The $10 Trillion Prize: Book by BCG

Captivating the Newly Affluent in China and India

New Consumers, New Opportunities

Consumers in India and China are the new kings and queens of the global economy. They have fast-changing tastes and appetites, and they are transforming the world with their consumption. Consider the following facts, which provide a snapshot of what the opportunity is for the rest of this decade:

• There will be nearly one billion middle-class consumers—some 320 million households—in China and India by 2020. They are demanding “more, better, now” for themselves and their children.

• The number of billionaires is rising: in 2001, China had 1 billionaire and India had 4; today, there are 115 billionaires in China and 55 in India.

• The two markets will give rise to some of the world’s most powerful companies. China already has three of the world’s top ten companies, ranked by market value: PetroChina, China’s ICBC bank, and China Mobile.

• Some eighty-three million Chinese and fifty-four million Indians will become college graduates over the next ten years. Over the same period, the United States will see just thirty million new college graduates.

• The rapid growth in both China and India has led to enormous growth in the consumption of the building blocks of households—from copper to corn to chicken to coal—plus almost every other ingredient important to better lives, particularly a diet higher in protein but also vertical dwellings with modern conveniences and vehicles of transportation of all kinds.

Consumer markets of China and India will triple over the current decade and amount to $10 trillion annually by the year 2020.

We also build on the insights drawn from our prior work on consumer needs, including research that we published in the books Trading Up: The New American Luxury (2003); Treasure Hunt: Inside the Mind of the New Consumer (2006); andWomen Want More: How to Capture Your Share of the World’s Largest, Fastest-Growing Market (2010).

In Trading Up, for example, we identified the trend among middle-class Americans to buy more expensive goods in a handful of product categories and to become expert in the art of consumption—looking for technical, functional, and emotional benefits in products and services. Over the past two years, we have traveled throughout China and India and seen many parallels. Chinese and Indian consumers are also hungry for product information—they want to understand the back stories of products and their creators. They are allocating their budgets to achieve a visible level of affluence in many categories of goods and cutting corners in others to achieve necessary savings. The Chinese and Indian consumers are ambitious and dream big. They understand technical and functional differences and love to “ladder up” emotionally. They love to tell their friends about their shopping adventures and to celebrate their purchases.

The $10 Trillion Prize is based on both qualitative and quantitative consumer research. We studied Chinese and Indian consumers in their homes, meeting their families and discussing their current and anticipated lifestyles. We probed them about their diets, their purchases, their histories, and their hopes and dreams. Readers will get to know the new generation of consumers, including the brilliant student we call “Mr. Number 19” because of his ranking on the highly competitive entrance exam to the Indian Institutes of Technology; the determined thirty-three-year-old woman from Shanghai who already makes more than fifty times as much as her parents did and still wants more; and the fifty-nine-year-old rural Chinese woman with three years of formal education who has built her home brick-by-brick and constructed a garage for the car she would like to buy one day.

Readers will also get to know the new generation of corporate titans—Chinese and Indian entrepreneurs who are thriving by meeting the needs of the newly affluent consumers—including Frank Ning, who runs Cofco, one of the world’s biggest food processing companies; Adi Godrej, chairman of the Godrej Group, one of India’s biggest consumer goods conglomerates; and Anand Mahindra, vice chairman and managing director of Mahindra & Mahindra, India’s major manufacturer of tractors and low-cost—and now global—sport utility vehicles.

The Promise of the Book

The $10 Trillion Prize is written for leaders who need a better understanding of the consumers in China and India. It carries ten key messages:

1.For the first time, we calculate the size of the prize: the $10 trillion that Chinese and Indian consumers will be spending on goods and services in 2020. Over their lifetimes, Chinese children born today will consume nearly thirty-eight times as much as their grandparents did, while Indian children will consume nearly thirteen times as much as their grandparents did.

2.We describe the driving spirit of the consumers: their ambition, their energy, their confidence, their optimism. As a young Chinese woman told us, “I want two houses—a house in the city and a house in the country. I want two children. And I want to send them to school in America. I want beautiful clothes, a handsome, educated husband, and time to enjoy it all.”

