Haddad Contactless London

Copyright 2007 © Welcome Real-time

All rights reserved. Material in this presentation can be copied on condition that “Source : Welcome Real-time” is included in a clearly visible fashion next to the copied material.

Will contactless change the global payments landscape?

Aneace HaddadChairman & FounderWelcome Real-time

London June 2007

The main contactless promise: “No more lines”

“No more lines.”Does contactless deliver this promise?

Yes, if the shoppers in front of you also have contactless cards.

25 million contactless cards will be issued in the US in 2007, versus 300 million magstripe cards.

1 out of 12

“Of the largest banks, only JPMorgan Chase has begun a significant rollout, although it has only put contactless chips on part of its portfolio.”

Card Technology, June 2007

Only JPMorgan Chase

Contactless forecasts for 2007

230 million

Jupiter Report (2004)

37 million

Jupiter Report (2006)

25 million

Card Technology (June 2007)

Percent of spend in 2010

US contactless payments forecast (Jupiter)

1.6%

“A major obstacle is persuading more merchants

to accept contactless.”Card Technology, June 2007

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

“[We] haven’t moved aggressively to contactless because there is little consumer demand – been

more of an issuer/association push.”

David TryderDunkin’ Donuts

May 2007

“The contactless cards are not yet affecting the parking lots. Get more

cards out in the market!”

Manager, Sheetz, Inc.Source: American Banker

“Waving a card in front of a reader takes about as much time

as swiping one through.”

Manager, Sheetz, Inc.Source: American Banker

“Visa launches No Signature Required program to boost card usage for small purchases with traditional magnetic

stripe cards.”

April 11, 2006

Is this ad for contactless or traditional magstripe cards?

“Because money shouldn’t slow you down”

THE IRONY:

Contactless can deliver uniquefeatures that are irresistible to merchants … not just “Speed”.

(But the technology needs to be used to its fullest.)

Which brand offers irresistiblefeatures to merchants?

An opportunity to differentiate.

How might contactless become irresistible to merchants?

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.

[Couple] EMV technology and loyalty best practices …(customer analytics … merchant-funded rewards …)

Mercator Advisory Group, Nov 2006

DiamondCluster, Dec 2005

How might contactless become irresistible to merchants?

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 messagecan be delivered via a POS receipt.

Gartner, May 2007

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

France

Germany

Italy

Spain

Pakistan

Thailand

China

Newspaper ad, half page:€9,000 - €12,000

Co-op package mailing,1 insert: €350

Local coupon book,1 page: €350

Make it possible for merchants to use data hidden inside the card’s chip to deliver targeted messages at the POS, at very low cost.

Your cards willbecome muchmore valuableto merchants.

Dining &Fast Food

Cosmetics

Ex: Frequent Shopper Messages

Coupon at 1st visit-----------------------------

Coupon

BUY 1 VALUE MEALGET A FREE

DESERT

-----------------------------Coupon

BUY 1 VALUE MEALGET A FREE

DESERT

Coupon at 2nd visit-----------------------------

Coupon

BUY 1 VALUE MEALGET A FREEHAPPY MEAL

-----------------------------Coupon

BUY 1 VALUE MEALGET A FREEHAPPY MEAL

Coupon at 3rd visit-----------------------------

Coupon

BUY 1 VALUE MEALGET A SECOND

VALUE MEAL FREE

-----------------------------Coupon


VALUE MEAL FREEExpires Jan. 31, 2006p Expires Jan. 31, 2006p Expires Jan. 31, 2006p

After 100£-------------------------

COUPON

CHOOSE A SILVER CATEGORY GIFTExpires Jan. 31, 2006

-------------------------COUPON


After 100£-------------------------

COUPON


-------------------------COUPON


After 200£-------------------------

COUPON

CHOOSE A GOLD CATEGORY GIFTExpires Apr. 30, 2006

-------------------------COUPON


After 200£-------------------------

COUPON


-------------------------COUPON


After 300£-------------------------

COUPON

CHOOSE A PLATINUM CATEGORY GIFTExpires Aug. 31, 2006

-------------------------COUPON


After 300£-------------------------

COUPON


-------------------------COUPON


After 400£-------------------------

COUPON

CHOOSE A DIAMOND CATEGORY GIFTExpires Dec. 31, 2006

-------------------------COUPON


After 400£-------------------------

COUPON


-------------------------COUPON


Merchants can avoid giving high value promotions to all customers. They can deliver increasingly valuable coupons encouraging the customer to come back

again soon. Customers are pleasantly surprised to get the offer.

