PayPal Shopping Cart Software
9
Common Fraud-Related Risks
Product theft
Using a stolen credit card to purchase goods and services
Chargebacks
A cardholder disputes a credit card purchase
2 Privacy Policy – Describes how the company treats and protects
customers’ information
3 Shipping Policy – Details shipping terms, shipping classes
offered, & expected delivery timeframe
PayPal Shopping Cart Software
11
Your Disclosure Policy Tells Customers that You Are Honest and Dependable
1 Business Description – Explains what the company does
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► Merchant’s Acquiring Bank – provides internet merchant account
► Processor – authorizes credit card transactions and settles funds for merchants
PayPal Shopping Cart Software
PayPal Shopping Cart Software
6
Settlement Process
Payment Processing
Service
2
1
Merchant
Customer
Processor
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Merchant’s
6
acquiring bank
PayPal Shopping Cart Software
5
Authorization Process
Payment Processing
Service
27
Merchant
8
3
6
45
Customer’s issuing bank
Customer 1
Processor
1. Customer decides to make an online purchase and inputs credit card information 2. Merchant’s website receives customer information and sends it to a payment processing service 3. Payment processing service routes information to processor 4. Processor routes information to bank that issued customer’s credit card (issuing bank) 5. Issuing bank sends authorization (or declination) to processor 6. Processor routes transaction results to payment processing service 7. Payment processing service sends results to merchant 8. Merchant decides to accept or reject purchase
► Payment Processing Service – connects merchants, customers, and banks through secure online transactions.
► Gateway – the secure pipe between the banks and the processor
Vulnerabilities abound…
► Authentication is a challenge
► Hackers can break into a merchant’s network
► Hackers can also steal customer identities
► Multiple access points for break-ins
…leading to losses
► An estimated $2.8B USD was lost to online fraud in the U.S. and Canada in 2005
► The rate of credit card fraud for online sales is three to four times higher than the overall fraud rate
3
Understanding the Payment Processing Network
Individuals
► Merchant – seller of goods
► Customer – buyer of goods
Institutions
► Customer’s Issuing Bank – provides customer’s credit card information and verification
Introduction to PayPal Payment Solutions
PayPal Helps Bring You New Customers
Drivers of Consumer Demand for PayPal
PayPal is:
Secure
Simple Fast
Opportunities for Merchants
PayPal Shopping Cart Software
7
PayPal Provides an All-in-One Solution for Online Merchants
Payment Processing
Service
Merchant
Customer’s issuing bank
Customer
1. Merchant informs the payment processing service to settle transactions 2. Payment processing service sends transaction information to the processor 3. Processor checks the information and forwards settled transaction information to the issuing bank 4. Issuing bank transfers funds to the processor 5. Processor routes funds to the acquiring bank 6. Acquiring bank credits merchant’s bank account 7. Issuing bank includes merchant’s charge on customer’s credit card account
PayPal Growth
► 141M accounts ► 31% yoy volume growth ► 190 countries ► 70+ currencies ► 1000s of merchants add
PayPal every year
PayPal
helps you grow your business
4
The Payment Network Provides Processes and Services
Processes
► Authorization – the process of verifying a customer’s credit card
Services
► Settlement – the process of collecting funds from the customer’s account
Accessing payment networks
Accessing a payment network to complete fraud
Identity theft
Using stolen information to open new credit cards
Cash theft
Issuing unauthorized credits or payments
4 Return Policy – Provides clear guidelines on how a return is