3.We stress the need to segment and target these consumers—not only by income but also by region, city, rural community, and gender. The great engine of change is the rising middle class: by 2020, an astonishing 320 million increasingly affluent households whose nearly one billion members will be following their dreams and, in so many ways, emulating Western consumers. In addition, there are the millions of poor, now moving beyond survival, as well as the superrich (more than 1 million households), now joining the global elite. But it is not enough to divide consumers by class. To survive in the big city, you need more income, more hustle, and a tolerance for long commutes. As we will see, middle-class consumers in a megacity such as Beijing or Mumbai can exhibit altogether different patterns of behavior than those in smaller cities. You need to understand these consumers, personify them, and cater to their individual needs.

4.We recommend the adoption of a paisa vasool—literally, “money’s worth”—strategy. Chinese and Indian consumers will be hungry for material goods over the next decade. They will want more than they can afford. Their income growth will be substantial, even if they will still end the decade earning only 10 to 25 percent of Western incomes. They will want goods with full features, luxury elements, and reliability. To serve these consumers, you will need not only raw material and packaging innovations but also a comprehensive, low-cost business model. And these will be transferrable to other markets because consumers around the world will want products that do not compromise on features, ingredients, design, or value.

5.We urge the importance of “local, local” customization. These consumers need to have products and services that are tailored to them—and them alone. If they are rich or poor, if they are urban or rural, if they live in a big city or a little city, if they live in the north or the south, if they are educated or illiterate—all of these factors matter and require refinements to the product and the way it is designed, packaged, and sold. China and India are markets with heterogeneous populations demanding locally customized products.

6.We identify the accelerator mind-set. Speak to entrepreneurs in China or India, and they talk of their ten-by-ten strategy of growing tenfold in ten years. If this sounds extraordinary—even unattainable—in the West, it sounds perfectly rational in the East. Today, in China and India, there is a determined, can-do attitude, and the word impossible is not one commonly heard on the lips of business leaders. Strategy is as they see it: a big-picture vision, colossal dreams, and no limits on opportunity. They do not feel beholden to anyone or bound by text-book business rules and the constraints of commonly held business logic. They start with a clean slate, focus on a specific opportunity, scale up or refocus as needed, learn by doing, and drive relentlessly forward.

7.We introduce the notion of a boomerang effect. The impact of more than two billion consumers wanting more—more foodstuffs, water, housing, transport, luxury goods, education, and health care—will be inflation in supply-constrained commodities, price volatility, scarcity of some resources, and hypercompetition to meet consumers’ needs. The boomerang effect will spread far beyond China and India.

8.We warn of the hit-the-wall scenario. What if China and India do not continue on the path of marvelous straight-line growth? Political instability, natural disasters, bursting asset bubbles, rotten and corrupt institutions, the failure of government entities to invest in the future—each of these could cause projections of growth to veer dangerously off course, with cataclysmic consequences for China, India, and the companies that are pinning their hopes on the new and dynamic generation of consumers. This is why we say that it is important to factor these risks and hazards into any scenario planning process. It is important to be alive to the possibility that the story of “Asia Rising” could change into the story of “Asia Uprising.” The successful future development of China and India depends upon the ability of their leaders and citizens to solve many difficult challenges.

9.We portray the left-behinds—millions of people who, for all the success of the Chinese and Indian economies, remain disconnected and disgruntled with their lot. For now, they offer limited commercial opportunities, but they could offer the prospect of a second wave of growth as the Chinese and Indians pursue policies to foster social harmony.

10.We maintain that there is no inevitability about the decline of the West. We are profoundly optimistic—yet, we think, measured and realistic—about the opportunities in China and India and the positive impact on the global economy, on companies, and on individuals. It was not so long ago that political commentators and historians were talking about the triumph of the West. Now they are talking about decline and the fall of the American empire. But we do not consider this likely. On average, American and European consumers are vastly richer than Chinese and Indian consumers—and this is not going to change anytime soon. If Americans and Europeans adopt the accelerator mind-set, opportunity and growth will rebound. We believe that the consumer revolution isawinner for all, a force for good that can benefit everyone. The new interactions between East and West are energizing, enlightening, and empowering—and ensure that companies and their leaders look far beyond the horizon to a world of infinite possibilities.

We hope you use this book to see the market opportunity in China and India through the eyes of consumers moving from D income to C income, from C income to B income, and from B income to A income. We offer a checklist of requirements for success along with our assessment of risks and how to mitigate them.

