PaymentBox. PaymentBox Take Control of your payments. October 2017

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1 PaymentBox Take Control of your payments October 2017 PaymentBox 1

2 Table of Contents Table of Contents 2 Executive Summary 3 Problems 4 Solution 7 Technology 9 PaymentBox Transaction Flow 9 Payment Delegation 11 Payment Approval Chain 11 Payment Sharing 12 Reputation System 13 Risk/Fraud Detection 13 Ecosystem Incentives 15 Ethereal PaymentBox Token (PAYT) 15 Consumers 16 Sellers 16 Product Comparison 17 Milestones 18 ICO Details 19 Community Relations 21 Sources 21 2

3 Executive Summary PaymentBox is a new and innovative online transaction technology that provides a secure way to control who is making your purchases. As retailers adopt the constant growth in technology that allows them to become e-tailers, customers have more options to shop online than ever before. But headlines about credit card theft from retailers such as Target and The Home Depot make it difficult for customers to trust that their information is safe. Customers repeatedly take the time to shop and add items to an online shopping cart but are unwilling to complete their purchase and abandon their cart. Even well-designed web sites that makes shopping easier lose sales because customers worry about making purchases online. A study by Bizrate Insight shows that 60% of consumers believe merchant websites are not doing enough to protect their credit card and personal information. 34% of those respondents say they hesitate to buy online because of data theft. How can we increase the number of people who complete their online purchases and ensure that they feel that their information is safe? Security and blockchain experts at PaymentBox have engineered a unique solution to simplify a secure payment process that protects the customer's information. This disruptive solution provides the convenience of a mobile checkout process. 3

4 Problems 1. An online purchase cannot be made without credit or debit card information, or access to your bank account. 2. A simple B2B transactions at any company involves cumbersome process, such as asset management, procurement, and finance. Users are required to go to the centralized expense report portal to report their purchases and get paid. The process makes even a small purchase, such as a stabler, long and cumbersome. PaymentBox platform was created with a focuses to solve this problem. 3. The chart below shows the increasing trend of shopping online among teenagers in the USA. In order for teens to shop online, their parents share their credit or debit card information. That is how many college students presently order their textbooks and make other purchases. A survey indicated that 80% of parents do not feel safe sharing credit card information with their children because they cannot control their spending or verify their purchases. In order to control their spending and verify their purchases online or in-store, the parent needs to be present. PaymentBox 4

5 removes this inconvenience and allows a parent to approve a purchase with their mobile. 4. The checkout process is broken. According to Baymard Institute (based on 37 separate studies), nearly 69% of online shopping carts are abandoned [1]. An alarming rate for retailers that is getting worse. Here is another report conducted by Kibo showing online shopping cart abandonment rates in the United States from 2012 to (Source: Kibo, Statista) So what s going on? Why do customers abandon carts? There are many contributing factors. (Source: Statista) 5

6 Nearly 50% of the carts are abandoned due to 3 reasons: Long and confusing checkout Concerns about payment security Having to create a new user account PaymentBox helps solve and ease these concern s 5. Even when making a credit or debit card payment in a store or over the phone, it is necessary to provide credit card information in order to make a purchase. There are no guarantees that the retailer can keep your information safe. There has been a tremendous rise in credit card frauds. In fact, according to a study done by Alite group in 2014, 45% of the card frauds in the US take place when a card is not present. If you ve done enough shopping, you ve fell victim to credit card fraud. (Source: Creditcards.com - Aite Group, EMV: Lessons Learned and the U.S. Outlook, June 2014) Credit card fraud is bad for everyone, including the retailers. Home Depot Inc. incurred $263 million in expenses from its 2014 data breach and it severely impacted their finances and stockholders. Similarly, Target reported expenses from it s late-2013 breach totaling $291million. Even if retailers do a tremendous job of encrypting and trying to protect their customer data, it is not guaranteed to be 100% protected. 6

7 Solution PaymentBox provides a simpler and a secure way of paying online purchases by linking the ecommerce checkout process to a mobile payment system. Instead of entering a credit or a debit card during the checkout, you simply select PaymentBox as the payment option and enters a phone number or an address. The purchase is validated on the corresponding mobile; either your own mobile device or you can delegate the payment request to someone else's. This technology opens many possibilities to change the online shopping experience: Make a secure payment yourself using your credit or debit card information or even crypto-currencies. Authorize a secure payment for someone else and allow them to use your credit or debit card. Make a purchase with someone else with approving the use of their payment information. 7

8 There is no need to share your personal financial details and the payment process is much more flexible. BlockChain and cyber-currency backed PaymentBox network ensures that every transaction between the customers, merchants, PaymentBox services, and the payment processor is verified to ensure security, accountability, and convenience. It is easy to make a purchase on behalf of someone else (Payment Delegation). For example, a parent can pay for their teenager s online purchase of pair of jeans without sharing their personal credit card or being present during the transaction. With PaymentBox, a child can shop online and initiate the payment process with their parents' phone number. Parents can then review the shopping cart and approve the transaction. No need to give a credit card number to anyone. The Payment Delegation concept can be further broaden into the corporate space. Consider a scenario where an employee needs to purchase office supplies or equipments. Instead of going through the expense system, the purchase can be made right at the POS where the approval request can be send directly to the approvers. 8

