PBT 01 EFT Overview

Payments Basic Training
Module 1: EFT Overview
Copyright 2009. S1 Global Ltd. All rights reserved.

Module Introduction
Introduction to Payments Basic Training (PBT)
EFT Concepts
Payments System Overview
Course duration
o day (3 hours)

Section 1: Introduction to PBT
Overview
Training structure
Module scope

Introduction | EFT Concepts | Payments System Overview
Training Structure
Overview
Three types of courses
Payments Basic Training (PBT)
Payments Specialized Training (PST)
Payments Development Training (PDT)

Training Structure
Core Modules
Module 1: EFT Overview
Module 2: Realtime
Module 3: PostCard
Module 4: Office

Training Structure
Elective Modules
Additional modules environment specific
Module 5: ATM Driving
Module 6: eSocket.POS
Module 7: TermApp

Module Scope
Main Sections
EFT Concepts
EFT concepts (incl. S1-specific concepts)
Payment cards (PANs and routing)
Payment flows (consumer transactions and settlement)
EFT protocols (draft capture and ISO 8583 messages)
Payments System Overview

S1 payments product family
S1 payments solutions

Evaluation and Certification
Evaluation and Certification

PBT Certificate
o Questions from modules 15
Scoring
o Less than 64% Attendance
o Between 65% and 84% Competence
o 85% and greater Achievement

Section 2: EFT Concepts
Introductory concepts
Point-of-sale environment
ATM environment
Cards and routing
Payment cycle
Basic S1 payments terminology
EFT protocols
Transaction integrity
Introduction
Terminology 1
Electronic funds transfer (EFT)
Card acceptor (merchant)
Acquirer (merchant account provider)
Card association ( EFT network)
Issuer

Introduction
Terminology 2
Authorization and capture
Downstream versus upstream
On-us, not-on-us, remote on-us
Protocol
Primary account number (PAN)
Bank identification number (BIN)

Point-of-Sale Environment
Entities in a Point-of-Sale (POS) Environment
Cardholder Merchant Acquirer (or merchant Card association Issuer

(or card acceptor) Account provider) (or network)

ATM Environment
Entities in an ATM Environment
Cardholder Card acceptor Acquirer Network Issuer

ATM Environment
On-us Transactions
Cardholder Issuer-owned ATM Issuer

ATM Environment
Not-on-us Transactions
Cardholder Acquirer- Acquirer Network Issuer

owned ATM

Cards and Routing
Routing
Routing
o Acquirer: on-us or not-on-us?
o Network: which issuer?
o Issuer: which account?
Routing mechanism
o Primary Account Number (PAN)

Cards and Routing
Cards PAN
PAN
PAN primary account number

Usually 16 or 19 digits

Cards and Routing
Cards BIN
BIN
BIN bank identification number

First 6 digits
Identifies card issuer
Issued by card association or national standards body

Cards and Routing
Cards IID
IID
IID individual account ID

Remaining digits (excluding the last digit)

Cards and Routing
Cards Check Digit
Luhn formula (Modulus 10)

Primarily of use in manual PAN entry
Detects single-digit errors and transpositions of
adjacent digits

Cards and Routing
Cards Tracks
Track 1
Track 1
o Cardholder details (name and courtesy title)
o Used by terminals not used by EFT processors

Cards and Routing
Cards Tracks
Track 3
Track 3
o Seldom used

Cards and Routing
Cards Tracks
Track 2
Track 2
o PAN + essential EFT data
o Numeric; Maximum 37 digits

Cards and Routing
Cards Track 2
5412345678901234 = 0612 101
PAN (max 19 digits)

Field separator
Expiry date (YYMM)
Service restriction code
Additional data (PVV/CVV)

Cards and Routing
Credit Card Statistics

2008 Global market share (in terms of purchase
volumes)
o Visa 60.25%
o MasterCard 28.33%
o Amex 10.04%
o JCB 0.94%
o Diners 0.44%
2008 Visa Transactions in US

o Purchase volume $823.7 billion (2003: $540 billion)
o Purchase transactions 9.2 billion (2003: 6.5 billion)