The Structure of the Book

The $10 Trillion Prize is arranged in three parts, which are preceded by an introduction (chapter 1).

n chapter 1, we tell the story of the dramatic growth in consumption and quantify the size of the commercial opportunity: the $10 trillion in annual spending that the consumer markets of China and India will generate by the year 2020. We explain how consumers’ rising income—which takes them, in many cases, from subsistence to middle class—seems like the wheel of fortune: they truly feel as though they have won the jackpot.

We draw on BCG’s proprietary studies of Chinese and Indian consumer attitudes and take a panoramic view of the new generation of spenders, exploring the underlying passions and preferences that influence their buying behavior. These consumers have high aspirations, are optimistic about the future, and are eager to enjoy their first taste of affluence.

In part I, “The Rise of the New Consumer in China and India,” we identify the fortunes to be made at the top, middle, and bottom of the income pyramid. We contend that to really succeed in China and India, you must know everything there is to know about the new consumers, which means dissecting the markets into segments based on wealth, education, attitude, geography, age, and gender. The analysis is based on BCG’s proprietary market segmentations of the two countries.

In chapters 2, 3, and 4, we examine the rising middle class, the superrich elite, and the vast hordes of “left-behinds.” In chapter 5, we take the reader on a virtual tour around the countries, traveling to the cities and the rural districts. We describe two revolutions: one relating to infrastructure, the other to agriculture. In chapter 6, we examine the development of the female economy in the two countries.

Part II, “Preferences, Appetites, and Aspirations,” digs deeper, providing detailed portraits of the new consumers as they go about their daily lives—as well as the companies that serve them with the right products at the right price and with the perfect mix of ingredients, design, and packaging. Chapter 7, “Food and Drink,” focuses on the different tastes of the new consumers and profiles companies meeting the demand, including Kraft (Oreo cookies), Tingyi (noodles), Cofco (French wine), PepsiCo (Kurkure), and Pernod Ricard (green tea and Chivas Regal whiskey). We describe the key turning-point decisions made by these companies’ top executives to change the formulation, distribution channel, or marketing of their products to reach new consumers.

Chapter 8, “House and Home,” examines the rise of home ownership and the companies meeting the need for financing (HDFC), decoration (Asian Paints), and household appliances (LG Electronics). Chapter 9, “Luxury,” looks at the new consumers’ growing appetite for expensive goods and highlights companies such as LVMH and Gucci (leather goods, watches, and apparel) that are capturing market share. Chapter 10, “Digital Life,” investigates the lives of the digital generation, examining how consumers are using the Internet and mobile devices, and how companies such as Bharti, Airtel, Taobao, and Nokia are prospering by meeting these consumers’ needs. Chapter 11, “Education,” focuses on the thirst for knowledge, with parents going above and beyond to pay for schooling that will give their children a head start in life, and students—including superachievers—who are prepared to dedicate their lives to fulfilling their parents’ dreams as well as their own.

Part III, “The Lessons for Business Leaders,” draws together the take-aways from the corporate stories in The $10 Trillion Prize. Chapter 12, “Paisa Vasool,” examines one of the most powerful strategies for success in China and India, as well as in the rest of the world. Chapter 13, “The Boomerang Effect,” looks at the global impact of the race for resources. With more money, consumers have started to spend as never before, and this has driven up the demand for food, water, copper, iron ore, cement—the building blocks of modern life. This increased demand is giving rise to the boomerang effect—price volatility, inflation, and the disruption of comfortable expectations in the West. Chapter 14, “Fast Forward,” introduces the accelerator mind-set and features profiles of business leaders and company founders whose approach to business and life explains their good fortune and provides a useful model to foreigners looking to replicate their success. Chapter 15, “The BCG Playbook,” reflects on the size of the commercial prize and features BCG’s guide to captivating the newly affluent consumer.

The $10 Trillion Prize concludes with an epilogue that sets out the opportunities for individuals in the West—the original consumer kings.

India, China consumer market to touch $10 trn: BCG

China and India combined will add up to a $10 trillion consumer market by 2020, says 'The $10 Trillion Prize', a book by Boston Consulting Group (BCG).  The book further says that consumer spending in China and India will triple by the end of the decade.

