‘;Business Policy Assignment

Dave Revinder Loekmanhadi 盧志偉 S09910604

0. Most of the people in the world are using credit cards. A small cards that fits in pocket
can be beneficial and make our live convenient. These cards could be use in every
merchants or transaction that accepts credit cards payment. There are 4 participants in a
credit cards payment which is the card holders, the merchant, credit card company and
card issuing bank.
First, the owner or individuals of card holder will swipe their credit card to make a
transaction from the merchant, and the merchant will give the product or service in
exchange of the payment by credit cards when the transaction approve. In this situation,
the card holders has a responsibility or knowledge that they will repay the bank of the
issuer after the credit cards bill issue. Beside that, The merchant will asks the issuer for
authorization .The issuer confirms that the account is operational and funded. Secondly,
The merchant's bank transmits transaction and authorization data to the card network to
wait for approval. In this situation the merchant also uses their techniques to validate the
purchase so that they will be not getting fraud. Thirdly, Credit card company whom
facilitate international transactions will accepting permission requests from the
merchant's acquiring bank. The card network will pass that information to the
cardholder's issuing bank for approval. The transactions list is sent to the acquirer for
processing by the merchant. Fourthly, The cardholder's bank or payment account
facilitator part which Payment authorization. Their requests will be sent to the originating
bank via the acquiring bank and card network. The purchasing bank receives an approve
or deny answer using the same channels. When the purchase is approve they will give
data to the issuer and charges with the card holder name. Lastly, The issuer transfers
funds to the purchaser. The funds are sent to the merchant's account. That is the operation
flow of using a credit card.

1. Because developed countries in Asia Pacific did not have or supply bank cards at the
time, they gradually transitioned to mobile payment. Because their smartphones lack
NFC (Near-Field Communication), this method of payment is not widely used in
developed nations such as Asia Pacific or Latin America. They have smartphones that
can handle C 288, which implies they can use QR codes, contactless stickers, and
magnetic secure transfer (MST).
Moving on to Square and PayPal, these two mobile payment services use payment
applications that can be downloaded and transmitted to users over the web. Square
provides small, complimentary credit card scanners that can be connected into a
smartphone's audio socket. This enables the consumer to make payments simpler . simple
means we can use it anytime and anywhere. These scanners enable cash-only merchants,
to accept major credit cards. Squares is one of the business of Silicon Valley's fastest -
growing digital startups in 2014 because they handled $ 30 billion in payments. Square
takes 2.75 to 3% of each transaction it conducts, but credit cards must still be divided.
Talking about PayPal , in 2017 , they have approximately 227 million active registered
accounts more than square. It tells that PayPal is more superior compare to square.
 Customers make transactions by simply inputting their phone numbers and a pin code, or
by using a PayPal-issued, magnetic stripe card connected to their PayPal accounts. Users
can link their PayPal accounts to their credit cards or bank accounts to connect directly.
They also offer Venmo, which enables peer-to-peer transfers via a Facebook-like
interface and is becoming increasingly popular as a means of exchanging money . So the
conclusion is that these two mobile payment systems need to rely on the services from
bank card and/or credit card companies.

2. M-PESA is Africa's most successful mobile money service and the leading fintech
platform in the area. M-PESA is the favored method of payment across the continent for
both banked and unbanked people. They allows anybody with a passport or national ID
card to deposit money into their phone account and transfer money to other users via
SMS (short message service). This financial mobile payment systems is developing into
other services such as international loan transfers and health services. This mobile
payment system doesn’t involved major credit cards companies like PayPal and peer-to-
peer just like Venmo. A mobile payment method that eliminates the need for credit card
issuers, possibly saving billions of dollars in transaction costs. in another word, it was
more financially friendly. Credit card companies and merchants thus both have high
incentives to influence the outcome. Besides all of the conveniences that they offer,
There is always a risk behind it. The biggest risk is about safety and security. For
customer their biggest risk about fraud. As we all know they using passport number and
national ID as their requirement, this allows their personal information to got leaked. This
definitely can make the consumer feel unsafe and unsecure. The other important thing
that concerns the consumer is about pervasiveness. For merchants, their biggest risks are
also about fraud and cost. In the cost point of view, it would bring confusion to the
merchant to distinguished between the system's fixed expenses and transaction fees.

