money at any contactless ANZ ATM.

4.27 Future Forecast

Retailers are giving more preference to customers demand for integrating mobile payments and allow customers
to store their card in the wallet, hence more than 3 million cards will operate integrating into mobile application
by 2020, which has increased from 1.4 billion of 2015.
Fig. 4.10 growth of virtual reality users worldwide from 2014 to 2018

Source:http://ophirgottlieb.tumblr.com/post/138493556474/apples-future-growth-is-enormous
The above graph depicts the increase in the users growth of virtual technology and the early majority is highest
in percentage.

Fig. 4.11 total revenue of global mobile payments

Fig. 4.11: Total Revenue of Global Mobile payment market, 2015-2019

4500
2015

6200

2016

7800

2017

9300

2018

Revenue (in US$ 100 million)

10800

2019

Source: Statista market research, 2015

Worldwide consumers will use their mobile phones to spend a total of US$620bn on all forms of mobile
transaction in 2016, representing a 37.8% of growth from $450bn in 2015. By 2017, total mobile payment will
be expected to reach $780bn, reaching to $930bn in 2018 and $1.08tn in 2019.
Apple Pay and Samsung Pay have been scrambling to china, which makes up a huge rise in mobile payment
market. Bank Service charges, telecom operators and third - party payment services creates lot of business
prospect for mobile payment market.
In fact, the biometric technology is now a standard feature in most of the mainstream smartphone models. We
can expect more than 40% of the smartphones will be able to read fingerprints by the end 2016. According to
the study, the acceptance of mobile, contactless cards and electronic cards will double in next 2 years. As of
today mobile payment account for 9% of all payments, in the span of 2 years it will increase to 18%.

Samsung Pay will become leader of mobile payment market in Asia, with 49% share of the market by the end
of 2016. As Samsung joins hands with Union Pay, it is expected that Samsung Pays influence will expand
starting from China. More than 16 billion mobile biometric payment transactions will be made and around 1.1
billion financial services customers will be using mobile biometrics by 2020. Biometric mobile phones will
increase tenfold from 200 million users in 2015 to 2billion users by 2020. As per Research nearly 1.6 billion
coupons will be delivered annually to customers via (BLE) beacons by 2020, up from 11 million this year.

CHAPTER 5
FINDING
SUGGESTIONS AND
CONCLUSION

FINDINGS

The usage of with integrated NFC capability has increased drastically from 2010 to 2014.If we see the

number it has increased more than double.

The sale of NFC enabled mobile is increasing and will increase to 81% in 2019 from 23% as of 2014.
As per 2010 japan Market survey, 77.50% of mobile wallet users are utilizing the service in purchase of

items. 9.8 million Japanese mobile users carried out purchase with mobile wallets in Dec 2010.
By 2015, the mobile money transaction will reach to $670 billion 40% of the market has taken over by
digital goods. 75% of the mobile payment transactions is because of Asia, Western Europe and North

America.
Worldwide consumers will use their mobile phones to spend a total of US$620bn on all forms of mobile
transaction in 2016, representing a 37.8% of growth from $450bn in 2015. By 2017, total mobile

payment will be expected to reach $780bn, reaching to $930bn in 2018 and $1.08tn in 2019.
Biometric security will be worth 1.8 billion by the end of 2015 compared to 900 million 2012.biometric

has the ability to reduce financial and operational risk by 20% in next 10 years.
Around 23% virtual currencies are leading change. Interestingly banks have voted for virtual schemes.

11% of the bank use single processor rising to 18% in ten years.
Depicts the increase in the users growth of virtual technology and the early majority is highest in

percentage.
RBR predicts the number of contactless cards will rise to 700 million in 2014 2020, which will

represent 40% of the regional card.

Price range of virtual card payments and also the impact of lower price for transaction leads to small
providers receiving virtual card payments.

RECOMMENDATION

Span has good capability in mobility banking along with have good experience in E - commerce sight.
Global market is booming especially Europe and USA. By using the mobile mobility span can work on

virtual card in India because its emerging.

Span provides services such as card issuing portfolio, card security, anti-fraud solution, teller application
which they can use in developing virtual card technology. Secure access is used for authenticating which

includes operations like CVV, PIN etc.

Tokenization which is something that replace the sensitive data without comprising the security can also
be used to work with virtual card.

Span has good growth in global market because the future of virtual card in Europe and USA is very

bright.
Contactless payment is emerging in India, even when some banks provide virtual card services most of
them are not aware of it, the usage rate is very low. So span can work providing virtual card services to

Indian banks.
Span have 16 year experience of end to end mobile solutions and mobilized over 200 applications. Span
also provides complete services including Card ordering, Card security, EMV security data and PIN
verification, Card production, personalization and shipment, Card activation, Card usage, clearing and

settlement and dispute handling. Due to these services it can easily work on virtual card.
India could be also good market for span because contactless payment are emerging.

CONCLUSION

We cant actually feel a virtual credit card, but it soon will touch more of the financial institutions. Right now,
corporate travel programs use virtual credit cards mainly for hotel payments. This is largely because hoteliers
lead other suppliers in implementing virtual payment automation. But as virtual card providers improve security
and simplicity, more suppliers, travelers and travel programs will adopt virtual card in their transaction.
The security around single-use virtual cards is a large improvement over the limitations of checks and Plastic
cards, which expose key account information. Virtual cards, among those companies, will become the primary
form of e payment over the next 10 years.

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