According to Boston Consulting by 2020, Chinese consumers will spend $6.2 trillion annually on consumer goods while Indian consumers spend would be around $3.6 trillion. It also said that the newly affluent group and the growth in the middle and upper classes will act as a catalyst for the consumer boom.

The book also finds that China which had only one billionaire in 2001 witnessed a tremendous growth and the number grew to 115 by 2012. Similarly, the number of billionaires in India grew to 55 in India from 4 in the year 2001.
The book written by BCG consultants Michael J Silverstein, Abheek Singhi, Carol Liao, David Michael also said that China already has three of the world’s top 10 companies by market value. According to the authors, China and India represent both a $10 trillion prize in themselves, and the gateway to global success.
In 2000, there were eight Chinese companies and one Indian company in the Fortune 500. By 2010, there were 46 Chinese companies and eight Indian companies. Further, it said by 2015, around one billion people in the country would have cell phones. Around to $350 billion in payment and banking transactions will flow through those phones – more than the total Indian credit- and debit-card market today.
According to the BCG global consumer survey, 36% of Chinese and 19% of Indians expect to increase their discretionary spending over next 12 months.

http://business-standard.com/india/news/india-china-consumer-market-to-touch-10-trn-bcg/189325/on

RBI capped MDR on Debit Cards

RBI is prioritizing electronic payments to reduce the economy's dependence on cash. "India is the fifth largest in cash-to-GDP ratio and we are taking a series of steps on both retail and wholesale payment's side to reduce this," said deputy governor Chakrabarty . One of the interventions , he said, was the decision to reduce merchant discount rates (MDR) drastically on debit cards to encourage usage. The RBI recently capped MDR in debit card transactions to 0.75% up to Rs 2,000 and 1% beyond Rs 2,000 — a sharp cut given that debit and credit card MDRs have been similar in India so far.

Putting big data to work

Retailers in India are on the cutting edge of harnessing big data to predict customer behaviour

Ten years ago, if a marketer told you he has a mine of data on his consumers what would you imagine would be the source and size of this information? Well, it would be a compilation of data the consumer would volunteer to offer while filling up her credit/debit card application form, a snapshot of her mobile phone usage pattern and may be the information captured by the odd loyalty card offered by her favourite retailer or airline.

Today when he says he has data on the consumer, you can be sure it’s a veritable treasure trove. In the digital age, there is a string of footprints left behind by every one of us: If a consumer swipes her card somewhere you know what she is up to. If she browses through online stores, you can pick up clues about her shopping behaviour. If she downloads your brand application on her mobile, you know how much she is ready to splurge on value add-ons. Along with third-party information on web interactions, credit card transactions, demographics and the like, this data can help marketers paint consumer portraits, get a head start on the competition and win over markets in the process.

Welcome to the world of big data. Managed correctly, big data is a powerful resource to improve decision-making for every business. More so in retailing. The reason is simple: the more information a retailer has on his consumer, the better he is able to predict her buying behaviour. And, therefore, tailor his products and offers to suit her needs. In short, improve his chances of making a sale. “The marriage of mathematics and business knowledge has created the discipline of predictive analytics,” says Naveen Jain, CEO of TransOrg Solutions and Services, which offers analytics and campaign-management services to the clients in BFSI, retail, travel, online, telecom and healthcare sectors. “It has created new opportunities for future-oriented analysis of large amounts of data leading to actionable insights.”

Indeed, retailers in India — also, across the globe — are on the cutting edge of harnessing this data. If the first wave of data centred on the flow of bits and bytes, and texts and emails, the next wave is about knowledge and discovery, powered by intelligent, always-on services that make sense of the big mass of information flowing in through smart devices. More than the size or volume, the potential of big data lies in the kind of insights it can offer businesses and the kind of questions it can help answer. As a McKinsey Global Institute paper on big data, puts it, “The widespread use of increasingly granular customer data can enable retailers to improve the effectiveness of their marketing and merchandising. Big data levers applied to operations and supply chains will continue to reduce costs and increasingly create new competitive advantages and strategies for growing retailers.”

