MasterCard PayPass – Global Update

February 2010

The SimplerThe SimplerWay to Pay

Provide consumers with an interoperable, fast,

MasterCard PayPass: Strategy Statement

and simple way to pay for low-dollar purchases in order to achieve greater conversion of cash transactions, thereby increasing gross dollar , y g gvolume and driving consumer preference for MasterCard branded products.Focus on:Focus on:

1. Growth2. Optimization3. Innovation4. Communication

February 22, 2010 2

Contactless Payments Global OpportunityContactless Payments Global Opportunity

By Transaction Amount By SectorNightclubs

$0 1Transit

$250+

$100–$250

$50–$100

$25–$50

VendingMachines$4bn

$7bnPubs and Bars$ 66bn

Fast Food$150bn

$123.3

$44.4

$9.4

$0.1 $29bn

n Value Band (

US$)

$25 $50

$10–$25

$5–$10

$2–$5 $153.0

$228.6

$410.3

$123.3

Transaction

$1–$2

50c–$1

25c–50cTotal Market

$29.4

$52.0

$83.6

10c–25c

Up to 10c

Petrol Retailing$535bn

ConvenienceStores$172bn

Opportunity, 2008:

$1086tr$0.3

$5.8

$0 $100 $200 $300 $400 $500

February 22, 2010 3

Value of Cash Transactions in Selected Retail Sectors (US$Billions)

Source: Datamonitor, 12/2008

$535bn

PayPass remains the global leader in contactless issuanceissuance

Cards in market - there are over 70 million PayPass cards and

devices in use globally – throughout 32 different countries, as of

4Q2009

Issuer Highlights• US: Bank of America, Barclays, Capital One, Central Bank, Citibank, Fifth

Third, GE, HSBC, JPMC, KeyBank and Union Bank of California

• Canada: Canadian Tire, Bank of Montreal, Presidents Choice, Capital One,

Citibank MBNACitibank, MBNA

• AP: Commonwealth Bank of Australia, BC Card Consortium, Lotte Card,

CIMB, Taipei Fubon, Shinhan Bank

• Europe: Barclaycard, Lufthansa, Bank Asya, Garanti, RBS, Carrefour/S2P,

HSBC, Poste Italiane, Banque Accord, , q

• SAMEA: Dubai First, Emirates Bank, Fransabank, ADCB, BLC, Capitec

February 22, 2010 4

Continuing to Expand PayPass Acceptance

Deployed Merchants – there are nearly 200,000 merchants globally, as of

4Q2009

Merchant Highlights• US: Best Buy, McDonald’s, Arby’s Jack in the Box, 7-11, Dairy

Queen, Circle K, CVS, Rite Aid, Duane Reade, BP Amoco, Vending, Home

Depot Faber Coe & Gregg Compass Group Taxi’s Sport Authority TimDepot, Faber, Coe & Gregg, Compass Group, Taxi s, Sport Authority, Tim

Horton’s, King’s Supermarket, Whataburger, ShopRite

• Canada: Tim Hortons, Vending, Petro Canada, McDonald’s, Husky Oil,

Pioneer Petroleum, Loblaw, No Frills, Sobeys, Canadian Tire

• AP: Sizzlers, Starbucks, Borders, KFC, KCG Buses, IS Coffee/Sushi

Express, Wellcome Supermarkets, Wendys, Burger King

• Europe: Boots, Carrefour, Auchan, Caffe Nero, Rowlands Pharmacy,

Burger King, UYUM, McDonald’s, Mercers Coffee

• SAMEA: T. Choitrams & Sons, Burger King, Nutritional World,

Cinnabon/Seattle’s Best Coffee, Spinneys, TGIF, Habtoorland, Medco,

LALIPCO, Mazen

February 22, 2010 5

PayPass & People Centers – the Perfect Combination for Busy Consumers

Paradies Shops – 70 U.S. Airports Deployed

Combination for Busy Consumers

Brooks Brothers

Drugs & More

Brighton Jewelry

Kids Zoo Marketplace

LaCoste

TravelMart

Harley Davidson

New York Times

B k

PGA Tour Shops

Bookstore

Atlanta, Dallas, Detroit, Fort Lauderdale, Houston, Las Vegas, Miami, Newark, New-JFK, New York-LGA, Philadelphia, Phoenix, San

Francisco, Washington-Dulles, Washington-Reagan

February 22, 2010 6

Source: theparadiesshops.com

U.S. Airport Parking Systems Deploying PayPass 2009 – 2010

• Atlanta Contactless technology significantly decreases transaction time relative to cash and cards —

• Charlotte

• Denver

• Detroit

transaction time relative to cash and cards 21 seconds faster than cash*

• Miami

• New Orleans

• Norfolk

• Oakland

• Orlando

• Philadelphia

• Sacramento

February 22, 2010 7

• San Jose

Photo Provided By McCarran International Airport

*Source: Smart Card Alliance 2005 Annual Meeting: RF Payment at CVS / pharmacy

Transit Transit –– Offers Consumers the Same Way Offers Consumers the Same Way to Pay Throughout the Dayto Pay Throughout the Dayto Pay Throughout the Dayto Pay Throughout the Day

