Mats Taraldsson Head of Market Development, Nordic … of Market Development, Nordic and Baltics...

©2012 MasterCard. Proprietary and Confidential

January 18, 2012

Mats Taraldsson Head of Market Development, Nordic and Baltics MasterCard Europe


Changing Consumer Experiences

Established Emerging

Internet connected devices PC-based e-Commerce

Card at Point of Sale

Cash

PayPass at Point of Sale

Mobile Money Services

January 18, 2012 Page 2


Mobile Payment Technologies can be Distinguished in Three Dimensions – P2P, m/e-commerce and Mobile Contactless Overview Mobile Payment technologies

mobile e/m-

commerce payments

mobile P2P

payments

mobile NFC POS payments

•  The integration of all three dimension into one mobile phone is what is known as mobile wallet

•  A mobile wallets sits “in the phone” and enables the consumer to use the phone for P2P, POS and e/m-commerce payments



0

200

400

600

800

1000

1200

1400

2009 2010 2011E 2012E 2013E

Total Global Unit Shipments (MM)

Tablets

Smart Phones

Notebook PCs

Desktop PCs

Remote Payments Connected Devices for Remote Payments

MasterCard providing interoperability and connectivity

Source: KPCB Top Mobile Internet Trends, Feb 2011

Easier to Use

More Secure

New Transactions



Proximity Payments PayPass NFC Payments for Smart Phones

Source: BCG Research & Analysis 2011

64%

48%

0%

10%

20%

30%

40%

50%

60%

70%

2010 2011 2012 2013 2014 2015 2016

% of Total U.S. Phones

Smart Phones

NFC-Enabled Enhanced Information

Speed and Convenience

Smart phone growth is transforming shopping and will accelerate PayPass adoption and expand merchant acceptance

Offers and Redemption



Proximity Payments PayPass Quickly Spreading Across the Globe

*Footprint and statistics are as of Q2 2011. ** Figure approximate.

Indicates PayPass Global Footprint

•  96M Cards/ Devices**

•  37 Countries

•  341,000+ Acceptance Locations


Mobile Money


Creating new ways to pay for existing MasterCard cardholders and addressing the needs of 2.5 billion global consumers1 who are underserved

Mobile Money Mobile Money Accelerating Globally

107 199

326

499

684

807

2011 2012 2013 2014 2015 2016

Number of Mobile Money Accounts (MM)2

+40%

Sources: 1) Gartner 2010, Ovum, World Bank, EIU, BCG analysis. 2) Gartner and Ovum research and BCG estimates for growth

Reaching Banked and Underserved Consumers



Integrated, turnkey mobile payment processing to support consumers and merchants; value-chain enabler based on defined value propositions and go-to-market models

Account Wallet

Prepaid Processing

Merchant Processing

Payment Routing

Consumers

Mobile Network Operators

Customer Web Access

Commercial, Government Institutions

EFT

Merchants

Billers

Mobile Top-up, Other Merchants

Banking Systems

MasterCard Network

Payments Domain Mobile Domain

Mobile Money Mobile Payments Gateway

Mobile Payments Gateway

Mobile PayPass Proximity Payments


MasterCard networks carry transaction data

Goods & Services

Proximity Payments Mobile Payments Ecosystem

Cardholder Merchant

Issuer Acquirer

Telco / TSM

The mobile proximity payments eco-system includes the traditional incumbents of the four party payment system plus additional entities that add value to a mobile payment transaction.



SIM (UICC) Based

Secure Element location • SIM/UICC card

Access to Secure Element

Mobile Handset • NFC Smartphone

Secure Element owner • MNOs

1 O.S. based

• Handset Embedded chip

• NFC Smartphone

• O.S. providers

2

Access to Secure Element Drives a Critical Partner Choice

Sustainability •  Long term •  Long term

External device based

• Micro SD

• Smartphone or NFC Smartphone

• Banks

3

•  “Bridge” solution

In the Mobile Ecosystem, Access to the Secure Element Drives the Balance of Power & The Future Business Model



SECURE ELEMENT

CONTROL USER EXPERIENCE

VALUE ADD SERVICES

SIM based

Telco Wallet

Bank

Telco as Issuer

Bank

Bank

Telco

Telco

Bank

DISTRIBUTION CHANNEL

Bank MVNO

Bank Bank Bank

Telco

Bank MVNO

Bank Payment App

Telco Wallet

Telco Payment

BUSINESS MODEL

3

2

1

4

Retailer Bank Retailer Bank Retailer Retailer MVNO Retailer MVNO 5

External device based

Bank Bank Bank (?) Bank Payment Device 8

O.S. based Apple/iTunes

Other

Bank

(?)