Mind you, the applications mentioned above are the final steps. Typically, there are three steps to data mining and interpretation, say experts—recognising what is happening, analysing the how and why it is happening and lastly leveraging the information. While a huge majority of the Indian market is still at the ‘recognising’ stage, according to Ankur Shiv Bhandari, managing director for the Indian subcontinent, Kantar Retail (part of the Kantar Group, the insight and consulting arm of WPP), there are a handful of retailers such as Lifestyle International, Pantaloon Retail and Trent that are working to harness consumer data from every available source to make their enterprises agile and hard to beat.

The shift, whatever the magnitude, has come on the back of the evolution of modern trade and electronic point-of-sale terminals that have made it easier to capture the data in the first place. “Earlier there was only the sales-in data available on the quantitative side,” says Bhandari. “That is, sales from the manufacturer to the distributor, or the retailer, were tracked. It is only now that sales-out, that is sales to the final consumer, is being tracked, making it possible to actually understand consumption patterns.” Says Uma Talreja, head, marketing, Westside, a retail chain operated by Trent, the retail arm of the Tata group, “The more consumer-centric your business, the more you can use consumer data for decision-making in the business. Several decisions can leverage consumer data—this includes store layouts and adjacencies, buying decisions, merchandising decisions, property selection, pricing decisions, sales mix etc.”

Companies may say that they have a lot of data, a lot of information or a lot of insight. But they must be wary of using the phrases interchangeably, says Bhandari of Kantar Retail. “It is an insight only if it holds true to the four Rs—reality (what is happening in the market), resonance (relating it to what you are doing), reasons (for why it is happening) and lastly reaction from consumers,” he explains. This will also help explain some of the challenges retailers are grappling with currently.

“Technology and storage aside, the challenge lies in efficient use of large complex data, finding meaningful relationships, analysing and creating useful and applicable and actionable business intelligence,” says Talreja. This requires enhancement of talent along with technology. “Businesses need to invest more in using the data and leveraging it as compared to the investment in collecting and storing it and use it for smart decision making. As data grows, it is critical for the business to be able to slice and dice the data to create information that help answer questions critical to the business,” she adds.

Even before the large format modern trade outlets started mushrooming, the local kiranas or the friendly neighbourhood mom-and-pop stores knew their customers on fairly intimate terms. Then, times were simpler and the sheer volume of transaction much lower. Today, as competition is becoming intense and customer needs and preferences more complex and difficult to predict, it is precisely this one-to-one relationship that big retailers are looking to emulate. Big data is their ammunition in this battle.

Winning consumers
“Indian companies are at different levels of data maturity — some companies are struggling to visualise their data while others are using predictive models and real-time analytics to drive their decisions. Agile analytics and campaign management tools used by new generation analytics companies have made analytics affordable for Indian companies,” says Jain of TransOrg Solutions and Services.

Loyalty programmes are a strong starting point for most retailers. They need not be restricted to just your own store. Consider Pantaloon Retail, the flagship company of Future Group. The chain tied up with Payback, a multi-partner loyalty programme around a year ago. This tie-up, as per Pawan Sarda, CMO, Future Group, helps the company look at its customers in a more holistic light. “We can understand a customer’s entire profile now — where he eats, how often he travels, what’s his fuel consumption like. This helps us in building a far more personalised relationship with him,” says Sarda. For him, the biggest application of data learnings can be the ability to predict a consumer’s behaviour and then personalising the solutions for him.

How can it be done? For instance, you find out — either from his online purchase data or credit card transactions—that your customer is travelling to the US in November. And you know he will need heavy woollens to brace up to the cold weather conditions. By leveraging this information accessed through a multi-partner programme, the retailer can design customised offers for him.

In fact, based on such transaction data, Pantaloon has actually created consumer profiles such as higher-trolley-load-low-frequency-of-visit, high-frequency-but-casual-shopper etc. Armed with this insight, the chain hopes to create personalised offers and experiences, something departmental store chain Shoppers Stop is working on as well.

Vinay Bhatia, customer care associate and senior VP, marketing and loyalty, Shoppers Stop shares an example. “When we looked deep into the First Citizen (the loyalty programme subscriber) base, we observed that customers who buy both men’s shirts and trousers, the average yearly spend is 60 per cent more than that of consumers who buy only shirts and three times that of those who don’t buy men’s shirts at all.”

