EMV Authorization Host Overview v1.0

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SPECTRA Technologies Holdings Co. Ltd.

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SPECTRA EMV Authorization Host

Over decades, vastly expanded uses of card payment such as magnetic swipe cards and smart

cards have already dominated the payment methods. While EMV chip card, with greatly

enhanced security, will also definitively become the widest-use payment media in market in

the short future.

When faced to the continuously rising and demanding usage of card payments, doubtlessly, as

an acquirer organization, the following concerns strongly urge for a comprehensive solution:

1. Security (fraud prevention)

2. Card Transaction Performance (time to authorize a card and to complete a transaction)

3. Cost (both implementation cost and on-going cost)

To take care all of the concerns raised, we come to a qualified Authorization Host.

What is Authorization Host

Authorization is the process by which card issuers, usually VISA, MASTERCARD, JCB, DINNERS,

and AMEX, either approve, refer (directing the agency to contact specified Card Authorization

Organization for further instructions, e.g. Onus Cards) or deny request to accept or reject

transactions. Approval is based on the validation of the account number and expiration date or

some authorization schemes like hot card list to verify that a cardholder’s account is activated and

the card is secure to be trusted.

Authorization Host is exactly a physical server which handles the tasks of the authorization

process mentioned above, with connection to the point-of-sales devices and the authorization

issuers (PSTN or TCP/IP) in the middle.

The authorization requests come from point-of-sales devices when sales transactions are made.

The host then decides what the appropriate authorization issuers should be routed to for

authorization (if it’s a Stand-In request, the host will validate the card based on the pre-loaded

hot card list in the host database), and finally either approves or denies the requests for the

transactions.




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SPECTRA EMV Authorization Host

SPECTRA EMV Authorization Host, our card authorization solution product, with EMV standards

merged, provides a secure and high-speed management for card transaction authorization.

The online authorization process completes an authorization request just in a matter of

seconds. The Host also supports various interfaces like handling OnUS Cards by just

plugging-in a related customized software module. The solution implementation is quick and

the host management is easy.

Physical Network Structure:

EMV Authorization Host Solution

(1) EMV Authorization Host Application Server

A server grade PC, which is installed in Acquirer site and connected to the network. The functions of theEMV Authorization Host include card authorization services, database, communication services, etc.




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(2) Network Access Controller (NAC)

Networking device, which is installed in Acquirer site and connected to the network. The NAC

provided Multi-protocol POS Terminal dial-up access.

VAP, MIP , JIP S…

Authorization lines for each credit card international organization, which are installed in

Acquirer site already.

PSTN/ GPRS

Fixed line or mobile public telephone network, which is using for POS Terminal dial-up access.

Issuer Networks

A secured data network provided from Issuer for the data exchange.

Interior Software Modular Architecture:




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Communication P rotocol

TCP/IP and x.25 both supported by EMV Authorization Host for data exchange to/from POS

Terminal and Issuer Network.

Core Modular

(1) POS Modular

Handle requests & responses from/to POS Terminal.

(2) Merchant Inspector

Validate the merchant & terminal information.

(3) Transaction Data

Transaction logs, keep track all the transaction data.

(4) Settlement Data

Settlement logs, keep track all the settled transaction data.

(5) Routing Modular

Depends on the card type to route the transaction to the corresponding issuer.

(6) Timeout Modular

A control of timeout in forward message transmission is disclosed, by which a continuous

network transmission delay can be adaptively handled.

Interface Modular

Interface between EMV Authorization Host and each Issuers. EMV Authorization Host

supported 5 major credit card international organizations such as VISA, MasterCard, JCB

Card, AMEX and Diners Club. System also provided a tailor-made modular (OnUS) for the

Acquirer to handle their own cards and a modular (StandIn) for handle the offline

authorization.




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Authorization Flow Description:

Credit Card Authorization Process:

(1) Card information is captured from the card (magnetic stripe, smart card or EMV chip card)

through a point-of-sale terminal, or by data entering the card and payment information

into the agency's payment device (e.g., PC-based software). Information from the card

(e.g., card type, account number, expiration date) is combined with information about the

transaction (e.g., dollar amount) to create the authorization request.

(2) The agency's payment device connects to SPECTRA EMV Authorization Host and transmits

the authorization request via one of the five communications methods (i.e., dial-up, leased

line, host-to-host, ISDN or wireless).

(3) SPECTRA EMV Authorization Host recognizes the authorization request as being for a Visa,

MasterCard, JCB, American Express, Diners or OnUS card. The request is transmitted to

the appropriate association, which, in turn, routes the request to the member bank which

issued the card.