9 Technology PaymentBox Transaction Flow PaymentBox uses many different technologies to provide a secure and convenient method for online payment transactions. The following illustrates paying for a purchase using the PaymentBox network; it is not necessary to share financial information with the seller or PaymentBox. 1. User initiates the checkout process 2. The seller sends a payment request to the PaymentBox network 3. PaymentBox records the transaction in a ledger and then sends the payment request to customer s mobile device. 4. The PaymentBox mobile application receives the payment request. 5. The customer confirms the purchase and approves the payment request. 6. The payment is processed and the ledger is updated with the payment complete entry. 7. A payment ID is sent to the seller and the transaction is completed 9

10 The transactions go through a blockchain network and are recorded via transaction ledgers. When a customer pays for their shopping cart using PaymentBox, a payment request is send to the PaymentBox server from the merchant. PaymentBox sends the transaction notification to the customer s phone for approval. If the customer decides to pay for the transaction directly, any mobile device specific payment option (such as ApplePay, AndroidPay, or SamsungPay) or crypto-currencies can be used to complete the transaction. No customer financial information is shared with either PaymentBox or the merchant during the payment process. 10

11 Payment Delegation If a customer decided to delegate the payment request to someone else, PaymentBox provides an option to select a someone from their PaymentBox network or a phone number. Once selected, PaymentBox sends the transaction request to the appropriate person. A smart contract is created and the transaction is recorded in the ledger to ensure accuracy and accountability. Payment Approval Chain The PaymentBox approval chain works with its own delegation model to ensure proof of ownership. The transfer of ownership from one entity to another in the chain is accomplished without a trusted third party intermediary. As a value moves through each PaymentBox entity, what occurs at each point in the chain is chronologically recorded for each transfer from one entity to the next. For example, in a B2B scenario, an employee can submit a PO for purchasing a equipment. Then the payment request is send through a chain of PaymentBox entities to get approved. Each entity has to approve the payment request before sending the request to the next entity. Once PO has gone through the approval chain, the PO is approved, and the order can be made. No 11

12 other third party intermediary is needed and all the transaction is recorded and can be audited later. Payment Sharing Sometimes we need help when purchasing a big ticket item. PaymentBox makes it easy to ask for friends to help at the time of needs. Users can choose to assign a request for payment to a group of friends in their PaymentBox network or social network (Facebook, Instagram, etc). As an incentive, PaymentBox includes a reward platform whereby the borrower can specify a reward for someone who helped make a payment. It is also possible to specify a reward one is willing to give for help making a payment. Multiple friends can bid and the highest bid wins the contract. Anyone on the platform can provide rewards in a form of PaymentBox token. Smart contract is created between each transaction as well, and all the transactions are recorded in the ledger to ensure accuracy and accountability. 12

13 Reputation System Blockchain provides a perfect system to keep user & merchants ratings based on the transaction records. The more transaction or smart contract fulfilled, higher the rating a user will get. While merchants rating depends directly on transaction volume, geography, business type, etc. Potential lender can decide whether or not to accept borrower s request and interest offer based on the reputation. Once a user performed an activity within the PaymentBox ecosystem, an initial rating will be assigned. Risk/Fraud Detection Risk and fraud Detection are at core of PaymentBox technology. To achieve a holistic approach to detecting security risks and fraud, we have created a multi-tier fraud detection system using advance analytics, information services based on consumer/seller information and scores, and digital security software.. Fraud detection is a complex problem[2] and our solution is a hybrid approach. Our system detects fraud using certain data points (merchant general transaction range, source origination, vpn, date, time, and so on) and generates a fraud risk score for each transaction. The transaction fraud risk score (TFRS) in conjunction with the merchant 13

14 fraud risk score (MFRS) is used by our rules engine to determine whether to approve, reject, or tag the transaction for manual review. Each manual review is tagged as dataset to maturing the TFRS algorithm. The hybrid approach allows PaymentBox achieve a better balance of convenience and security by converting legitimate visits into sales while simultaneously identifying fraudulent transactions. Fraudulent transactions affect everyone from merchants, issuers, acquirers, processors, and even the service providers. For every $1 of fraud, businesses incur on average $2.66 or roughly two and a half times the actual loss itself. [4]. Fraud detection becomes more difficult when information is hacked on a large scale (i.e Equifax) because a fraudster can leverage information from the breach to perpetrate multiple forms of frauds such as identity theft, re-shipping scams, account takeover, and clean fraud. Even with PaymentBox s risk/fraud analysis application; the two of the key feature which makes PaymentBox secure is that most of the transaction only happen after biometric validation, and PaymentBox leverages OS level security to ensure that only required information is shared to even PaymentBox. Lastly, PaymentBox given payment commitment to open standards; PaymentBox is in process of joining FIDO Alliance ( This will not only help us provide better security for our service, but also gives us an opportunity to participate with other players in the larger ecosystem. 14