Approximately 9 lakh customers were shortlisted for targeted ‘trouser communication’. This group of customers was divided into sub-groups based on purchase patterns and the group’s reactions to the various communication devices was observed. One group was given information on the variety available in trousers and new brand launches at the store, another was given offers on multiple trouser purchases. These customers were sliced into control groups to measure the success or failure of the promotion. With this equation in place, Shoppers Stop raked Rs 9 crore worth additional sales in a three-week period, a lift of 30 per cent, when there was no such coordinated effort.

Transaction data can also help with store layouts (more popularly known as adjacency analytics) and inventory management. Like, if more customers are buying a combination of belts and shoes, it would be a good idea to put the two items close by. A retailer can trigger purchases by simply putting some items simply close together. Even if the consumers don’t necessarily want the two together, putting them next to each other may trigger off an impulse purchase. Analysing consumer buying patterns can throw up some insights that may prompt a retailer to go as far as changing a store lay-out completely. Shoppers Stop, for instance, found that very often when ladies shopped for Indian clothing, the other item on their list was men’s innerwear. The company hopes to include its finding in the next round of changes it plans to make in the store layout.

From the point of view of the retailer such insights can offer perspectives on product bundling options to bolster sales. Sample this: onions and potatoes are a household staple and sharp price increases have begun to hurt. To spruce up lean midweek sales, food and grocery retailer, Big Bazaar, decided to throw in a kilogram of onions and potatoes free with every bill that adds up to Rs 999. While exact numbers are not available, the company says Wednesday footfalls have increased dramatically after the free offer was introduced.

While chains can push sales through pricing and promotion, they must also remember that consumers may simply wander off if they don’t get the right in-store experience. Monitoring consumers can help gain insights on improving shopper experience dramatically. “It (in-store monitoring) is not happening in India to the same extent as it is prevalent in the West. But quite a few are undertaking shopper behaviour studies,” says Bhandari. This helps one understand the occasions or motivations for buying products, activating these insights and mirroring them in a path to purchase. This can be done through store layout, on-floor instructions and graphics, clear demarcation of categories through storage etc.

The final victory for analytics will come in the form of real-time application. Analytics create opportunities for actions which may be offline or on a real-time basis. Says Devarajan Iyer, vice-president, marketing, Lifestyle International, “Big data aided with location-based technology can be used to update customers in store on the latest offers and shopping suggestion based on their previous shopping history.” He added that the chain hasn’t implemented it so far but is currently exploring this technology and its application for future use.

Here’s one more example of retail stores taking quick decisions based on real-time data. Surely you have come across stores that quickly open an additional counter at the tills whenever more than a certain number of customers are in a queue to pay for their purchases and check out. This is part of the in-store experience — it is based on the insight that even if the store sells the cheapest goods, a longer wait time at the point of purchase is a big put off and can actually customers to a rival. So chains like Big Bazaar and Spencer’s have put in place systems that monitor the traffic towards the tills — to make the check-out process hassle free they open up more counters during rush hours and then deploy the same set of people for other tasks as the traffic begins to wear off.

A corollary benefit of data analytics is the possibility of generating an alternative revenue stream. Retailers are the point of contact between stockists and consumers. Now, stockists of FMCG players such as HUL, P&G, Pepsi etc can benefit from the insights gleaned by retailers through their data. In fact, globally some retailers have even set up data services that sell the insights to FMCG players like Unilever, P&G, Nestle, Coke, Pepsi etc which benefit from this data driven insights in the ecosystem.

“As we trade a multitude of brands in our stores, our data is a rich source of information for them to understand the behaviour and spending patterns of the customers. Therefore, an opportunity for alternative source of revenue for big data is to allow brands to pay up for the access fees for this data. They, in turn, use this for targeting consumers for new brand launches, new season merchandise launches, understanding response to their latest product lines etc,” adds Iyer of Lifestyle International. He also says that Lifestyle does send out targeted communication on behalf of brands that it retails and charges them a fee to reach out to their “loyal” member base, without sharing any data with any external party.

Evidently, retailers are waking up to the potential of big data. “If you want to understand the transformations in the marketplace, you will have to understand and master analytics,” says Jain of TransOrg Solutions and Services. Those who have made an early start in capturing and trying to make sense of all the data will definitely enjoy an advantage but analysts say this is one area that is rife with confusion making it easy to lose sight of the true potential.

http://www.business-standard.com/india/news/putting-big-data-to-work/488072/

Visa Is Trying To Pave The Way For Safer Retail Credit Cards

Visa intends to pave the way for merchant acceptance of EMV credit cards with help from a new data encryption service that launches early next year.

