towards cash free day

©2010 MasterCard.Proprietary and Confidential

Towards a Cash Free DayDelivering Innovation with Insights

ADVANCING GROWTH. ADVANCING COMMERCE.

Gabriele Zuliani, MasterCard WorldwideNovember 25, 2010

©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.

In 2010, we started looking more closely at the

Today we explore some of

December 2, 2010


order to understand how to better meet their needs

Could I live without cash?

What do I & my family spend

on everyday, week, month or

year?

Where do I want to use my card where its

not accepted or welcomed ?

What stresses & frustrates me

when I wantto pay?

What are

everyday payment needs & are they currently being

met?

What would make me use

my card more?

How much cash do I like to keep

in my purse?

December 2, 2010


We used 5 different methodologies designed

360°

MasterCard Advisors Transactional Data Analysis

without Cash

6 country blog

5 country Quantitative Study

Life of 4 4 country Ethnography Study

6 country POS experience

December 2, 2010


How much cash do I like to keep

in my purse?

How much do I usually draw

from the ATM?

How often do I actually pay with cash ?

What do I spendon everyday, week, month

or year?

December 2, 2010


Q8. Frequency of usage of payment means last 12 months, by country Base: All

Cash

Debit

Total Nr of payment txs

Each month, an average German consumer pays about 21x in out of ± 32 payment transactions.

23 21 2417

12

PL DE IT NL SE

125 8

14 16

3 3 311

42 32 37 35 32

Source: TNS, Towards a Cash Free Day research, 2010

Credit

December 2, 2010


For same everyday payments, Germans use mainly cash vs. heavy card habit Swedes who use cash in just 40% of payment occasions

% l

ow

valu

e p

aym

en

ts (

>10

)

Parking fees\tolls Newspaper

Public transport day ticketBooks and

magazines

Food\ snacks\beverages\ sandwiches

Everyday groceries from corner shop

Everyday groceries from supermarket

0

20

40

60

80

100

10 30 50 70 90

Public transportday ticket

Newspaper

Parking fees\tolls

Food\snacks\beverag es\sandwichesBooks and

magazines



% paid for in cash moneyBase: 5 countries, Payment occasions yesterday,

Categories: Transportation, Groceries / household items,Entertainment /hobbies / leisureSource: TNS, Towards a Cash Free Day research, 2010

Parking fee/tolls

Food/snacks/Beverages/sandwiches



December 2, 2010


What is my path from a

cash only consumer to a more regular debit user?

December 2, 2010


Understanding where cardholders are on their

Incidental Use Confidence Builds Comfort Sets In Habit is Formed

emergency

grocery & fuel clothes & shoes

(core debit territory)

big ticket

socialising

impulse

draw cash from branch or ATM

grocery & fuel plateau

health & personal carerail & bus

18.4 industries

Cash Content

Source: MasterCard Advisors Transactional Data Analysis

December 2, 2010

Expanding merchant acceptance & continuous communication are key to migrating customers along the card adoption path


What are my everyday

payment experiences?

December 2, 2010


What are my everyday

payment needs?

December 2, 2010


around speed, no matter the sophistication levelof the country!


1. Speed be on my way quickly

2. Avoid carrying cash, going to ATM

3. No transaction costVery functional needs

1. Speed be on my way quickly2. Feel in control of my spending

3. Go with the norm, pay as everyone does, not stand out,

not hold up the queueMost emotional needs

1. Speed be on my way quickly2. Feel reassured, not hold up the

queue, easy merchant interaction

3. No transaction cost or feeTheir payment needs are less

extensive as if other thingsmatter more

1. Speed be on my way quickly2. Avoid carrying cash

3. Use my preferred payment method

Very functional needs

1. Speed be on my way quickly2. Feel in control of my spending

3. No transaction cost or fee

December 2, 2010


scale groceries where what matters most is NOT having to carry cash


Consumer Payment Needs for Specific Everyday Payment Occasions

Acceptance SpeedSpeed be on my way

quicklySecurity

Basic condition Basic condition, but not top of mindConsumers do not know what they are liable for. Very different from the online world where security is the key concern.

