Smart Card Based Solution [Micro Finance].

XIPHIAS provides a universal platform for smart card transactions. XIPHIAS enables direct payment transactions whether in on - or offline mode without requiring authorization from a third party.

The following paragraphs describe a complete financial cycle of the XIPHIAS Funds Transfer Concept.

Obtain Funds

Once the client card has been issued and personalized by the issuer bank, the cardholder can load purchasing power (pre-authorize the card with a certain value using PIN 1) onto the card depending on the availability of funds on his/her account. This transaction can be carried out either with the help of a bank teller or by the cardholder at any online self-service terminal, ATM or over the Internet and even remotely in off-line mode.

Purchase

When the client makes a payment using a smart card at a point-of-payment terminal, the purchase amount is debited from his/her card and credited to the merchants card. The clients card account balance decreases by the respective amount and the merchants card account balance increases accordingly. Both cards register all the details of this transaction. It is important to point out that the merchant does not need to check the customers solvency since the transaction would not be processed if there isnot enough purchasing power on the card.

Deposit Funds

At the end of a working day, the merchant can visit the bank or use the terminals modem or any other online device to transfer the accumulated funds from his/her card to his/her account. The encrypted list of transactions is transferred from the merchant card (not from the memory of the POS terminal) to the banks XIPHIAS card management system.

Settlement

The acquiring bank settles all the merchants transactions via a clearing/settlement system with the issuer banks which then transfer the money from the respective client accounts. After the merchant has transmitted the encrypted transaction list, his acquiring bank decrypts the merchants part of the transaction and sends the clients part of the transaction to the issuer bank to clear the transaction(s). If both documents/certificates stand the test of comparison and contain the same information (amount of money, card number, date, etc.) the transaction will be settled. It is important to note that during all this time the real monetary resources remain at the banks disposal or better yet stay in the banks vaults (in the case when both the payer and the payee keep their money in one and the same bank).

Business Context

Governments and municipal agencies all over the world are increasingly facing the pressure to reduce costs and improve services. Citizens who have become accustomed to profit from the Internet and digital services in their private lives, are demanding the same convenience in the public sphere. E-Government is certainly an efficient way to reduce administrative costs, to involve and engage the community through greater accessibility and enhance existing services. But it also poses security concerns. The identification and authentication of individuals accessing services online is still the most controversial issue in discussion. Private data and public information are sensitive, it is therefore crucial to know that people are really who they claim to be. The security features of smart cards such as digital certificates, cryptographic transactions, personal identification numbers (PINs) and passwords provide sophisticated protection against fraud, loss, robbery or counting errors thus ensuring that sensitive information is viewed and processed only by authorized users. As smart card payment technology continues to improve, more and more governments in developing countries worldwide are automating their retail and corporate payment processes in order to enable cashless payments to government and municipal institutions.

Microfinance based on Smart Cards

In many developing countries microfinance scenarios have become a profitable business scheme as microfinance institutions worldwide have shown that poor, unbanked people are creditworthy and that the daily micro savings of a mass population can accumulate into substantial amounts of money generating a profitable money float for the microfinance institution. In general, microfinance is the provision of a broad range of financial products such as deposits, loans, payment services, money transfers, insurance and others to low-income households and, their micro enterprises which are usually concentrated in rural and thus more underdeveloped areas. Client access and efficient provision of banking products in rural markets, usually fails through missing branch infrastructure which in turn is the result of a low populated environment. One of the core problems for banks is high transaction and service costs. Creating the necessary branch and service infrastructure to reach a large number of small borrowers who require credit frequently and in small quantities, requires large investments in service outlets and personnel.

Benefits

• Provision of customized financial services to low-income households in rural markets that would otherwise remain unbanked.
• Establishment of a low-cost agent-host network in areas lacking the necessary infrastructure through the use of smart card technology.
• Provision of mobile, manageable and transparent last mile delivery channels through field agents.
• Architecture soundness guaranteeing secure, uninterrupted and fault tolerant system operation.
• Improved system reliability due to usage of distributed server resources and a combination of online and offline transaction processing .
• Lowest total cost of ownership consisting of costs of infrastructure, transactions and operations.
• Reduction of all manual procedure generating immense paper work and manual error.
• Increased speed of operations: Transactions that usually take a couple of minutes each can now be done in just a fragment of time.
• Reduced administration costs due to automation of process flows.
• Easy and convenient monitoring of financial operations viewable with a pocket sized Value checker, at ATMs or banks as often as required.
• Dynamic information on customer behavior and habits.

Benefits

• XIPHIAS is a system that is easy to maintain, operate and administer and can be interfaced/integrated with existing back-end systems.
• XIPHIAS offers up to 8 different card products on 1 card, dual PIN protection and offline payment functionality.
• XIPHIAS supports multiple payment schemes (pre-authorized, pre-paid, debit, credit, etc.).
• XIPHIAS provides a technological foundation for a cashless society via EFT (electronic funds transfer) and is the key for secure transactions involving authentication and the exchange of sensitive data and private information.
• XIPHIAS provides full control of all system parameters - no information leaves the country ever; no fees paid outside the country ever.
• XIPHIAS offers full traceability of transactions for automated creation of government reports thus reducing administration and monitoring costs.
• XIPHIAS reduces the total cost of ownership on transaction and operating cost (telecom infrastructure, wireless connectivity and online connection time are not required).

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