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Wave and Pay Visa Contactless

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Wave and Pay Visa Contactless

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    1. “Wave and Pay” Visa Contactless Guido Mangiagalli Consumer Market Development Visa Europe

    2. Visa Europe Agenda Contactless business opportunity Visa Europe contactless strategy Visa e-money

    3. Visa Europe Cash – The Business Opportunity Europe 361 bn cash vs 60 bn non-cash transactions 85% Cost of cash to society 0.5% GDP (Europe €50 bn)

    4. Visa Europe Cost of cash to society

    5. Visa Europe Cash – The Business Opportunity UK cash market 27.2 bn transactions for £268 bn 20.7 bn of these transactions are for less than £10

    6. Visa Europe Cash – The Business Opportunity 50% of all low value cash transactions are accounted for by just eight spending categories:

    7. Visa contactless activities

    8. Visa Europe Visa Contactless Payment Programs Launches in Asia Pacific Malaysia – after a successful pilot in 2004, began initial rollout of 500,000 cards and 4,000 merchants in February 2005 Taiwan rollout began in October 2005 Korea and Thailand rollout imminent Launch in United States Chase has issued millions of cards to date Over 20,000 merchant locations Began in Atlanta in May 2005 and expanded to major metro areas of seven other states Visa Contactless Mini Card announcement Opportunities in Europe Key market commitments to pilot in 2006 and deploy in 2007 Commercial Rollouts: Malaysia - initial rollout launch of 500,000 cards and 4,000 merchants, including convenience stores, quick-service restaurants, cinemas, petrol stations, and supermarkets. In Malaysia, Visa Wave requires no signature on purchases below the Ringgit equivalent of US$25. Taiwan – China Trust Commercial Bank is the first Visa Member to launch contactless in Taiwan Korea – Contactless card issuance will begin shortly to leverage approximately 400,000 contactless readers already deployed by South Korea Telecom (SKT), Korea Telecom, and LG Telecom. US - Chase has issued millions of contactless cards by the end of 2005 and expects to have issued in the tens of millions by the end of 2006. Over 20,000 merchant locations accept Visa contactless, such as 7-Eleven, Sheetz (petro/c-store), CVS pharmacies, Regal Entertainment Centers (cinemas), Yum! Brands (KFC, TacoBell, PizzaHut), Walgreens, McDonald’s and Arby's. In addition to deploying contactless technology, Visa USA has implemented small ticket payment rules to allow merchants to not obtain signature on transactions below US$25. The 7 additional states are: Colorado (Denver), Connecticut, New York, New Jersey, Delaware, Pennsylvania, and Texas (Dallas) particularly in the metropolitan areas. Dallas was just announced on January 12th – additional 800k cards and 500 merchants in the Dallas area. Upcoming projects and pilots in Europe Germany: pilot with Metro Group retail store in their “Future Store” in Hamburg. 12 Vivotech contactless readers have been installed and contactless cards will be issued to existing Metro loyalty cardholders to conduct market research and test consumer reaction. UK: supporting a major member as part of the Transport for London projectCommercial Rollouts: Malaysia - initial rollout launch of 500,000 cards and 4,000 merchants, including convenience stores, quick-service restaurants, cinemas, petrol stations, and supermarkets. In Malaysia, Visa Wave requires no signature on purchases below the Ringgit equivalent of US$25. Taiwan – China Trust Commercial Bank is the first Visa Member to launch contactless in Taiwan Korea – Contactless card issuance will begin shortly to leverage approximately 400,000 contactless readers already deployed by South Korea Telecom (SKT), Korea Telecom, and LG Telecom. US - Chase has issued millions of contactless cards by the end of 2005 and expects to have issued in the tens of millions by the end of 2006. Over 20,000 merchant locations accept Visa contactless, such as 7-Eleven, Sheetz (petro/c-store), CVS pharmacies, Regal Entertainment Centers (cinemas), Yum! Brands (KFC, TacoBell, PizzaHut), Walgreens, McDonald’s and Arby's. In addition to deploying contactless technology, Visa USA has implemented small ticket payment rules to allow merchants to not obtain signature on transactions below US$25. The 7 additional states are: Colorado (Denver), Connecticut, New York, New Jersey, Delaware, Pennsylvania, and Texas (Dallas) particularly in the metropolitan areas. Dallas was just announced on January 12th – additional 800k cards and 500 merchants in the Dallas area. Upcoming projects and pilots in Europe Germany: pilot with Metro Group retail store in their “Future Store” in Hamburg. 12 Vivotech contactless readers have been installed and contactless cards will be issued to existing Metro loyalty cardholders to conduct market research and test consumer reaction. UK: supporting a major member as part of the Transport for London project