(4) The card issuer (Issuing bank) verifies that the cardholder's account is valid, and that the




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amount of the transaction is less than their remaining credit limit (if such a credit limit

exists). The approval (with authorization number), referral or declination is transmitted

directly back to SPECTRA EMV Authorization Host.

(5) SPECTRA EMV Authorization Host transmits the response to the agency's payment device.

(6) The cardholder is made aware if the transaction is approved or denied. If approved, a

confirmation number (which can be the authorization number) is typically provided to the

cardholder.

From the cardholder/agency perspective, this process is seamless, taking only seconds for

completion.

Our long history of electronic transaction management with high reputation in the industry, as

well as our rich development experience reward our customers with a reliable and low-cost

system.

By minimizing losses of frauds (charge back cases) and enabling our customers to benefit from

the low operation cost of electronic transaction authorization, SPECTRA EMV Authorization Host

remains the best choice for our customers. Functionality

Host Processor Authorization. In normal situation, our Host routes the transactions to

appropriate issuing association for authorization decisions. If the connection is failed or the remote

issuing association is unavailable, our Host can stand in and authorize transactions using limits

and other criteria defined by the acquiring financial institution previously.

Stand-in Authorization. In Stand-in mode, our Host authorizes transactions on behalf of the

unavailable issuing association for the moment. Before authorizing a transaction, our Host reviews

the preloaded cardholder file (hot card list) and specified limits (floor limits), and transaction data

check options to approve or deny the transaction according to the agreed specifications provided

by our acquiring customers. Without requiring a full-time online linking to acquirer host system,

our Host creates and sends a batch-posting file at the end of each settlement day for reference.

Hot Card/ Card Activation service. Web-based Interface is provided to users to import hot cardlists and floor limit definitions. Also specific card activation is allowed by the interface. Hot card




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and floor limit guarding helps protecting cardholders and our customers’ financial institution from

potential fraudulent activity. The hot card list and the floor limit definition can also be exported for

reference.

Monitoring, Queries and Reports. Web-based interface is provided to users for monitoring

approved or denied transactions and approval history, responses from approval associations, hot

card and floor limit definition details and management history and users accounts and privileges.

Queries about all the type of data mentioned can be made through interfaces. Analytical reports

and exceptional reports are also provided.

Administration and Housekeeping. Web-based Interface is provided to users for system

configuration and user accounts and related privileges management. Privilege can be set to restrict

users’ activities in different areas like transaction approval history monitoring and hot card

management. Our System provides secondary backup host and disk mirroring for database backup

to minimize the down time for any host down cases.

Communication Interface Support. For the low level data communication protocol, our Host

supports TCP/IP and X.25. As for the authorization association communication interface, VISA,

MasterCard, JCB, American Express and Dinners are the basic modules. Extra modules can be

plugged-in like OnUS cards according to the acquiring bank specification given.

System Capacity

Capacity:

@EMVHost may process up to 130* transactions in the same time.

Performance

@EMVHost may process up to 33* transactions per second.

*Note: The number of transaction varies by processing type

Business Value and Benefit of Authorization Host Service Reduce Processing Costs. Single-point connection to our Host enables customers to consolidate

all of card-based authorization processing on an integrated platform, reducing telecommunication

costs, eliminating redundant functionality, and streamlining back-office procedures, resulting inbetter controlling, monitoring and management of authorization process.




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Provide Stand-In and Hot Card Checking. Stand-In authorization is allowed. With preloaded

hot card and floor limit checking, it reduces the workload of acquiring bank (for OnUS cards)

authorization processing system. The processed (approved or rejected) transactions can be

redirected to acquiring bank at the end of each day for reference. Moreover, the stand-in host is

also suitable for those merchants which daily transactions are huge, so that the workload of

acquiring backend system in the business peak hours is alleviated. Serve Around the Clock. Serve cardholders wherever and whenever they transact business.

Strong processing response time enhance cardholder satisfaction.

Low Cost. We reward our customers with a low implementation cost.

Proven Service. Our long history of electronic transaction management with high reputation in

the industry and our experienced technical support and customer service team ensure our

customers to achieve any goals on card authorization solution.

Minimum Hardware & Software Requirement EMV Authorization Host Server

Hardware - Server Grade PC (Intel Pentium 4 CPU or above)- 2GB Ram (Main Memory)- 160GB Hard Disk

Software - Redhat Linux AS 4 (Operating System)- Oracle 10g Database

Network Access Controller (NAC)

- Multi-protocol POS dial access support

- Providing a full suite of uplink connections to support POS hosts requiring support of X.25 or

TCP/IP protocols

~ End Doc ~

EMV Authorization Host Overview v1.0

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