Spiced payWave Sep 07

Making the preferred contactless brand in Asia Aneace Haddad Chairman & Founder Welcome Real-time September 2007

Technology from Welcome makes the payWave brand much more attractive to merchants. The power of Differentiation!

Let the other brands struggle with major pains which occur when merchants are not excited. For example…

1 out of 133 “ There are 6 million places where you can use your credit card, 45,000 (contactless locations) doesn’t excite me .” John Suchanec, Bank of America

“ Until you have a better merchant coverage, there’s clearly a problem .” Leigh Malnati, American Express

“ Contactless is a great idea but only at the right price and the price at the moment is miles off the pace.” “ The cost of handling cash is virtually free because the banks want our notes for their ATMs .” Nick Mourant, Tesco

“ WHSmith and Boots have looked at it from the cost perspective and it has not stacked up.” Consultant to MasterCard

“ [We] haven’t moved aggressively to contactless because there is little consumer demand – been more of an issuer/association push .” David Tryder Dunkin’ Donuts May 2007

“ Waving a card in front of a reader takes about as much time as swiping one through.” Manager, Sheetz, Inc.

Provide more value to merchants … and let other contactless brands struggle with all of these problems.

Imagine the next generation of cards…

… equipped with a set of marketing enhancements that help merchants get more value from the Visa payWave brand.

Merchants can use data hidden inside the payWave chip to deliver targeted messages at the POS, at very low cost. BPI advertisement, Philippines, 2007

WHY PROMOTIONAL MARKETING? ?

Promotional marketing is huge ($342 billion in the US alone!)

Promotional marketing is global (the same techniques are used everywhere )

France

Germany

Australia

Pakistan

Thailand

China

Newspaper ad, half page: € 9,000 - €12,000 Co-op package mailing, 1 insert: €350 Local coupon book, 1 page: €350 Promo marketing is expensive (and rarely targeted because too difficult)

“ Bank-managed data could help retailers identify their best customers and prospects .” “ [help] entice customers to visit the retailer - either for the first time or for repeat patronage .” “ [banks can charge] direct fees or indirect/bundled pricing e.g., in the form of higher interchange.”

“ Introduce payment information value-added services to reduce pricing pressure from merchants and convince them of the real value of bank-sponsored retail payment networks.”

“ An EMV-compliant card would store cardholders' shopping patterns on the chip.”

“ For example, how many times the cardholder has used a card at a specific retailer or whether the person has shopped at that retailer.”

“ The retailer will have a platform to deliver tailored promotions at the POS. The promotion or message can be delivered via a POS receipt.”

Payment data in the chip indicates that this man last had coffee here over 30 days ago… … he has obviously been going somewhere else.

… since he is here now, why not print an offer at the bottom of his card receipt? ---------------------------- Coupon TRY OUR NEW EZ CAR WASH AND ENJOY A COFFEE WHILE YOU WAIT CAR WASH+COFFEE SPECIAL $2.00 Expires Nov. 15, 2007 A feature that is simple, low cost and valuable for all types of merchants.

1st visit ---------------------- M---R---S-- Use your Visa payWave card at McDonald’s. When all the letters above are filled, win your McSurprise! 2nd visit ---------------------- MC--RPR-S-- Use your Visa payWave card at McDonald’s. When all the letters above are filled, win your McSurprise! 3rd visit ---------------------- MC--RPRISE- Use your Visa payWave card at McDonald’s. When all the letters above are filled, win your McSurprise! 4th visit ---------------------- Coupon MCSURPRISE! Congratulations! Present this ticket to any clerk and get your McSurprise! Not valid with any other offer. Expires 31 Jan 2008 Card receipts don’t have to be boring.

Not just loyalty!

Attract and excite occasional customers *

Competitive Shopper Messages/Coupons

Game Programs

Smart Sampling Offers

Reward frequent shoppers

Frequent Shopper Messages/Coupons

VIP Service Vouchers

*: Acquisition tactics are very valuable to merchants, and function best on general purpose cards, not store cards, so merchants need Visa more.

Competitive Shopper Messages/Coupons 30 days since last visit ----------------------------- Coupon Bring a Friend Our Treat BUY ONE COFFEE GET ONE FREE! Not valid with any other offer Valid Until June 30, 2007 Merchants instantly recognise customers who last came some time ago, and deliver a coupon encouraging them to come back in a few days. Help merchants avoid losing customers to the competition.