3. In this case, it is mentioned that it is estimated that roughly two billion people worldwide
do not have access to financial services, and 31% of adults do not have a bank account.
In developing regions, such as Africa and Asia, the average of adults with bank
accounts is only 20%-39%. With that said, having a mobile payment system will help
eliminate this problem. With this, there is a possibility of one dominant mobile payment
system worldwide by 2030. Technology is advancing and will continue to grow rapidly
until 2030, especially in the banking industries . There are three key forces to become the
dominant mobile payment system by 2030. Firstly, the payment system needs to allow
users with no credit card to conduct transactions. This is because, in India and Africa, the
proportion of people with mobile phones exceeds the number of people with credit card.
A payment system allowing users to deposit money without a credit card will eliminate
the problem in developing countries. However, an option for credit cards will need to be
included since users from developed countries will appreciate having payment options.
Secondly, payment systems must allow users to send money across regions. With the
rising popularity of online shopping, payment systems will need to accommodate sending
money across currencies with the lowest possible fee to attract consumers. Without the
ability to send money across currency, it is impossible to become a dominant force as
people across the world conduct business. Lastly, payment systems must have a simple
interface and security measures. Using mobile payment systems should be a hassle-free
experience for users because the point of using them is to avoid having to bring numerous
 debit or credit cards to pay. The interface will be an essential factor as the complicated
interface will discourage users from using it and cause problems for less experienced
users, especially users from developing countries. Developing countries with little to no
exposure to financial services will have problems when sending and registering for the
application becomes complicated.
The dominant force will be companies like Alipay. Alipay is competitive as they have
established a user base. However, Alipay will need to accommodate the above forces and
try to improve its system. A contactless payment system that could be attached to apple
pay and google pay will be key, and reaching markets other than the Chinese market will
be crucial. Improving the user interface and establishing policy support will be critical.
Alipay will need to cooperate with banks worldwide and negotiate policies with countries
so it can be integrated into the systems worldwide.

4. SWOT Analysis of Master Card company

Strength Weakness Opportunities Threat

1.Implement the 1. Data leaked, As 1.These days the 1. There are a lot
latest payment personal trend are towards of other mobile
technology, they information needed Cashless and payment
keep following and to payments, digitalization. This competitors such
up to date the companies should is one of the as China union pay
trends such mobile ensure the safety of opportunities they and India’s RuPe.
payment. customer have where cashless
information economies 2. Hacking
2. Convenient and significantly problem, because
easy to use, it can 2. WIFI or Signal increasing. Master cards could
be use anywhere matters, if there is be use in mobile
and every time. no signal or 2. The increase of payment, it raise a
internet there could Online shopping safety concerns.
3.Access to many not be any make customer to
discounts and transaction happen. more often using
promotion MasterCard

3. Digital currency
also famous in these
few years and it
makes MasterCard
as one of the
payment system to
buy digital
currencies.
To stay relevant, MasterCard will need to cooperate with major companies and online shopping
retailers to promote the usage of credit cards. An advantage MasterCard currently have over
mobile payment companies is the reward point system that they established. Partner companies
such as airlines and cash back could boost its popularity. Furthermore, a key factor is to follow
digital trends and shift its business model towards digital banking. To combat mobile payment,
which is based digitally, MasterCard would need to maintain relevancy through creating a digital
ecosystem that will replace physical cards. My recommendation will be to start by integrating
credit card platform to consumers everyday life. For example, Master Card will have competitive
advantage in creating a more advance app-interface hence they could add mobile payment
functions that currently is not available for MasterCard holders. Functions like paying bills,
creating loans, buying tickets and budgeting will be a few functions to start with.