What’s next when America turns EMV – Comparing Europe and America EMV rollout

What’s next when America turns EMV – Comparing Europe and America EMV rollout Yiru Zhong, Analyst Information & Communication Technologies 24 September 2009

What’s next when America turns EMV? • This analyst briefing aims to achieve two objectives: • Provide an overview on EMV payment trends in Europe and North America • Identify best practices in Europe for America 24th September 2009 2

What is EMV? Europay American became part JCB joined Express of EMVCo joined MasterCard EMVCo EMV specifications Version 4.2 published EMV specifications Version 3.1.1 published EMV specifications development began 1994 1996 2002 2004 2008 2009 Source: EMVco 24th September 2009 3

Lay of the land – EMV deployments in the world Europe Canada • EMV compliance • Liability shifts 2010 deadline 1Jan05 • Full migration 2012 / 15 Asia • EMV compliance deadline 1Jan06 America • Issues still to be resolved 24th September 2009 4

Is the economic downturn still a drag in the payment industry? Not necessarily so Quarterly Real GDP YoY, % Opportunities 2% • Tighter grip on bottom line – can EMV 2007 2008 2009 help? 1% • Changing end user payment habits – debit cards come to the fore 0% • Opportunity cost of new market expansion falls in an economic -1% downturn -2% Obstacles • Investment inertia -3% • End user payment habits – credit cards usage declines -4% 2Q07 4Q07 2Q08 4Q08 2Q09 EU Japan US Source: OECD Quarterly GDP Press Releases 24th September 2009 5

UK: One of the European Market Leaders in EMV SEPA compliance Micro- payments enabled EMV compliance deadline PIN CHIP & Pin introduced introduced Use of chip in bank cards 1999 2003 2006 2009 2012 2020 Timelines Continuous innovation to entrench digital payment methods Continuous innovation to entrench digital payment methods 24th September 2009 6

UK: Barclaycards example • Eradicate chicken and egg dilemma • Seek partnerships to generate transactions • Invisible influences on end-user habits 24th September 2009 7

Poland: An emerging champion from Eastern Europe Legend EMV Deployment Total Of cards Sup to 50% EMV Cards 5% to 50% Under 5% Central Europe 21 10 Eastern Europe 145 Nordic + Denmark 133 6 2 Baltic 51 UK & Ireland 6 126 45 124 Benelux & Switz 50 53 Germany & Austria 3 182 Eastern Europe + TURKEY Central Europe + Greece 35 South Europe Source 2006: Business Dev Xiring Widen customer reach to drive adoption Widen customer reach to drive adoption 24th September 2009 8

Poland: Closed loop communities • Expand acceptance network • Seek partnerships to generate transactions • Invisible influences on end-user habits 24th September 2009 9

Turkey: An unlikely candidate Device based SMS-based Mobile payment Mobile payment Turkcell NFC MobilOdeme Contactless Payment MasterCard PayPass system launched in 2006 Contact Payment Garanti Bank Bonus Card based Card: chip-based credit and loyalty card program Evolution of payment enablers Innovative payment alternatives for an emerging economy Innovative payment alternatives for an emerging economy 24th September 2009 10

The value chain describes the relationships between stakeholders and end users Infrastructure and service enablers Hardware providers Payments IT & Communications infrastructure Payment service providers providers Emerging Software Mobile operators Mobile devices applications providers Non bank affiliated Traditional payment communities Campuses Service Public transport providers Financial institutions End user Retailers 24th September 2009 11

Key success factors in America • Expand acceptance network • Seek partnerships to generate transactions • Invisible influences on end-user habits 24th September 2009 12

Looking ahead • Changing end user payment habits • Co-existence of alternative payment methods • Innovations to expand beyond EMV 24th September 2009 13

Next Steps Request a proposal for a Growth Partnership Service to support you and your team to accelerate the growth of your company. (myfrost@frost.com) 1-877-GoFrost 1-877-463-7678 or +44 (0)20 7343 8383 Register for the next Chairman’s Series on Growth: The Growth Excellence Model: Competitive Benchmarking & Growth Investing (October 6th) (http://www.frost.com/growth) Register for Frost & Sullivan’s Growth Opportunity Newsletters and keep abreast of innovative growth opportunities. (www.frost.com/news) 24th September 2009 14

Your Feedback is Important to Us What would you like to see from Frost & Sullivan? Growth Forecasts? Competitive Structure? Emerging Trends? Strategic Recommendations? Other? Please inform us by taking our survey. 24th September 2009 15

For Additional Information Craig Hays Jake Wengroff Director of Sales Director, Corporate Communications Information & Communication (210) 247-3806 Technologies jake.wengroff@frost.com (210) 247-2460 email@frost.com Yiru Zhong Analyst Information & Communication Technologies (48) 22 390 4128 yiru.zhong@frost.com 24th September 2009 16

What’s next when America turns EMV – Comparing Europe and America EMV rollout

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