No transaction cost or fee

FuelBooks and magazines

Go with the normParkingPublic transport day ticketNewspaper

ControlEveryday groceriesFood/snacks/beverages/ sandwiches

Avoid carrying cashLarge scale groceriesFuel

Functional

Emotional

December 2, 2010


Could I live a week without cash?

December 2, 2010


and preconceived notions Habit!


Cash gives me power Card makes me feel liberated

I don't have to go to ATM all the time

Its fast and easy

Card is easy its widely accepted

Not accepted everywhere

More electronic payments could mean less meaningful interaction with merchant

Less need to spend

Its safe

Card fraud

Feel empty without it

Physical incarnation of money (look, feel, smell)

Cash is comfortable, its accepted everywhere

Go with the norm - socially not always accepted to pay by card

last penny slips out of your hand

Not safe (carrying large amounts & pick pockets)

December 2, 2010


Merchants reactions have significant impact

CARDS ACCEPTED

Large shopsLarge amounts

SurpriseFirst reluctance, after acceptance of cardCARDS NOT ACCEPTED

Smaller shopsSmall amounts

reaction

IrritationCash only acceptedRefusing the card

brought so

Feeling embarrassed

he/she can do, leave shop without goods

December 2, 2010

Participants were very inventive on seeking solutions, but these were only temporary. In everyday situations cardholders land up using the method

most insisted on by merchant or following societal norms


What stresses & frustrates me

when I want to pay ?

Do I want touse my card where its not accepted or

welcomed ?

What reactiondo I get ?

December 2, 2010


Merchants in Munich & Turin had most card unfriendly attitude, refusing card acceptance, even at indicated minimum spend

100% card acceptance100% No restriction for card transactions

for card transactions 100% card acceptance100% No restriction

Warsaw

Rotterdam

No terminal 25%Refused card offered 6%Minimum amount 7%

TurinMunich

GothenburgExpressed preference for card 1%Refused card offered 1%Minimum amount 4%Card transaction surcharged 1%

No terminal 6%Minimum amount 3%Card transaction surcharged 2%

Manchester

Expressed preference for cash 8%Refused card offered 15%Minimum amount 19%

December 2, 2010

Italians and Germans had highest cash usage at 75% and 71% respectively


What do consumers want ?

Payment solutions that can simplify and facilitate their day to day lives

For the industry & all its stakeholders, its about delivering

December 2, 2010


Internet banking & security

9

Parking2

Tollroads1

LVP solutions / e-purse4

Retailer Loyalty 7

Transit3

10Personal Finance

Management

e-Com5

December 2, 2010

6Multiple

Credit and Debit cards

Identification Card

8

BANK

http://images.google.be/imgres?imgurl=http://www.chambresdhoteswijzer.nl/artikelen/wp-content/uploads/2010/03/telepeage.jpg&imgrefurl=http://www.chambresdhoteswijzer.nl/artikelen/columns/snelle-manier-van-betalen-voor-gebruik-van-de-peage-telepeage.html&usg=__SE1A64IGkLiGKo4GyGQI4FsibD8=&h=76&w=76&sz=1&hl=nl&start=8&sig2=dGQpAGlxb_8UmsiUC2cWlg&um=1&itbs=1&tbnid=ERfStUF9RBnHxM:&tbnh=72&tbnw=72&prev=/images?q=telepeage&um=1&hl=nl&safe=active&gbv=2&tbs=isch:1&ei=jY7ZS8aFBIqMOLPayKoP

http://www.payback.de/pb/neuanmelden2/cardSignup/0/paId/24/id/12978/

http://www.moneydashboard.com/

http://www.google.be/imgres?imgurl=http://hosting.ber-art.nl/wp-content/uploads/logo_yunoo.png&imgrefurl=http://hosting.ber-art.nl/yunoo-nextweb/&usg=__kITd5hEuPgtYiauepXBv891KJLs=&h=63&w=200&sz=29&hl=nl&start=11&sig2=JplvHNqAatqyIqLtotEUWA&itbs=1&tbnid=NeHzfTyRYWyaYM:&tbnh=33&tbnw=104&prev=/images?q=logo+yunoo&hl=nl&safe=active&gbv=2&tbs=isch:1&ei=bK3qS6PZEY3EOIC86KAL


one card!

