Introducing MasterCard®

M/Chip™

Version 4

More Power and Flexibility for Your Portfolio

MasterCard

M/ChipVersion 4

More Smart Choices.

card.

As the number of MasterCard member financial institutionsmoving to chip technology continues to grow, MasterCard’sOneSMART strategy and support program is ready to meetthe needs of the marketplace. Key to this, of course, is ourwork in maintaining a truly global payment infrastructure,and more specifically, our core credit and debit program,known as MasterCard® M/Chip™. The M/Chip program enablesfinancial institutions to issue globally interoperable chip-based MasterCard-, Maestro

®-,

and Cirrus®-branded cards,

fully compliant with the EMV(Europay, MasterCard, Visa) standard. First introduced in1998, M/Chip has steadily evolved over the years, evolvingas needed to provide our members with more functionality.

More Issuer ChoiceWith smart cards now flourishing in many parts of the world, MasterCard is

pleased to introduce the M/Chip version 4 (M/Chip 4) program. This program

is more than just a card specification. It consists of vendor-built and

MasterCard-tested card applications that comply with both EMV 2000 and

MasterCard’s global card specifications.

Our new specification builds on our market experience, delivering the most

comprehensive, yet most flexible guidelines for introducing chip-based credit and

debit cards. With M/Chip 4, MasterCard is giving the industry the tools to deploy

a wide range of unique, but technically consistent and globally interoperable

MasterCard smart cards. M/Chip 4 is fully compliant

with EMV 2000, the most recent iteration of the

global payment standard.

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To ease adoption, MasterCard is delivering specifications fortwo distinct M/Chip product profiles, each carefully designedto meet the needs of today’s issuers. The product profiles are:

1. MasterCard M/Chip Lite— a streamlined version of MasterCard®

M/Chip™ using the version 4 specifications for cards. This cost-effective solution provides members with a smooth start to their chip migration.

2. MasterCard M/Chip Select — a more sophisticated and feature-richimplementation of MasterCard M/Chip that takes advantage of all that isoffered by M/Chip Lite as well as RSA-based computing facilities that carry outsophisticated security and risk management functions, including Dynamic DataAuthentication (DDA) as defined in EMV.

By segmenting M/Chip in this way, MasterCard is meeting the needs of its global membership, who are at different stages of chip migration and are implementing a variety of different business strategies.Through the availability of two distinct profiles, MasterCard issuers will have an easy migration path tochip and the ability to select the right approach to meet their needs. These twoproduct profiles are fully consistent with the functionality and pricing of smartcard technologies available in the marketplace today. Additionally, MasterCard is giving its members maximum choice by having both M/Chip profiles implemented on all major smart card platforms (MULTOS™, JavaCard, and proprietary operating systems).

By using M/Chip 4, MasterCard issuers are given the freedom they need to offerbetter differentiated products and services, while MasterCard is assured that allimplementations around the world rely on the same core technology and behavethe same way.

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More Smart Features

M/Chip 4 was designed specifically to address many of

the industry's key needs. Among its main features:

� Builds on EMV 2000 standards for improved application

security: session key derivation and combined DDA/AC

generation

� Ability to store the last ten transactions and associated

details

� Permits post issuance modification of personalization data

� Improved offline PIN management facilities

� Compliant applications can be implemented on single

application cards or multi-application cards.

� By using a common source for different card profiles,

issuers can better segment their card base without

impacting their authorization and back-office infrastructure.

� Ability to differentiate between domestic or

international transactions

� Platform independent, and not tied to services provided

by any individual platform

� Enhanced card risk management to the issuer

� Improved issuer control over offline risk

� Enables secure offline debit

More Benefits for Issuers

M/Chip 4 was designed specifically to give our card issuers more functionality,service and control. In addition to its added flexibility, M/Chip 4 providesenhanced risk management and built-in, additional services sought by ourissuers and their vendors.

� In accordance with the EMV 2000 specifications,M/Chip 4 implements a new EMV defined session key algorithm, benefiting card issuers that want a single authorization process regardless of applicationprovider, while providing a high level of protectionagainst internal attacks.

� M/Chip 4 applications have the ability to store thelast ten transactions, including: transaction amount, transaction currency, transaction date, the card’scumulative transaction counter, and transactionauthorization details.

� Card issuers can segment their portfolios and controlcard use at specific merchant categories. For example,the M/Chip 4 application on a fleet card can limittransactions to designated merchant categories. Theseparameters can be defined by the issuer during thecard personalization process.

� M/Chip 4 cards can be used in conjunction withMasterCard® SecureCode™ to generate the authenticationdata necessary to guarantee e-commerce transactions.This program, called Chip Authentication Program, is one of three cardholder authentication solutionsMasterCard is making available to its issuers as part of its global MasterCard SecureCode program.

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� M/Chip 4 cards are passed through MasterCard’s Compliance Assessment andSecurity Testing (CAST) program that strives to ensure that card implementationsand their respective platforms meet MasterCard security standards. This program evaluates the chip, operating systems, and implementation integrityof M/Chip in order to provide members with greater assurance regarding thesecurity of their implementation.

� M/Chip 4 will help expand smart card acceptance by enabling secure, offline debit transactions to take place. The specifications include commandsthat facilitate implementation of an offline debit program, using the same application platform and infrastructure as the one used for traditional debit or credit programs. This program will allow issuers to maximize theirinfrastructure investment.

More Attention to Your Needs

In establishing M/Chip version 4, MasterCard took great care to define a clear migration path for memberswho have previously issued cards using earlier versions of M/Chip.

� M/Chip 4 supports all of the functionality supported by previous versions.

� Data preparation equipment are expected to only needminor upgrades.

� Card production equipment (hardware)will not need modification.

� Terminals and acquirer networks will not need specific modifications,but will follow the established EMVevolution.

� M/Chip 4 supports current MasterCardsession key derivation and EMV 2000 session key derivation. Members can deploy version 4 and begin using the new algorithm later.

� The most labor intensive part of migrating to EMVinvolves changes to the host systems and business practices.This work does not have to be repeated whenupgrading from previous versions to version 4.

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To find out more about M/Chip version 4, and how it can help your portfolio, please contact your

local MasterCard representative or e-mail us at e-Business@mastercard.com