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Maximizing cardholder value using Smart Card Technology - VISA
Visa is promoting the use of smart card technology to maximize cardholder value for issuers. Smart cards can improve key profitability drivers for card issuers like usage, retention, and acquisition by enabling value-added applications for loyalty programs, authentication, ID verification, medical insurance, and mass transit payments. Visa's vision is for all payment cards to contain chips and carry multiple applications over the next 10 years. Costs of chip cards and terminals have fallen dramatically, and global demand for chip cards is exploding as they are increasingly used for payments, ID, transit, and loyalty programs.
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Maximizing cardholder value using Smart Card Technology - VISA
- 1. Maximizing Cardholder Value Using Smart Card Technology Rajiv Kapoor EVP Marketing and Product Sales Visa Asia Pacific 14 March 2002
- 2. Challenges Facing theCard Business Diminishing returns on profitability Saturation of credit cards in mature markets Need for more competitive product offerings Role for new technologies such as smart cards
- 3. Key Profitability Drivers How can smart cards improve these factors? Drivers Value-added applications Usage/spend Loyalty, Authentication Retention ID, Medical insurance Acquisition/reduced attrition Mass transit Revolving credit Loyalty
- 4. Visa’s Chip CardVision Over the next 10 years, all payment cards will contain a chip and carry multiple applications.
- 5. Chip Cards Today Chip cards are already used in many sectors Credit/debit cards Healthcare cards Security ID cards Mass transit cards E-purse cards Loyalty cards Telco SIMs in mobile communications
- 6. Costs Have FallenDramatically Demand exploding Costs declining EMV chip card costs now <US$1 EMV terminal costs now <US$50 incremental
- 7. Increasing Global Demandfor Chip Cards 2000 Number of Global Chip Cards 2 billion (20% of all cards) Other - 25% Telco - 75% Source: Frost & Sullivan, DataMonitor, Visa 4 billion Other - 8% Transport - 7% Financial - 15% Govt./Health/ID - 30% Telco - 40% 2004
- 8. Major Drivers forCard Migration Fraud Value add Significant reduction through chip Multiple applications on one card Strong consumer demand
- 9. Initiatives to AccelerateChip Migration New policies Incentives and penalties US$25 million regional investment Country funds framework 90% migration by end 2008 Accelerate vendor and member readiness Overcome country barriers in Japan, Korea, Taiwan
- 10. Multi-application Chip Cardsand U-Commerce Access Health Electronic Commerce Electronic Purse Security / ID Transit Mobile Loyalty Visa Debit and Credit
- 11. Open Platform WillEnhance Multi-application Phase 1 Credit Phase 2 Credit Loyalty - Petrol Phase 3 Credit Loyalty - Airline Healthcare, ID