15 Ecosystem Incentives Ethereal PaymentBox Token (PAYT) The PaymentBox eco-system is backed by crypto-currencies. PaymentBox transactions are payable with Bitcoin, Ethereum, or PaymentBox token (PAYT), in addition to using a credit or debit card as the payment method. The PaymentBox token is a new type of token introduced by PaymentBox and can be used within the PaymentBox eco-system. A PaymentBox token wallet which can be used to store PaymentBox token is created automatically for anyone using PaymentBox. Using PaymentBox token simplifies the payment structure. By decentralize the paying processing, PaymentBox mitigates high cost of credit/debit card transaction fees. Transactions completed with PaymentBox token have an option to convert to fiat money. A small conversion fee is paid by the seller to convert PaymentBox token to fiat money. The competitively small conversion fee and additional incentives for both consumer and sellers will help energize the PaymentBox eco-system. The first vision of the PaymentBox token is based on Ethereum: an open source, blockchain-based distributed computing platform with smart contracts. Cryptographically secure smart contracts are stored in the Ethereum blockchain and are fully capable of enforcing performance. 15

16 Consumers We are offering PaymentBox token to incentivize bootstrapping of the ecosystem and the continuing participation and interaction in the ecosystem. PaymentBox token can be obtained from the a public exchange or earned from PaymentBox or merchants promotional activities or incentives. Each time a user completes a transaction with PaymentBox, certain percentage of the transaction will be rewarded back to the user as PaymentBox tokens. PaymentBox token can be used to pay for purchases anywhere where PaymentBox is accepted, or it can also be traded in the public exchange for another currency. Sellers In addition of incentives to the users, merchants also receive incentives to participate in the PaymentBox ecosystem. No transaction fee if merchants received PaymentBox token based transactions. There is a small fee to convert PaymentBox token to flat money. However, Half of the conversion fee is given back to the merchant as PaymentBox token to be used on platform. In addition, even when a merchant receives a credit card transaction, half of transaction fee is given as token back to merchant as incentive. Merchants gets a reduced transaction fee if PaymentBox is used as their payment processor. If merchants use their own payment processor, PaymentBox will still subsidize transaction fee in a form of PaymentBox token. Merchants can choose to perform additional incentives through promotions and discounts. For example, a retailer can offer exclusive deals to PaymentBox users with PaymentBox token. 16

17 Product Comparison PaymentBox Paypal Credit Card Privacy Users financial information are not stored in either the merchant or PaymentBox Users financial information are stored on PayPal s servers Merchants may stored users financial information Payment Delegation Complete control on who can pay or authorize payments Not supported Not supported Fee No fee on merchants or users if pay with tokens Transaction and conversion fee required Transaction fee required Open Platform Yes No No Blockchain Support PAYT, Bitcoin, Ethereum No No 17

18 Milestones 18

19 ICO Details Token Supply : 150 Million PAYT tokens are available for distribution. 40% Presale & Token Fundraiser Pre-sale: 10% of overall tokens Crowd-sale: 30% of overall tokens 20% Distribution to incentivize the ecosystem 15% Long-term Foundation Budget 10% Advisors, Partnerships & Bounties 15% Retention of Development Teams 19

20 40% R&D Platform & Ecosystem 20% Operations & Business Dev 15% Marketing & Community Dev 15% PaymentBox ETH Reserve 5% Legal Expenses (Patent) 5% Administrative cost 20

21 Community Relations We believe transparency is key to creating a successful organization. We believe transparency builds trust, which we plan to build between the community and us. As we successfully complete our crowdsale; and move towards delivering on our timeline. We will be providing periodic update to our community using We will be designating one of the team member as community relation manager. One of the key responsibilities for this person will be to provide our community regular update on progress, along with help answer any questions. Another key responsibility is to develop and maintain investor relationship, performs a comprehensive competitive analysis, including financial metrics and differentiation, and develops investor relations messages based on on-going company operational status. Sources 1. Baymard Institute, E-Commerce Checkout Usability, Danchev, D. (2010, January). Report: 48% of 22 million scanned computers infected with malware Juniper Researdch. (2016). ONLINE PAYMENT FRAUD WHITEPAPER. ne-payment-fraud-wp-2016.pdf 4. Security Magazine. (2017, September). U.S. Businesses Spend $2.66 to Combat Every Dollar of Fraud. Retrieved from -every-dollar-of-fraud 5. Womack, B. (2017, September). Equifax Says Cyberattack May Have Hit 143 Million Customers. Retrieved December 23, 2017, from usion-affected-143-million-customers 21