1
Wave and PayVisa Contactless

• Guido Mangiagalli
• Consumer Market Development
• Visa Europe

VISA EUROPE
2
Agenda

• Contactless business opportunity
• Visa Europe contactless strategy
• Visa e-money

3
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
Cost of cash to society
0.5 European GDP 50 Billion
CentralBanks
RetailBanks
RetailCash
32 Billion
13 Billion
5 Billion
Outgoingprocess
Incoming/ recycling process
21 Billion
11 Billion
Source EPC
5
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
Cash The Business Opportunity

• 50 of all low value cash transactions are
  accounted for by just eight spending categories

• Top-up groceries
• Spending at confectionary, tobacconists and
  newsagents outlets
• Payments in pubs and bars
• Fast food restaurants
• Taxis
• Mobile phone top-up
• Transportation
• Off-license sales

7
Visa contactless activities
8
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

9
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
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 reliabilityparticularly for
  fast food, gas stations, movie theaters, parking
  garages, and vending machines

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Visa Europe contactless
12
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

13
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

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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
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(?)

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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

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How does it work
Counter 30
30
E-money
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How does it work
Lunch 10
E-money
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How does it work
Travel card 15
Pre auth fundexceeded -5
40
E-money
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How does it work
E-money Top up 40
15
15
E-money
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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
Questions
Thank You