March, 2002 June, 2002 POSLink series Serial-Ethernet connectivity for credit card payment terminals SENA

Contents Embedded Connectivity The Market Opportunity POSLink 100/400 Benefits System Configuration Technical Details: –Technical Specification –Software Architecture –Hardware Architecture System Comparison –Legacy off-line payment processing system –IP-based off-line payment processing system References Target Customers Implementation Issues

The Market Opportunity Broadband Service Providers (in South Korea) –25M Internet users, 8.9M Broadband households nation-wide (70% of total households, DSL 5.6M, Cable 3.3M), 45M population –USD20~30 per month –Three major providers for DSL & Cable Credit Card Processors (in South Korea) –10 processors nation-wide –1.5M payment terminals in the market –Very competitive market Limitation –Still locked into dial-up or proprietary leased line –Long processing time for dial-up: 20secs –High monthly service charge for leased line: USD50+ per line per terminal

POSLink 100/400 Internet Merchant Location Credit card Processor Location Payment Processing Server POSLink 100 POSLink 400 Payment terminal Merchant LAN Or Broadband line A box for IP-based off-line credit card payment processing

POSLink 100/400 Secure transaction –Full SSL Data Encryption for secure credit card transaction Lightspeed transaction –Overall processing time less than 2 secs Multiple terminals with single broadband account (POSLink 400) Remote firmware download & monitoring for payment terminals Extremely low transition cost Out-of-box installation without any modification of existing devices: Just hook up & go Platform alternatives –Firmware based platform with 16bit microprocessor –Linux based platform with 32bit microprocessor

Benefits Broadband Service Providers –Looking for new revenue sources –Saturated market for households and small offices –More than 1.5M new subscribers that are POS terminals and still increasing Credit card processors –Strong needs to provide quality services to dominate market –Easy system maintenance with Internet-based remote device & system management –Seamless integration of on-line and off-line payment system –Generate new revenue model with Internet-based services such as on-line lottery & joint promotion with merchants Merchants –Lower monthly cost for credit card transaction –Fast credit card payment processing time –Easy installation and relocation of payment terminals

System Configuration Enable serial-line based credit-card payment terminals to be connected to Ethernet or broadband Internet Transaction via TCP/IP with SSL encryption Payment Authentication Server Internet ADSL/Cable modem HUB Request payment authentication Initiate payment transaction Approve payment transaction Notify transaction complete ADSL/Cable ISP

Technical Specification Embedded Connectivity POSLink 100POSLink 400 POS Terminal Interface Serial 1 portSerial 4 ports Serial speeds: 1200bps to 19200bps Flow Control: Hardware RTS/CTS Signals: Rx, Tx, RTS, CTS, DTR, DSR, GND Network Interface10 Base-T Ethernet with RJ45 Ethernet connector Supports static and dynamic IP address ProtocolsARP, IP/ICMP, TCP, UDP, Telnet, DHCP client, PPPoE SecurityUser ID & Password Data Encryption: SSL ManagementManagement Tools: Serial console port Firmware: Stored in Flash memory and downloadable via serial console or telnet LEDsPower, Ready, 10 Base-T: Link, Act Serial: Rx, Tx for each serial port PowerSupply voltage = 7.5V ~ 30V DC Supply current = 140mA nominal EnvironmentalOperating temperature: 5° to 50°C Storage temperature: -40° to 66°C Dimension & Weight95 mm L x 80 mm W x 25 mm H (3.7 in x 3.1 in x 1.0 in) 200g 230 mm L x 153 mm W x 30 mm H (9 in x 6 in x 1.2 in) 960g ApprovalsFCC(A), CE(A), MIC

Software Architecture Encryption algorithm (SSL, IPSEC) –SSL(Secure Socket Layer) as a basic encryption method Asymmetric key exchange, Popular method in PC-based credit card transaction –Flexible TCP/IP stack software and the encryption software Easy-to-customize to customers requirement PPPoE VDM Emulation Serial Communication Encryption Decryption Ethernet & ARP TCP/IP Serial raw data from/to the payment terminal VDM Emulation data & raw credit info Raw credit info. Encrypted credit info. Cable or Ethernet packetADSL packet Encrypted credit info. ADSL Cable PPPoE VDM Emulation Serial Communication Encryption Decryption Ethernet & ARP TCP/IP Serial raw data from/to VDM Emulation data & raw credit info Raw credit info. Encrypted credit info. Cable or Ethernet packetADSL packet Encrypted credit info. ADSLCable or Ethernet

Hardware Architecture Ethernet Controller ROM ( ) RAM ( ) MCU Internal bus Ethernet IP4CAT Serial Level Converter UART Cable/ADSL Modem, Router Credit Authorization Terminal RS232 Ethernet Controller ROM RAM MCU Internal bus Ethernet IP4CAT Serial Level Converter UART Cable/ADSL Modem, Router Credit Card Payment Terminal RS232 POSLink

System Comparison Legacy off-line payment processing System Phone-line based system –Charge per transaction The more the transaction, The higher the maintenance cost –Slow overall processing time for payment terminal –No data encryption required Proprietary leased-line based system –Flat rate but expensive –Fast overall processing time compared to phone-line –No data encryption required –Leased line service providers do not invest for infrastructures PSTN Modem Leased Line Modem PSTN/Leased Line Modem pool

System Comparison IP-based off-line payment processing system Connect to Ethernet or broadband Internet (ADSL, Cable) Flat & lower monthly rate Fast overall processing time Benefits from the shared line connection Secure transaction is the key –Data Encryption: Industry standard SSL (Secure Socket Layer)

Phone-line Proprietary leased-line Internet (ADSL, Cable) System Comparison Charged by the number of phone calls = 4 cents/call Flat rate per line = $65 for 4 line multiple Flat rate per line = $23/month Monthly Fee 20 sec5 sec2 sec Transaction Time For low-volume transaction & Small retail shop - For large-scale retailer - Saturated infrastructure but no investment plan by service providers - Good for high- volume transaction - Good for existing Internet users Comment In Korean market

References KMPS: processor & acquirer –Field test at merchants location completed with 16bit-based POSLink100 –16bit-based POSLink400 –Payment terminal by domestic manufacturer –Close an initial supply contract of POSLink100 KFTC: processor & acquirer –Feasibility test with 32bit & Linux based POSLink –IDphone: Payment terminal manufacturer Demonstration for other 7 domestic processors with payment server emulation software

Target Customers Credit card processors and acquirers Payment terminal manufacturer POS system integrator or value added resellers Broadband service providers Merchants as end users

Implementation Issues Communication with authorization server –For servers that doesnt support SSL The authentication server for credit card payment processing may have to be modified for server-side data encryption/decryption for the case of legacy dial- up & leased line based server. SENAs tool kit with standard SSL –For servers that supports SSL No server-side job required Legacy POS terminal interface –Serial interface with POS terminal –Dial-up only terminals without any serial port Dial-in interface is to be supported according to the payment terminal

SENA Technologies, Inc. Phone: Fax: Web Address: Yangjae-dong Seocho-gu Seoul , South Korea Contact SENA