Game Programs Coupon 1st visit ---------------------- Game Status P---E DR---! Pay with your card at Pizza Hut. When all the letters above are filled, win this month’s nominated prize! Valid Until June 30, 2007 Coupon 2nd visit ---------------------- Game Status PR--E DR—E! Pay with your card at Pizza Hut. When all the letters above are filled, win this month’s nominated prize! Valid Until June 30, 2007 Coupon 3rd visit ---------------------- Game Status PR-ZE DRI-E! Pay with your card at Pizza Hut. When all the letters above are filled, win this month’s nominated prize! Valid Until June 30, 2007 Coupon 4th visit ---------------------- Winners Coupon PRIZE DRIVE! Congratulations! Present this winning ticket to any staff member to receive your prize! Not valid with any other offer Valid Until June 30, 2007 Games based on cumulative spend or number of visits help merchants build continuity without the cost and trouble of complicated loyalty programmes.

“ Games” is as big as “Loyalty”!

Smart Sampling Offers Merchants can give a different sample at each visit to encourage customers to try many different products, and avoid giving the same samples over and over again. 1st visit in the month ------------------------- COUPON GOOD FOR GIFT PACK #1 Expires Jan. 31, 2006 ------------------------- COUPON GOOD FOR GIFT PACK #1 Expires Jan. 31, 2006 1st visit in the month ------------------------- COUPON GOOD FOR GIFT PACK #1 Expires Jan. 31, 2006 ------------------------- COUPON GOOD FOR GIFT PACK #1 Expires Jan. 31, 2007 2nd visit in the month ------------------------- COUPON GOOD FOR GIFT PACK #2 Expires Apr. 30, 2006 ------------------------- COUPON GOOD FOR GIFT PACK #2 Expires Apr. 30, 2006 2nd visit in the month ------------------------- COUPON GOOD FOR GIFT PACK #2 Expires Apr. 30, 2006 ------------------------- COUPON GOOD FOR GIFT PACK #2 Expires Apr. 30, 2007 3rd visit in the month ------------------------- COUPON GOOD FOR GIFT PACK #3 Expires Aug. 31, 2006 ------------------------- COUPON GOOD FOR GIFT PACK #3 Expires Aug. 31, 2006 3rd visit in the month ------------------------- COUPON GOOD FOR GIFT PACK #3 Expires Aug. 31, 2006 ------------------------- COUPON GOOD FOR GIFT PACK #3 Expires Aug. 31, 2007 4th visit in the month ------------------------- COUPON GOOD FOR GIFT PACK #4 Expires Dec. 31, 2006 ------------------------- COUPON GOOD FOR GIFT PACK #4 Expires Dec. 31, 2006 4th visit in the month ------------------------- COUPON GOOD FOR GIFT PACK #4 Expires Dec. 31, 2006 ------------------------- COUPON GOOD FOR GIFT PACK #4 Expires Dec. 31, 2007

“ Sampling” is as big as “Loyalty”!

Frequent Shopper Messages/Coupons Coupon 1 st visit ----------------------------- Coupon BUY ONE HOT&SPICY COMBO GET A FREE DESERT Not valid with any other special Valid Until June 30, 2007 Coupon 2 nd visit ----------------------------- Coupon BUY ONE HOT&SPICY COMBO GET A FREE UPSIZE! Not valid with any other offer Valid Until June 30, 2007 Coupon 3 rd visit ----------------------------- Coupon BUY ONE HOT&SPICY COMBO GET ONE FREE! Not valid with any other offer Valid Until June 30, 2007 Merchants can deliver increasingly valuable coupons encouraging customers to come back again soon, and avoid giving high value promotions to all customers.