    9. Visa Europe Contactless Benefits for Consumers Convenience and speed No more fumbling for cash Reduced card orientation issues Consumer remains in control of card – further extends use of customer activated payment Appeal of new technology

    10. Visa Europe Contactless Benefits for Merchants Increased ticket size of approximately 20-30% compared to cash Reduced transaction time by as much as 25% faster throughput Increased frequency of purchases Reduced cash handling and operating costs Improved terminal reliability–particularly for fast food, gas stations, movie theaters, parking garages, and vending machines For McDonald’s, this quote refers to their Mobile Speedpass contactless key fob pilot experience. McDonald’s has not yet rolled out contactless acceptance in their drive-thrus because they are still working on the right device solution for them. The 7-Eleven quote refers to results from the American Express pilot that 7-Eleven participated in. 7-Eleven is now rolling out Visa Contactless acceptance in major US metropolitan areas.For McDonald’s, this quote refers to their Mobile Speedpass contactless key fob pilot experience. McDonald’s has not yet rolled out contactless acceptance in their drive-thrus because they are still working on the right device solution for them. The 7-Eleven quote refers to results from the American Express pilot that 7-Eleven participated in. 7-Eleven is now rolling out Visa Contactless acceptance in major US metropolitan areas.

    11. Visa Europe contactless

    12. Visa Europe EMV Migration Europe 125m Visa cards in issuance as at end September 2005 41% of all Visa products 50% of POS transactions cleared through VisaNet in August came from chip-enabled devices UK situation 120 Mil all brands 98% penetration Approximately 1Mil POS and ATMs 71% Visa transactions are Chip and Pin Additional info: Issuance: 69% of premium products now EMV POS: more than half the transactions at chip POS are made with a chip card Exception item processing: Fallback (chip to mag-stripe) has halved this year. PIN bypass has fallen by 50% Fraud: APACS figures for the UK show dramatic decreases in both counterfeit and lost / stolen fraud for the first 6 months of 2005 vs 2004 Additional info: Issuance: 69% of premium products now EMV POS: more than half the transactions at chip POS are made with a chip card Exception item processing: Fallback (chip to mag-stripe) has halved this year. PIN bypass has fallen by 50% Fraud: APACS figures for the UK show dramatic decreases in both counterfeit and lost / stolen fraud for the first 6 months of 2005 vs 2004

    13. Visa Europe Europe Contactless Chip & PIN will boost the deployment of offline/unattended acceptance infrastructure Visa Europe is developing a contactless payment card solution to target face-to-face low value payments Transactions below €15 No PIN Always offline Fast (less than a second)

    14. How Does it Work? Both card and terminal can do contactless qVSDC below card and terminal transaction limits (€15) offline contactless funds available on card (€50) Offline authorised with no PIN from offline contactless funds automatic revert to contact qVSDC insufficient offline contactless funds offline contactless counters reset at any online authorisation

    15. Contactless qVSDC Leverage EMV infrastructure Flexible yet simple Minimal card and terminal changes No Visa system changes No required Acquirer host changes Issuer host changes limited to card personalisation Contactless qVSDC transaction speeds less than 0.5 sec.

    16. E-money

    17. Visa Europe Lessons learned Make a completely new solution for low value payment is not an easy task Visa Cash Mondex Moneo… Octopus Hong Kong Third parties payments represent ~10% total spending Are these payments profitable(?)

    18. Visa Europe Visa E-money proposition A prepaid Chip-based platform Leverage EMV technology Off-line and on-line capability e-purse like customer experience but Network based Contactless for for low-value payments below £10, offline, no PIN No need for proprietary reloading systems F2F, Internet, Mobile… Compliant with European e-money directive Re-loadable, Anonymous/ KYC…

    19. Visa Europe How does it work

    20. Visa Europe How does it work

    21. Visa Europe How does it work

    22. Visa Europe How does it work

    23. Visa Europe In closing… EMV infrastructure investment provides the foundation for new Visa value-added services E-money Contactless Add offline authorisation and no CVM requirement Real opportunity to Displace cash Enable “new” acceptance environments Increase card usage and transaction spend Leverage customer relationships New Visa payments form factors Mobile phones…

    24. Visa Europe Questions

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