February 22, 2010 8

Transit Achievements at a GlanceTransit Achievements at a GlanceTransit Achievements at a GlanceTransit Achievements at a Glance

PayPass program in Taiwan MTA, Port Authority and NJ First ever

contactless payments NYC Subway tests

P P f t expands Transit to accept PayPassp y

in taxisPayPass fare system

Contactless payments

introduced to parking areas PayPass piloted on Ohio

OneSmart™ PayPass launches transportation

project in TaiwanPayPass accepted on buses

p g

at major US airportsTurnpike project in Taiwan in Turkey

February 22, 2010 9

Mobile PayPassMobile PayPass

• The Mobile PayPass program covers all activities under which the mobile phone is used to initiate a PayPass transactiona PayPass transaction

– Ultimate goal is a contactless experience fully integrated into the mobile phone (including

secure element, payment application, antenna, and user interface)

MasterCard is supporting certain bridge technologies that can be deployed with less coordination• MasterCard is supporting certain bridge technologies that can be deployed with less coordination

between the parties

– Now - Mobile PayPass Tags

– Type approved options available now

– Seeing strong interest in US and Eastern Europe

– Evaluating “semi-integrated” form factors such as microSD card

• Fully integrated NFC version is moving from the “trials and pilots” phase into “first commercial

deployments” phase

– The most advanced activity is in Europe and Asia-Pacific

February 22, 2010 10

Overall Market P fPerformance

Displaces CashDisplaces Cash Contributes to the Contributes to the Bottom LineBottom Line

Decreases Wait TimeDecreases Wait TimeFor ConsumersFor Consumers

Close to 66% of PayPasstransactions are less than$25; 38% are less than $10

Year over YearSpend per 28–42%Account (Total) increase

Wait time 15%–20%in stores Reduction

Bottom LineBottom Line For ConsumersFor Consumers

Average ticket is just under $31

Transaction Per 33–52%Account (Total) increase

Recent data shows 21% or more of the incremental spend is from tap

Wait time at drive- 40%thru & QSRs Reduction

Average 10%–40%t ti ti R d tiExpands WhereExpands Where

Cardholders use PayPass at M h t that mostly accept

spend is from tap transactions

For certain portfolios / segments, spend per active account was up to 80% hi h

transaction time Reduction

A ti k t l t 40%

Expands Where Expands Where Cardholders ShopCardholders Shop Increases MerchantIncreases Merchant

SalesSales

Merchants that mostly accept cash

PayPass card users spend across more categories – up

higher

In addition to displacing cash, many tap-active accounts spend up to 60% more than accounts that do not tap

Average ticket sales up to 40%Increase

Frequency of everydaypurch. over mag 35%stripe credit cards Increase

February 22, 2010 11

p27% accounts that do not tap

Source: MasterCard Q2 2009, Issuer Case Studies, Press Release Data

stripe credit cards Increase

What Does Best Practice Show Us? - CanadaMarket Objectives• #1 – Increase the number of high-yield, low-

• 9,414 merchant locations – as of Nov 2009 - McDonalds, Tim Horton's, Petro Canada, Loblaws, Second Cup, M&M Meats, Blenz Coffee, Cineplex,

What Does Best Practice Show Us? - Canada

ticket transactions

• #2 – Enable all active cards by 2010

• #3 – Achieve acceptance leadership in meaningful categories

#4 C t d bit diff ti t

Odeon, Rabba Foods, No Frills, Dominion, Fortinos, Coke Vending, Zehrs, Your Independence Grocer, Maxi, Provigo, Real Canadian Superstore, Extra Foods, Pioneer Petroleum and Atlantic Superstore, Subway, Blenz Coffee, Shoppers Drug Mart, Jean Coutu• #4 – Create a debit program differentiator

Market Overview• 79.3% of all active cards in Canada are

PayPass enabled. On track for 100% bl t i 2010

Coutu

• Top PayPass merchants – % of Overall MasterCard Transactions that are PayPass (Tapped) –as of Nov 2009.

L bl 55%enablement in 2010

• 9 of the top 15 merchants are PayPass-enabled or committed

• 13 of the top 25 merchants are PayPassenabled or committed

– Loblaws: 55%

– No Frills: 64%

– Atlantic Superstore: 52%

– Fortinos: 60%

• Continued investment in education, activation and usage

– Zehrs: 62%

– Your Independent Grocer: 62%

– Dominion: 46%

– Maxi: 45%

February 22, 2010 12

The Keys to Success

• Create alignment between a critical mass of cards issued and

merchant locations deployed

• Identify and deploy the right mix of merchant locationsIdentify and deploy the right mix of merchant locations

• Maximize consumer awareness, activation and usage of PayPassutilizing an optimal mix of marketing strategies

• Ensure interoperability

• Continue updating & sharing best practices to ensure quality

rollouts

February 22, 2010 13

In Summary - Contactless Payments: the Time is Nowthe Time is Now

• Seize the global opportunity to displace cash -

$1086 tr for purchases under $50

• Benefit from increased global acceptance

channels

• Utilize support networks to assist issuers,

merchants, and acquirers

• Catch the opportunity that consumers are aware

of PayPass & love this new way to pay

• Demonstrate proven results that MasterCard

PayPass grows the bottom Line

February 22, 2010 14