March 4, 2015David Dechamps

© 2015 MasterCard.Proprietary and Confidential

Dynamics Backgrounder

Emerging payments: what is at stake?Emerging payments: what is at stake?

�Payments, like commerce, are influenced by key trends

�Fast-growing e-com

�New devices: mobile & smart

�Digital players are fighting for digital services, therefore

What you should remember from this

©2015 MasterCard.Proprietary and Confidential 2

�Digital players are fighting for digital services, therefore having to integrate payments

�MasterCard is investing significant amounts to address this new environment, developing solutions aimed at optimizing both convenience and security

March 4, 2015

So far, card payments could easily be separated in two worlds...

Face-to-face

(card @ terminal)Remote

(mostly browser)

PCPC

87%87%

85%85%15%

©2015 MasterCard.Proprietary and Confidential 3March 4, 2015

MobileMobile

TabletsTablets

13%13%

However, things are evolving fast...

E-commerce transactions have been growing fast over the last years

©2015 MasterCard.Proprietary and Confidential 4March 4, 2015

Source: ComScore

Very fast…

New Sales of connected devices - WorldwideMillion

“87% Of Connected Device Sales by 2017 will be smart-phones and tablets, with PCs representing only 13%” *

©2015 MasterCard.Proprietary and Confidential 553/4/2015

2012

340

2014 2017

PCsDesktop Notebook

Tablets

Smart-Phones

120

290

260

1200

270

470

1700

* From Forbes quoting IDC research. Chart Source: Gartner projection from June 2014

700

Connected devices enable the “commerce value chain” to become more integrated into applications

©2015 MasterCard.Proprietary and Confidential 66March 4, 2015

COMMERCE VALUE CHAIN

Orientation Selection Transaction Delivery Customer care

Account Identification Authorization Settlement Information

PAYMENT VALUE CHAIN

Orientation Selection Transaction Delivery Customer care

To serve today’s customers, our 4-party system must evolve

Issuers AcquirersPayment networks

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Consumers Merchants

March 4, 2015

Our ambition:deliver the best multi-channel solutions

Security / Control

3Dse-com3Ds

e-com3Ds

e-com

MasterPass

MasterPass

MasterPass

MobileMobileMobile

SecureMulti-

channelSolutions

SecureMulti-

channelSolutions

SecureMulti-

channelSolutions

ApplePay

ApplePay

ApplePay

DSRP MCBP

Token

(MDES)

BIO-METRICS

©2015 MasterCard.Proprietary and Confidential 88March 4, 2015

Convenience

Scale

Trad.e-comTrad.e-comTrad.e-com

Mobilecontactless

Mobilecontactless

Mobilecontactless

F2F Remote Converged solutionsNFC

Master

Pass

BIO-METRICS

38 contactlesscountries

13

TfLPL: 4in5locations

contactless

RU:mobile NFC

(eSE)

Contactless has now reached a “point of no return” in Europe

©2015 MasterCard.Proprietary and Confidential 9* In-store MasterCard and Maestro card transactions.

Source: banks’ own reporting (QMR) and MC data Warehouse. Q4 2014

13with mobile

NFC

almost

1in5 locations have a contactless

terminal

CZ:>1in2transactions*contactless

NL: debit migration

EE

Contactless acceptance Contactless & mobile

6Mio (out of 8,8Mio) Maestro NFC cards

and ~25% of all terminals

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MasterPass will add convenience while embedding enhanced security over time

©2015 MasterCard.Proprietary and Confidential 10103/4/2015

User Experience Improvements

U/N

PWD

Issuer controlled authentication

Device Secured

(EMV-Like) authentication

This year in Austria

Tokenization

Enable third party wallets

proprietary merchant interface

Other digital players

Page 11

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Tokenization

MasterPass allows Issuers to create their own mobile experience and balance the dependency on powerful 3rd party wallets

March 4, 2015

Enable Banks through MasterPass

Key innovations helping to drive the converged paradigm

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CloudCloud BasedBased SecureSecure ElementElementHCE(MCBP)

©2015 MasterCard.Proprietary and Confidential 12

EMVEMV--like security for like security for eCommerceeCommerce transactionstransactions

EMV over the internet (DSRP)

March 4, 2015

Mobile payment combats fraud

230

110

230

92

153

85

Countefeit

Lost / stolen

European MC Issuer Fraud Million USD

Mag stripe

©2015 MasterCard.Proprietary and Confidential 133/4/2015

2011

277

230

2012

342

2013

462

CNP

CountefeitMag stripe

The segments which the Digital Giants will address

©2015 MasterCard.Proprietary and Confidential 14

ee--ComCom

inin--appapp

F2F F2F comcom

March 4, 2015

MasterCard’s value proposition so far and in the future

•SIM(with the MNO)

BrowsersBrowsers

…

©2015 MasterCard.Proprietary and Confidential 15

ee--ComCom

inin--appapp

F2F F2F comcom

March 4, 2015

•eSE(with Samsung)

•Cloud based(MCBP)

“Traditional” eCommmerce

Questions?

©2015 MasterCard.Proprietary and Confidential 1616March 4, 2015

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