(?)

Open model

Apple (?)

(?)

Telcos/Retailers Apple Wallet

Google Wallet 6

7

Based on the Secure Element, Multiple Mobile Models Likely to Develop During Market Formation

Different technological solutions for the mobile wallet PAYMENT ACCOUNT


©2012 MasterCard. Proprietary and Confidential Option we retain

E-version of Cards located on smartphone

wallet application

Why The NFC Model is Likely to Succeed

WHY THIS MODEL? • Clients can use their existing bank cards: debit, credit or prepaid • Card branding like physical cards (issuer brand; existing acceptance brands) • User-friendly consumer experience • Not restricted to low-value payment • Full EMV & Secure-code security • Scalable & future-proof investments: uses int’l standards & specs

Mobile money: send and receive money –  Enable send/receive function on mobile card

account or mobile wallet –  Using the phone for ‘easy/strong’ authentication

Click-to-buy mobile web purchases –  No re-entry of card or shipping details –  Works on mobile and desktop –  Merchant and partner APIs to enable in-App

purchases –  Using the phone for ‘easy/strong’ authentication

Mobile PayPass: High value Tap & Pay –  Pay with phone on PayPass terminals –  Mobile contactless phone as PayPass POS –  Authenticated against Secure Element Prepaid card

Debit card

Credit card

1

2

3



On Nov. 14th 2011, Intel and MasterCard announced a strategic collaboration to further enhance the security and consumer payment experience for online shopping

The two companies are working together to combine MasterCard’s PayPass and Intel’s Identity Protection Technology (IPT):

Intel and MasterCard agreed to enhance eCommerce payment experience

•  Intel IPT enables consumers to use strong two-factor authentication and hardware-based display protection

•  MasterCard PayPass enables consumers to pay at enabled terminals by simply “tapping” their card on the contactless reader

•  In the future, when shopping with an Intel IPT capable computer (e.g. the new Ultrabook devices), consumers will be able to pay for online purchases with a simple tap of their PayPass-enabled card, tag, or smartphone on their computer


MasterCard Mobile Platform

Cardlet Mobile M/Chip

application

MOTAPS TSM & OTA

services

Midlet Standard API , UI, guidelines

“Certification“ Handset, TSM

and App

Mobile PayPass

terminal spec

Mobile POS 1 click check-out Couponing

Rules



MOTAPS

MasterCard Over-the-Air Provisioning Service facilitates real-time, over-the-air, provisioning and management of payment accounts directly on the mobile phone. Personalization data is delivered within seconds and the handset is then immediately enabled for contactless payments.

MOTAPS – TSM service

It’s a service No software needs to be installed; leverages MasterCard core network

Integrated offer End-to-end service, including Banking TSM and lifecycle management of payment app

Single interface Simple web service point integration for all card brands to multiple Secure Element TSMs


MasterCard Mobile NFC Launches


DNB and Telenor (Norway)

• DNB, Norway’s largest bank launched a trial in November 2009 the first fully Over The Air provisioning service.

• Using the MasterCard Mobile Over-the-Air Provisioning Service DNB cardholders were able to trial the service that allowed them to use their Near Field Communications (NFC)-enabled mobile phones to make payments wherever MasterCard® PayPass™ is accepted.

• Bank’s consumers self-registered via a MasterCard hosted website to access the service.

“By partnering with MasterCard, we have been able to implement a simple program with minimal infrastructure investment that gives our cardholders the ability to make PayPass payments with their mobile phones.” said Peer Theien, General Manager, Group Payments and Infrastructure, DnB NOR Bank ASA.



•  MasterCard partnered with Barclaycard and Orange (sub. Everything Everywhere) in the UK to launch the first commercial deployment of Mobile PayPass.

•  The contactless payment service, dubbed Quick Tap, is for purchases up to £15. It works on MasterCard's PayPass system.

