President of the Russian E-Money AssociationDirector for New Payment Technologies, Bank Tavrichesky

London, 20 June 2012

What you can do with NFC on emerging markets: example of Russia

Dr. Victor Dostov

Population: 142 mln. (&)

Number of banks 1 039

GDP per capita 15 800$

Russia means big

SIM cards per person: 1.6

Number of smartphones sold annually 12 mln.

Share of prepaid phones 95%

Russia means mobile

eWallets top up, 2011: $4 000 000 000

Active eWallets 34 mln.

Growth rate, per year 70%

Russia means e/m-wallets

1. Choose a service 2. Deposit cash 3. Payment is done

Electronic payment kiosk: how it works?

300 000

Topping-up mobile phone

account (Airtime)

Money on mobile account transformed into e-moneyE-Money may used for

P2P or P2B transactions

The Law lays down groundbreaking (for Russia) provisions:

*Legal definition of “Electronic money”

*Who regulates E-money sector?

*How should M-commerce work?

New Realities.Federal Law “On National Payment System”

* Classic

*Modern

*Avant-garde

Three NFC segments

Classics

PayWay and PayPass cards are now accepted at:

Fast food chains… …Urban trains… …Some petrol stations

And other locations (yet, regions and stand-alone stores are slow to catch up

Podorozhnik Card(more than 250 000 issued since 2011)

• Contactless stored-value card

• Accepted in all types of public transport in St-Petersburg, in

future – on suburban trains and elsewhere

• Topped-up online (with bank card or e-money), with prepaid

mobile phone or in cashRussian Oyster-type

card

Modern

Universal Electronic Card

• Identification document –Identification application

• Payment Instrument –2 payment applications

• Key to E-Government services

*Free for population

* Global applications : Transport, medical

insurance, driving license

*Local applications : Transport, fishing

permits, access, etc.

Universal Electronic Card

*Government+consortium of private and

government-associated banks

* First release date 01.01.2012, 50 mln cards

to issue

* Moved to 01.01.2013

UEC: infrastructure

* 350 000 devices are expected in 2013

* Both on-board (SWP) and SIM-based

solutions

* Sponsored by MNO

NFC in Mobiles

Avant-garde

*Contactless cards coupled with e/m

wallets and prepaid airtime accounts

*New payment technologies are flexible and adjustable:

NFC card/phone

Converging new and very new financial services

*New payment technologies are flexible and adjustable:

NFC card/phone

Converging new and very new financial services

e

*Most dangerous to NFC is its hi-tech

nature

Challenges to NFC (mobile only)

*Customer ownership debates

Challenges to NFC

* Slow development

USB 1.0 -> 3.0

GSM 1G -> 4G

WiFi 802.11b -> 802.22

Challenges to NFC

* Total connectivity

NFC vs 4G

Challenges to NFC

Dr. Victor Dostov

greygato@gmail.com

+7 812 963 8515