According to company spokeswoman Ellen Richey, the payment platform provider intends to offer a point-to-point security solution that scrambles customer data at the terminal, reducing the likelihood of credit card fraud and identity theft.

Today's magnetic stripe credit cards date back to the late 1960s and early 1970s, a time when the prohibitive cost of processing tools was enough to deter criminals from stealing account data. Therefore, magnetic stripe data passes, "in the clear," from a merchant's card reader into their database, and over phone lines or Internet connections.

Visa's proposed solution eliminates those potential vulnerabilities by encrypting card information from the swipe to the database at the acquiring bank. Merchants get a payment "token" instead of actual cardholder account information, reducing the risk of internal theft. Likewise, a tapped analog phone line or a siphoned Internet connection will only give up useless, scrambled data under Visa's methodology.

P2PE secures future EMV credit cards

The point-to-point encryption network helps merchants comply with existing security regulations, while streamlining the process of accepting next-generation Visa credit and debit cards with embedded EMV chips. The "contactless" version of the EMV standard being adopted among most American merchants passes more information to Visa's network, including a security sequence that retailers can use in "offline mode." P2PE security safeguards this data, minimizing the risk that identity thieves can clone an EMV credit card.

Visa expects minimal impact to merchants during the P2PE rollout. In a statement to reporters, Visa officials confirmed that merchants could mix new terminals with existing payment systems by using a "format preserving" version of the platform during the transition period. Many Visa merchants already face a deadline within the next few years to upgrade their customer-facing payment tools to comply with the industry's EMV acceptance roadmap. Officials promised more details about Payment Card Industry compliance and technical specifications before the service's initial launch in early 2013.

http://www.businessinsider.com/visa-adding-retail-credit-card-security-for-2013-2012-9

Central Bank launches slew of credit and debit cards

Central Bank of India has launched a slew of cards in both debit and credit categories on the MasterCard platform apart from other innovative banking solutions.

The city-based state-run lender had introduced credit cards to the country way back in 1980.

It yesterday launched three debit cards (international shopping, platinum and a NexGen card for the 10-17 year-olds), two credit cards (world credit card, a co-branded one with the Indian Dental Association) and a student prepaid card for disbursement of scholarship in Chhattisgarh in the presence of Bank Chairman and Managing Director MV Tankasale here.

The world credit card comes with a bouquet of features like free air ticket, zero surcharge on petrol filling, loyalty points for every Rs 100 spent, airport lounge access, insurance cover and many more offers and value additions.

The bank also introduced on-line deposit products for net banking customers. Its debit card customers can now book railway tickets through the IRCTC platform.

http://www.moneycontrol.com/news/business/central-bank-launches-slewcreditdebit-cards_762425.html

HDFC Bank, DCI launch co-branded credit cards

 HDFC Bank launched an exclusive range of credit cards in association with Diners Club International, a business unit of Discover Financial Services. 
 The HDFC Bank Diners Club International Credit Cards are available in three variants – HDFC Bank Diners Club Black, HDFC Bank Diners Club Premium and HDFC Bank Diners Club Rewardz. 
 The Cards are tailored to complement the complex and fast-paced lifestyle of HDFC Bank‘s elite clients and offer a wide range of premium travel and lifestyle benefits. 
 HDFC Bank Diners Club cardholders would have direct and hassle-free access to the Diners Club Airport Lounge Program spread over 450 lounges worldwide, the statement said. 
 In addition, the Cardholder would be able to exchange global reward points for miles on major airlines and hotels. 
 The Cardholders would also have exclusive benefits and offers at Taj properties, Taj Safaris, Taj Air and Small Luxury Hotels Group. Additionally, the cardholders would be privy to instant global recognition reflecting their status and preferences through a dedicated and elite concierge program - HDFC Bank Diners Club Concierge. 
 While all of the cards are aimed at the elite customers, HDFC Bank Diners Club Black, the top-of-the-line card, is also the most exclusive card ever to be launched by HDFC Bank in India.

http://www.greaterkashmir.com/news/2012/Sep/27/hdfc-bank-dci-launch-co-branded-credit-cards-30.asp