•  The account on the phone is a MasterCard prepaid account (processing by PPS), which the customer can top-up with funds from one of an Orange co-brand credit card, a Barclays debit or a Barclays credit card.

•  Gemalto is providing the payment application and the SIM card. Samsung provided the Tocco Lite handset. The phone is available in select Orange stores in London and via the Orange website. http://shop.orange.co.uk/mobile-phones/contactless/overview.jsp

Barclaycard & Orange launch Quick Tap

Market

Launch



•  Turkcell announced the official launch of the T20 smartphone to enable consumers to use their phone as a mobile wallet using MasterCard's contactless technology, PayPass

•  The aim of Turkcell Cep-T Cüzdan, a mobile wallet service from Turkcell, is to transform the physical wallet into a mobile one and provide an easy to use and secure environment for all the daily needs of Turkcell's subscribers.

•  With this service, Turkcell also provides a comprehensive end-to-end NFC platform open to all service providers and banks. As part of this platform, Turkcell TSM (Trusted Service Manager) was developed and Turkcell became the first telecom operator in Europe to launch an approved TSM solution by MasterCard. Turkcell, working with MasterCard, is the first mobile operator in the world that presents more than one bank application in Cep-T Cüzdan.

Turkcell Launches Mobile Wallet

Market

Launch



•  Commercial roll out in US in Q4 2011

•  MasterCard & Prepaid PayPass

•  Compatible with NFC Capable Android Handsets

•  OTA provisioning

•  Embedded Secure Element

•  Large scale launch with large volumes of handsets available

•  UK launch targeted 2012

Google Wallet

“Google Wallet Is Not only About Mobile Payments”

Wallet will enable “tap and save” mobile payments, incorporating loyalty, coupons, and digital receipts using NFC capabilities.

Market

Launch



MasterCard / Google Partnership

Google Wallet

Online & Offline Commerce

Rich Offers

Targeted Consumer Value

Increased Merchant Sales

Consumers Merchants

Wallet – much more than payments

Offers Deliver targeted, local coupons

Loyalty Integrate loyalty

and rewards into every transaction

Tap & Pay Accept contactless payments via NFC

Partners



North America

Fully-integrated, on-demand person-to-person mobile payment service

Mobile payment pilot in partnership with ViVOtech

First market trial of personalized NFC-enabled mobile phones

Contactless payments trial for MTA

First mobile PayPass pilot in Canada

First large scale deployment of PayPass in a mobile phone (60K

Customer)

First trial in Taiwan to make use of NFC smart posters and m-coupons

First Mobile Pilot in India (Bangalore) using Mobile PayPass

Asia

First trial of PayPass-enabled mobile phones for secure EMV payments

MasterCard PayPass enabled mobile phones

Pioneer mobile phone debit payments in the United Kingdom, using Maestro

PayPass

Enable customers to make contactless payments via phones

with MasterCard PayPass

Piloted a Mobile Payments proposition that focused on consumer convenience

MasterCard PayPass enabled mobile phones

Commercialization of mobile payments using NFC technology

Europe

Alliance will pursue mobile commerce opportunities

MasterCard introduces Mobile Payments Gateway via MPS JV.

South America

Commercialized a mobile platform leveraging the Mobile Payments

Gateway

First-of-a-kind JV to lead development of mobile financial solutions (12

countries) with the Movistar brand Enables unbanked mobile money

customers to engage in ecommerce transactions via virtual cards. Honored at

2011 Global Mobile Awards

Development and impending launch of NFC payment application

VIVO

June 23, 2011 Page 24

Sweden: Smartphone based EMV micro-POS - iZettle


1 click internet purchase on the desktop –  No re-entry of card or shipping details –  Using the phone for ‘easy/strong’ authentication

1 click internet purchase from the phone –  No re-entry of card or shipping details –  Using the phone for ‘easy/strong’ authentication

High value Tap & Pay –  Authenticated against Secure Element

Perhaps Mid-Term is Faster Than We Think… Marrying F2F and CNP in a single consumer experience

Plastic card linked to the phone –  Alerts on phone, limited use numbers, link card usage to phone presence –  Phone related loyalty (free SMS, call minutes) –  Single statement


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Mats Taraldsson Head of Market Development, Nordic … of Market Development, Nordic and Baltics...

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