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©2012 MasterCard. Proprietary and Confidential

Mobile Payment: MasterCard perspective on changes ahead

September 2012 Christian Rau


Getting started: Some things you should know about MasterCard.

1966

Company formed

Merged with Europay International

2002 2006

Became a publicly traded company (NYSE: MA)

210 countries 23,000 customers 33 mln. acceptance locations 1059 mlnMasterCard cards 705 mln. Maestro cards 2700 bln.USD GDV

We don’t issue cards We don’t determine the pricing for cards (fees and interest) We don’t decide on interchange, nor do we earn on it

Things MasterCard does not do:


…before we start: definition of mobile payment.

… Payment transaction involving the exchange of funds for either goods or services conducted via a mobile handset (1)

Mobile payment is…..

…. also referred to as mobile money, mobile banking, mobile money transfer, and mobile wallet generally refer to payment services operated under financial regulation and performed from or via a mobile device (2)

Mobile proximity

Mobile remote

P2P

1) Euro Monitor July 20122) 2) Wikipedia July 2012


Industries change.

Juni 12, 2012

Music industry MP3 (players) Apple,

Spotify Sharing, digitization

Cameras Digital cameras, smartphones

Sony, Samsung, Instagram

“Always on”, sharing online

Payment (mobile) internet, smartphones, tablets, mobile TAN

TelCos, PayPal, Facebook, iZettle, Groupon

(mob.) internet banking, (mob) E-commerce, mobile payment

Tele- coms

Mobile internet, smartphones

Skype, Facebook, What’s App

Social, one-to-many, text based

Technology Behavior Entrants

Market dynamics

Consumer behavior

Technology advances


Evidence of changes relevant to mobile payment.

72% of young German males have a smartphone (1)

70% of retailers say mobile contactless payment is “next big thing” (2)

1) Source: Nielsen e.o.y. 2011 for consumer postpaid tariffs 2) EHI 2012 3) Eurostat

59% of Germans already shop online, generating 18% of all sales (3)

112% YOY growth for PayPal transactions. 2nd largest already in E-Com (2)

Juni 12, 2012

26% did pre-purchase research thru smartphone and bought in shop (4)

4) Google - Our mobile planet – global smartphone users (In De)


Our view on the changes we see.

Juni 12, 2012

He who rejects change is the architect of decay.

“ ” Harold Wilson

!  Technical and behavioral changes are significant (Steam engine, mass production)

!  Change is irrevocable – generations of digital natives will entrench it in society

!  Due to network character we expect the speed of change to increase rather than slow down

!  MasterCard and our partners have assets that put us in good position to shape the future playing field


We are still at the beginning of change.

Juni 12, 2012

CONCEPTUAL

Time

Ado

ptio

n of

cha

nge

We are here today

PayPal offers interest on funds, increasing offline presence

Non perishable goods’ E-com sales overtake classical retail

Mobile fund transfers replace small value trx.

Virtual wallets replace “classical” ones

Acceptance curve is illustrative only, MasterCard accepts no liability for forecast


MasterCard product initiatives.

Juni 12, 2012

Mobile in store

Roll out of contactless retail ecosystem – on issuer and acquirer side.

Conver-gence

Enable all connected devices for consistent payment experience.

Value add Services such coupons, social network integration and P2P fund transfer.

Ensure “plastic cards” are transferred to digital wallet as digital payment tools.

Mob POS

P2P Mob

E-com

Digital wallet

Note: digital wallet also serves as enabler for convergence and value added services


Opportunities opened up by mobile payment.

Juni 12, 2012

Faster transaction time

Manage loyalty

Geo-location discounts

Comparison shopping

Read product reviews

Check account balances

I.  Opportunities for merchants

II.  Richer consumer experience

III.  Value add from / for banks

IV.   New opportunities for MasterCard


Development path for mobile proximity payment.

Juni 12, 2012

Classic form factor with contactless PayPass technology (relevant for acceptance build up).

Sticker form factor to go on mobile (or keys) to prepare consumers (educating users, cover NFC phone gap).

Multi card mobile wallet as target picture (incl. VAS).

Hig

h

Deg

ree

of “M

obili

ty”

Low


Christian Rau

Senior account manager TelCos

[email protected] +49-172-1880723

To get in touch.

Juni 12, 2012