Cards and Routing
Chip Cards 1
Integrated circuit chip (ICC)
Bigger storage capacity
Perform cryptographic calculations
o Offline PIN verification
Also known as EMV cards

o Europay
o MasterCard
o Visa

Cards and Routing
Chip Cards 2
Same basic information
o PAN
o Expiry date
o Service restriction code
Supports the same routing mechanism as magnetic stripe

cards
Compatible with existing EFT
network structure

Cards and Routing
Chip Card Statistics

As of May 2008
o 622 million chip cards issued
o MasterCard: 310 million ( of global portfolio)
o Visa: 262 million
o 8.2 million EMV acceptance points globally
o 68% of European POS points
o 56% of European ATMs

Payment Cycle
Introduction
How money (value) flows between EFT entities
Two phases
o Consumer
Value flows to the consumer.
Consumer receives cash or goods/services.
EFT processors (e.g. S1 payments system)
EFT protocols (ISO 8583)
o Settlement
Value flows from the consumer (closes the cycle)
Merchant or terminal owner receives payment
Automated clearing houses or similar

Payment Cycle
Not-on-us ATM Transaction

1: Cardholders
Request: Amount + surcharge account debited
Cardholder Card acceptor Acquirer Network Issuer

(Bank B) (Bank A) (Bank B)
2: Money
dispensed
3: Amount + surcharge +
interchange (switch) fee

Payment Cycle
Not-on-us POS Transaction

1: Cardholders
Request: Transaction amount account debited
Acquirer Network Issuer

Cardholder (Bank A) (Bank B)
(Bank B)
2: Goods
4: Amount
Merchant
3: Amount
merchant fee
5: Interchange
(discount rate)

Basic S1 Payments Terminology
Realtime and External Entities
Downstream Source interface Sink interface Upstream
POS device Store server Realtime Network Issuer

(source entity) (sink entity)

EFT Protocols
ISO 8583
ISO 8583
o Most widely used EFT protocol
o Used by Realtime
Specifies
o Message content
o Message Format
o Rules of exchange draft capture protocols

EFT Protocols
Draft Capture Protocols

Consumer phase two components
o Authorization
Verifies cardholder has sufficient funds
Funds reservation
Adjusts available balance (not ledger balance)
o Capture
Cardholders account debited
Ledger balance adjusted
Transaction completed/secured

EFT Protocols
Draft Capture Protocols

Four draft capture protocols (DCP)
o Paper
o Batch
o Store-and-forward
o Online

EFT Protocols
Paper Draft Capture
Auth request
Auth response
Terminal Acquirer Issuer
End of day: File

EFT Protocols
Batch Draft Capture
Auth request
Auth response
Batched advices
End of day
Advice responses
Merchant Acquirer Issuer

EFT Protocols
Store-and-Forward Draft Capture
Auth request
Auth response
Advice
End of day
Advice response
Merchant Acquirer Issuer

EFT Protocols
Online Draft Capture Single Message Pair
Tran request
Tran response
ATM Acquirer Issuer

EFT Protocols
Online Draft Capture Dual Message Pair
Tran request
Tran response
Completion
Completion
ATM response Acquirer Issuer

EFT Protocols
Summary of Draft Capture Flows

Paper Batch Store and Online
Forward
Time
EOD

EFT Protocols
ISO 8583 Messages

Flexible message format
Accommodates new requirements
Multiple variants
Protocol translation required between variants

EFT Protocols
ISO 8583 Messages
0200 101100110101 MAC
4 Bytes 8 (or 16) Bytes Variable length
Message type identifier

Bitmap
Data elements

EFT Protocols
Message Classes
Message class (first 2 digits)
01xx authorization
02xx transaction
03xx file update
04xx reversal
05xx reconciliation
06xx administration
08xx network management

EFT Protocols
Message Functions
Message function (last 2 digits)

xx00 request
xx20 advice
xx02 completion
Add 10 for response Add 1 for repeat

xx10 request response xx21 advice repeat
xx30 advice response xx03 completion repeat
xx12 completion response See page 123

EFT Protocols
Message Type Categories

Real-time messages
o Cardholder waits for transaction to complete
e.g. transaction requests
o No response time out
Store-and-forward messages
o Transaction complete from cardholders point-of-view
e.g. advices, completions, and reversals
o No response message repeated till response is received
o Inform recipient of final state of transaction
o Placed in S&F queue