Dining &Fast Food

Cosmetics

Ex: Competitive Shopper Messages

Petrol

----------------------------Coupon

LIMITED TIME OFFER

CHOOSE ANY SILVER GIFT SET

ONLY £2.00AT YOUR NEXT VISIT

Expires Nov. 15, 2005

----------------------------Coupon

LIMITED TIME OFFER

CHOOSE ANY SILVER GIFT SET

ONLY £2.00AT YOUR NEXT VISIT


----------------------------Coupon

TRY OUR NEW EZ CAR WASH AND

ENJOY A COFFEE WHILE YOU WAIT

CAR WASH+COFFEE SPECIAL $2.00


----------------------------Coupon

TRY OUR NEW EZ CAR WASH AND

ENJOY A COFFEE WHILE YOU WAIT

CAR WASH+COFFEE SPECIAL $2.00


-----------------------------Coupon


VALUE MEAL FREE

Not valid with any other specialExpires Jan. 31, 2006

-----------------------------Coupon


VALUE MEAL FREE

Not valid with any other specialExpires Jan. 31, 2006

Merchants can avoid losing customers to the competition. They can recognize occasional customers probably shopping elsewhere, and offer an incentive on the

next purchase, to encourage customers to shop more frequently.

Ex: Game Programs

Petrol----------------------

Y---O---N-

Game expires 31 Jan 2006

----------------------

Y---O---N-


1st fill-up----------------------

Y---O---N-


----------------------

Y---O---N-


1st fill-up----------------------

YE--O-W-N-


----------------------

YE--O-W-N-


2nd fill-up----------------------

YE--O-W-N-


----------------------

YE--O-W-N-


2nd fill-up----------------------

YES-OUW-N-


----------------------

YES-OUW-N-


3rd fill-up ----------------------

YES-OUW-N-


----------------------

YES-OUW-N-


3rd fill-up ----------------------

Coupon

YESYOUWIN!

Expires 31 Jan 2006

----------------------Coupon

YESYOUWIN!

Expires 31 Jan 2006

4th fill-up----------------------

Coupon

YESYOUWIN!

Expires 31 Jan 2006

----------------------Coupon

YESYOUWIN!

Expires 31 Jan 2006

4th fill-up

Dining &Fast Food

Coupon at 1st visit----------------------

M---R---S--

Pay with your card at McDonald’s. When all the letters above are filled,

win your McSurprise!

----------------------

M---R---S--



Coupon at 2nd visit----------------------

MC--RPR-S--



----------------------

MC--RPR-S--



Coupon at 3rd visit----------------------

MC--RPRISE-



----------------------

MC--RPRISE-



Coupon at 4th visit----------------------

Coupon

MCSURPRISE!

Congratulations! Present this ticket to any clerk and

get your McSurprise!

Not valid with any other offer. Expires 31 Jan 2006

----------------------Coupon

MCSURPRISE!

Congratulations! Present this ticket to any clerk and

get your McSurprise!

Not valid with any other offer. Expires 31 Jan 2006

Merchants can avoid the cost and trouble of complicated loyalty programs. Instead, they can build continuity through games based on cumulative spending

or number of visits.

What happens when merchants prefer one brand over others?

A simple, merchant funded promotion helped a Malaysian bank boost acceptance and usage of

it’s cards at Pizza Hut.

Maybankcard Purchases at Pizza Hut

Sep 2005 Oct 2005 Nov 2005

+ 49%

+27% +30%

+49% +50%

+71%+80%

+96%

+121%

+150%

Superm

arket

Superm

arket

Fast fo

od chain

Fast fo

od chain

Audio/

Electro

nicsAud

io/Elec

tronics

Fashio

n Reta

iler

Home I

mprov

emen

tFas

hion R

etaile

r

Avg+ 75%

Payment brands see increased transaction volume when they support targeted

merchant promotions

An opportunity to differentiate

And an opportunity to address major pains which cannot easily be addressed with magstripe cards.

The problem must be solved at the payment network levelPayment schemes will find it more and more

difficult to attract issuers if they cannot promise higherinterchange.

Show issuers that the scheme’s new generation payment products provide more structurally stable

interchange revenues.

The problem must be solved at the payment network level

Merchants and regulators will continue challenging the interchange model if

schemes don’tprovide more

value.

Change perceptions by demonstrating to merchants and regulators that the payment scheme provides major new innovation for the benefit of merchants.

The problem must be solved at the payment network levelImportant scheme initiatives (contactless,

mobile, EMV …) can fail without active merchant participation.

Get merchants to see the scheme’s emerging payment technologies as an integral and strategic part of their

communications and marketing activities.

Copyright 2007 © Welcome Real-time

All rights reserved. Material in this presentation can be copied on condition that “Source : Welcome Real-time” is included in a clearly visible fashion next to the copied material.

Thank you

Aneace HaddadChairman, Welcome Real-time

[email protected]

http://aneace.blogspot.com

www.welcome-rt.com

Economy & Finance

Haddad Contactless London