VIP Service Vouchers “ Enjoy VIP Services. Simply show your VIP Voucher to gain entry to special events.” ----------------------------- - VIP VOUCHER- ACCESS TO INVITATION ONLY EVENTS FOR A YEAR VALID UNTIL DECEMBER 31, 2007 Keep this VIP voucher. Use to gain admission to upcoming exclusive VIP events and advanced access to special promotion offers. Merchants can identify best customers and surprise them with VIP treatment, and avoid wasting money offering high value services to everyone.

vs When a scheme’s product is valuable to merchants When the product is not valuable to merchants

vs When a scheme’s product is valuable to merchants When the product is not valuable to merchants Merchants encourage customers to use that payment product over others. They encourage use of cheaper payment methods (such as cash).

vs When a scheme’s product is valuable to merchants When the product is not valuable to merchants Merchants encourage customers to use that payment product over others. They encourage use of cheaper payment methods (such as cash). Merchants encourage customers to get a card if they don’t already have one. They make no special efforts to promote card acquisition.

vs When a scheme’s product is valuable to merchants When the product is not valuable to merchants Merchants encourage customers to use that payment product over others. They encourage use of cheaper payment methods (such as cash). Merchants encourage customers to get a card if they don’t already have one. They make no special efforts to promote card acquisition. The cards are more attractive to customers, so easier to sell. The cards are no different than those of other payment schemes.

vs When a scheme’s product is valuable to merchants When the product is not valuable to merchants Merchants encourage customers to use that payment product over others. They encourage use of cheaper payment methods (such as cash). Merchants encourage customers to get a card if they don’t already have one. They make no special efforts to promote card acquisition. The cards are more attractive to customers, so easier to sell. The cards are no different than those of other payment schemes. High interchange fees are justified with regards to that payment scheme. High interchange fees are not justified, and end up getting cut.

vs When a scheme’s product is valuable to merchants When the product is not valuable to merchants Merchants encourage customers to use that payment product over others. They encourage use of cheaper payment methods (such as cash). Merchants encourage customers to get a card if they don’t already have one. They make no special efforts to promote card acquisition. The cards are more attractive to customers, so easier to sell. The cards are no different than those of other payment schemes. High interchange fees are justified with regards to that payment scheme. High interchange fees are not justified, and end up getting cut. The product is adopted by more issuers. Banks prefer other payment products.

Payment products that support targeted merchant promotions enjoy increased transaction volume

One more thing …

Merchants surprise and delight customers with cost-effective promotions that help them achieve their objectives.

Attract and excite occasional customers.

Reward frequent shoppers.

Limited infrastructure investment required.

Merchants simply accept payWave cards and ask their acquirer to set up the campaigns of their choice.

No need for a database, integration or systems other than payWave enabled payment terminals (enhanced for new generation payWave cards equipped with Welcome’s applet).

Benefits for merchants

Surprise and delight cardholders with cost-effective offers funded by merchants.

Enjoy increased spend and usage.

Protect interchange revenues (brands which offer less value to merchants face a higher risk of getting cut).

Acquire merchants easier, with less pressure on fees.

Limited infrastructure required: simply issue payWave cards with Welcome’s applet built-in.

Benefits for banks

The Bigger Picture (i.e. why this is so important)

“ MasterCard’s IPO, the biggest since Google, is a success despite ongoing legal battles over what are known as interchange fees.” “ Visa and MasterCard face dozens of lawsuits across the nation.” “ Gas station owners make less money, or even lose money, when customers pay with plastic .” “ Paying in cash instead of credit cards could lead to more money saved for everyone.” Interchange awareness comes to Wall Street

“ Historically, MasterCard and Visa were mirror images of each other. Visa should spell out if and how it plans to differentiate its interchange strategy, the markets and business it intends to cultivate, and the information-based services enhancing its customers’ profitability.” Lessons Visa Can Learn From MasterCard’s IPO

The problem must be solved at the payment network level Payment schemes will find it more and more difficult to attract issuers if they have to dramatically cut interchange. Show issuers that payWave provides more structurally stable interchange revenues (other contactless products face a higher risk of getting cut).

The problem must be solved at the payment network level Merchants and regulators will continue challenging the interchange model if schemes don’t provide more value. Change perceptions - show merchants and regulators (and Wall Street) that payWave provides major new innovation for the benefit of merchants.

The problem must be solved at the payment network level Important scheme initiatives (contactless, mobile, EMV …) will struggle without active merchant participation. Get merchants to see payWave as an integral and strategic part of their marketing activities (while other brands provide little added value).

Thank you Aneace Haddad Chairman & Founder, Welcome Real-time [email_address] http://aneace.blogspot.com www.welcome-rt.com