EFT Protocols
Bitmaps
10110010101
1st bit indicates presence of bitmap 2

3rd bit Indicates presence of field 3, etc.
String of bits (ones or zeros) indicating the presence or absence of data

elements
Each bitmap is 8 bytes (64 bits) long
Bitmap 1 relates to fields 264
Bit 1 of bitmap 1 indicates the presence/absence of bitmap 2
Bit 2 indicates the presence of field 2, etc.
Bitmap 2 relates to fields 65128

EFT Protocols
Data Elements
Fields may be
o Fixed length (e.g. Field 3 processing code)
o Variable length (e.g. Field 2 PAN)
Length indicated by first 13 digits
o Numeric (e.g. Field 4 tran amount)

o Alphanumeric (Field 45 track 1 data)
o Mandatory (e.g. Field 7 transmission date/time)

o Conditional (e.g. Field 35 track 2 data)
o Optional (e.g. Field 28 transaction fee)

EFT Protocols
Important Fields
Field number Description
2 Primary Account Number
3 Processing Code
4 Amount, Transaction
7 Transmission Date and Time
11 Systems Trace Audit Number
35 Track 2 data
39 Response Code
49 Currency Code, Transaction
52 Personal Identification Number (PIN) Data
127 Reserved for Private Use (S1-specific)

EFT Protocols
Field 127
Up to 999,999 bytes long
Used extensively by Realtime
Divided into subfields (239 sequentially)
Bitmap indicates which subfields are present
See page 128 for a list of more commonly used S1-specific subfields

Transaction Integrity
Introduction to Transaction Integrity

Customers view of a transaction = issuers view
ISO 8583 ensures transaction integrity in two situations:

o Lost responses
o Protocol translation

Transaction Integrity: Lost Response

Downstream EFT Entities are primarily responsible for recovery
from failure upstream
o Comms failures en route to upstream entity
o Failure of upstream entity
o Comms failure affecting response message
If failure occurs downstream, responsibility usually lies with the

entity further downstream

Upstream Failure
Online, no stand-in authorization
Downstream Processor Upstream

entity entity

0200 0200
Timed out
0210
Declined

0420 0420
Timed out

0421
0430

Upstream Failure
Online, with stand-in processing

entity entity

0200 0200
Timed out
0210
Approved

0420 0420
0430
0220
0220
0230

Late Response
Online, no stand-in authorization

entity entity

0200 0200
0210 Timed out

Declined

0420 0420
Late rsp 0210

ignored
0430

Downstream Failure
Online

entity entity

0200 0200
0210 0210
Timed out

0420
0430

0420 0420
0430

EFT Protocol Translation 1
Online Store-and-forward

entity entity
0200 0100
0210 0110
Potential loss of transaction integrity when performing protocol

translation
EFT Protocol Translation 2
Online Store-and-forward

entity entity

0200 0100
0210 0110

0220 0220
0230

Section 3: S1 Payments System Overview
S1 payments product family
S1 payments solutions

S1 Payments Product Family
The S1 Payments Product Family

ATM POS File
Voice Reconciliation
loads
files
Internet
File
imports
PostCard
eSocket.POS
eSocket.ATM Realtime Office
General
eSocket.web ledger
Network File Reports File

Host extracts Card extracts
systems production ACH
company

Business Environments
Payments product family suited to several environments:
o Financial Institutions
o Retailers
o Telecom operators (mobile and fixed-line)
o Processors
o Networks
o Independent sales organizations (ISOs)

Business Solutions
Driving ATMs
Performing card processing
Authorizing transactions (stand-in and full authorization)
Managing card production and PIN generation
Driving point-of-sale devices
Providing mobile and internet payment/banking
Switching transactions

Realtime
Core of installation
Realtime manages
o Online transaction processing
o Transaction security
o Integrity management
o Routing
o Card processing
o Currency conversion
o Batch reconciliation

Realtime Interfaces
Interact with external entities
Provide protocol translation
Provide terminal driving capability
o Source interfaces only
o AtmApp Diebold and NCR ATMs
o TermApp POS terminals

Realtime Consoles
Transaction querying
Terminal monitoring
Event logging
Transaction tracing

PostCard
Card management system
Provides the following services to issuers

o Card production management
o PIN management
o Card activation
o Validation and authorization services
o Risk profile management
o Not an account management system

Office
Transfers transaction data from Realtime to its own database
Provides post-transaction processing:

o Automatic reconciliation (match-and-kill)
o Extraction of transaction data
o Multi-party settlement including creation of payment (ACH) files
o Report generation

eSocket
Provides easy integration of third-parties with the S1
payments system
Components installed on foreign systems