Small ticket itemsEg. tolls, parking, coffee etc.

Everyday necessitieseg. groceries,petrol etc.

Large necessities eg.bills, rent, insurances etc.

Large indulgenceseg. electronics,holidays etc.

Mass

Co

nven

ien

ce

Relevance

Loyalty Affluent 50+FamiliesSmall

BusinessYouth

Mass affluent

December 2, 2010

Enhance security

Improve control

Improve convenience

Increase relevance

Increase relevance

Improve convenience

ConvenienceMaking debit faster, easier and universally accepted

across channels

SecurityImproving all aspects of payment security from prevention to recovery

ControlGiving consumers ways

of managing their money more effectively

RelevanceTailoring payment solutions

to the needs of different consumer segments

Remove barriers Increase appeal

http://www.4b.es/index.htm


Parking2

Tollroads1

e-purse4

Transit3

BANK

Expanding Debit cards into Low Value Payments

Debit cards accepted on Italian, French, Croatian, and Polish Tollways since 2009

Parking (garage and on-street) debit card solution now available

First transit PayPasscontactless transit solution introduced in Turkey (Asya Bank)

National e-purse migration plans to Maestro/MC PayPassimplementing


Perceive cash as free

Expect ubiquitous acceptance

Believe card transactions are slower than cash

Mixed view on the cost of cash

Think of cards as just more costs

Believe card transactions are slower than cash

Believe LVP transactions are loss making

Free-cash trap

ATM to POS migration requires time and investments

MasterCard Low Value Payments strategy is developed around 3 pillars addressing the core needs of all stakeholders

Consumers

RetailersAcquirers

Issuers

Need to drive profitability

Increase POS use

Develop acceptance for new card sectors

Increase speed and acceptance

Lower end-to-end transaction cost

Change Consumers / Retailers attitude towards cash vs. debit

3. Marketing & Awareness

1. New Technology & Solutions

2. Lower Cost Model

There is no one-solution in the LVP space, but a combination of solutions that must fit each stakeholder and offer an improvement over cash


MasterCard view of the opportunity for Low Value Payments

Tran

sact

ion

Valu

e

Acceptance Locations

ATV

CurrentBreak-even

Point

FutureBreak-even

Point

The key LVP objectives:

Increase card usage by: extending the acceptance of debit cards at

Facilitating card payments at existing debit card accepting merchants

Expanding to new acceptance channels by leveraging the latest technologies

Provide an attractive solution for all stakeholders that is a faster, more secure, more convenient and a more economic equivalent to cash and bring the barrier down

A

LVP Opportunity

DebitToday

A

New Merchant categories

Taxis, Doctors, Butchery, Bakery

ExistingMerchants

SupermarketsPetrolGroceriesFast-FoodMovies B B


Migration from e-purse to mobile/contactless A cost-effective way out of the cash trap and long-term vision for Low Value Payments

MagstripeNo CVM

EMV ChipDip & Go

EMV chip with PayPass

PayPassMobile tag

Mobile Integrated NFC PayPass

Online only Pre-Load/e-purse

Online/offline/chip pre-auth.

Auto top-upe-purse

MobileInfo

Structural (Back-end)

Front-End Technology(customer experience)


One card to unlock the door to simpler cash free

December 2, 2010

towards cash free day

Documents

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confidential advancing

cash moneybase

confidential page

insights2010 mastercard

mastercard worldwidenovember

of2010 mastercard

cash free day research