Web servers and IVR eSocket.Web
Web-enabled ATMs eSocket.ATM
POS devices eSocket.POS
Enables systems to
Process EFT transactions (including EMV)
Switch transactions to Realtime

S1 Payments Solutions
Example Payments Solutions
ATM driving
Retail payments
Mobile prepay

ATM Driving
Monitoring and
configuration
Advanced-function ATMs Pager alerts
Issuing
Realtime banks
WAN
Office Networks
Conventional ATMs:
Diebold 911/912 Reports
Triton
Tranax
NCR NDC+ ATM processors payments system
Tidel

Retail Payments
Monitoring and
configuration
Pager alerts
Issuing
Realtime banks
WAN
Office Networks
Reports
POS with
eSocket.POS
Retailers payments system

Mobile Prepay
Monitoring and
configuration
Pager alerts
POS terminal Issuing

Realtime banks
WAN
Prepay host
Mobile Office
Network
Reports
Mobile phone
Mobile operators payments system

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Payments Basic Training

Module 1: EFT Overview

Copyright 2009. S1 Global Ltd. All rights reserved.

Copyright 2009. S1 Global Ltd. All rights reserved.

Copyright 2009. S1 Global Ltd. All rights reserved.

Copyright 2009. S1 Global Ltd. All rights reserved.

Copyright 2009. S1 Global Ltd. All rights reserved.

Copyright 2009. S1 Global Ltd. All rights reserved.

Payments System Overview

Copyright 2009. S1 Global Ltd. All rights reserved.

Evaluation and Certification

Copyright 2009. S1 Global Ltd. All rights reserved.

Copyright 2009. S1 Global Ltd. All rights reserved.

Copyright 2009. S1 Global Ltd. All rights reserved.

Entities in a Point-of-Sale (POS) Environment

Cardholder Merchant Acquirer (or merchant Card association Issuer

Copyright 2009. S1 Global Ltd. All rights reserved.

Entities in an ATM Environment

Cardholder Card acceptor Acquirer Network Issuer

Copyright 2009. S1 Global Ltd. All rights reserved.

Cardholder Issuer-owned ATM Issuer

Copyright 2009. S1 Global Ltd. All rights reserved.

Cardholder Acquirer- Acquirer Network Issuer

Copyright 2009. S1 Global Ltd. All rights reserved.

Copyright 2009. S1 Global Ltd. All rights reserved.

PAN primary account number

Copyright 2009. S1 Global Ltd. All rights reserved.

BIN bank identification number

Copyright 2009. S1 Global Ltd. All rights reserved.

IID individual account ID

Copyright 2009. S1 Global Ltd. All rights reserved.

Cards Check Digit

Luhn formula (Modulus 10)

Copyright 2009. S1 Global Ltd. All rights reserved.

Copyright 2009. S1 Global Ltd. All rights reserved.

Copyright 2009. S1 Global Ltd. All rights reserved.

Copyright 2009. S1 Global Ltd. All rights reserved.

5412345678901234 = 0612 101

PAN (max 19 digits)

Copyright 2009. S1 Global Ltd. All rights reserved.

Credit Card Statistics

2008 Visa Transactions in US

Copyright 2009. S1 Global Ltd. All rights reserved.

Also known as EMV cards

Copyright 2009. S1 Global Ltd. All rights reserved.

Supports the same routing mechanism as magnetic stripe

Copyright 2009. S1 Global Ltd. All rights reserved.

Chip Card Statistics

Copyright 2009. S1 Global Ltd. All rights reserved.

Copyright 2009. S1 Global Ltd. All rights reserved.

Not-on-us ATM Transaction

Cardholder Card acceptor Acquirer Network Issuer

Copyright 2009. S1 Global Ltd. All rights reserved.

Not-on-us POS Transaction

Acquirer Network Issuer

Copyright 2009. S1 Global Ltd. All rights reserved.

Realtime and External Entities

Downstream Source interface Sink interface Upstream

POS device Store server Realtime Network Issuer

Copyright 2009. S1 Global Ltd. All rights reserved.

Copyright 2009. S1 Global Ltd. All rights reserved.

Draft Capture Protocols

Copyright 2009. S1 Global Ltd. All rights reserved.

Draft Capture Protocols