Making Convenience Secure

Zwipe Investor Presentation

Stockholm, 20.09.2019 | André Løvestam, CEO

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Zwipe’s biometric payment platform is the most widely piloted solution in the emerging biometric payments marketplace

How our eco-system operates

Consumers

Technology ProvidersUpstream Vendors Card Manufacturers Banks & Issuers

Fingerprint Sensor manufacturers

Electronics manufacturers

Electrical Components Providers

A technology innovator & integrator

with extensive intellectual property

Provide components & manufacturing

services as specified by Technology

Providers

Integrate components & provide card manufacturers with an inlay to integrate

into card body form factor

Integrate inlay provided by Technology Providers and supply banks with final

live cards for piloting

Request cards for piloting, after successful pilots confirm orders for

issuing to end customers

Card NetworksCertify final card once

received from card manufacturers

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Industry Pioneer

With a industry-leading technology platform

and strong IP portfolio for biometric payment

cards and wearables. Zwipe possesses

knowledge and support capability to provide

professional services.

User experience focused

Simple, frictionless and secure UX with no batteries or

fixed power supply necessary with intuitive at home

user onboarding

Strong market momentum

With growing commitments from leading industry

stakeholders we are partnering with world leading

industry partners like Thales, Idemia, G+D, Goldpac,

Thomas Greg & Sons and multiple major payment networks

With a mission of “Making Convenience Secure”, Zwipe is at the forefront of battery-less biometric authentication

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Our core technology is at the heart of secure convenience

Zwipe’s technology solution enables battery-

less, contactless, ultra-low power, self-

contained biometric authentication solutions in

constrained environments

Zwipe has a strong IP portfolio covering 31

patent families, of which 8 are granted

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Partnership with Thomas Greg & Sons do Brasil, to enable Latin American marketplace

Partnership with Inkript, to strengthen position in the Middle East, Africa and Central Asia

Partnerships with Goldpac, XH Smart Technology and Silone Cardtech solidifying ability to service issuers in APAC region

Diversified and growing customer network

Partnership with dz card,strengthening capacity to support issuers in Southeast Asia

Zwipe’s customers include many of the world’s most established digital security providers and card manufacturers

Long standing partnership with CPI Card Group, largest

domestic card manufacturer in the United States

Long standing partnership with Thales (Gemalto),world’s largest card manufacturer

Longstanding partnership with Hitachi High-Technologies

Partnership with TAG Systems, to unlock the fast-mover approach of European-based Challenger Banks

Selected by Giesecke + Devrient to develop biometric wearable

Partnerships with AllCard Inc. to address opportunities in the Philippines

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Partnering with Idemia to offer disruptive biometric payments card platform

Source: RBR study Global Payment Cards Data and Forecasts to 2023

Global card expenditure to reach 45 trillion USD by 2023 on back of contactless payments

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1EMV, Contactless, and Digital Payments Security (3DS 2.0 and Visa ID Intelligence)

Adoption of contactless accelerates

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The challenge of making convenience secure Remove the unnecessary trade-off between security & convenience

Challenge Zwipe innovation solves the challenge:

For consumers Zwipe eradicates the need to use

cash, or enter a PIN

Superior convenience and increased security

For merchants Zwipe reduces cash handling and

increases customer throughput

For the card networks Zwipe strengthens the growth of contactless by improving convenience & security

For the banks Zwipe ensures brand visibility by enhancing

top of wallet effects and reduced fraud

FOR PAYMENT

SCHEMES

Drives

contactless and

cashless

transactions by

improving

convenience and

security

FOR

BANKS

Enhances

branding and

top of wallet

effects.

Reduces fraud

and offers

cardholders

peace of mind

For consumers Zwipe eradicates the need to use

cash, or enter a PIN

Superior convenience and increased security

For merchants Zwipe reduces cash handling and

increases customer throughput

For the card networks Zwipe strengthens the growth of contactless by improving convenience & security

For the banks Zwipe ensures brand visibility by enhancing

top of wallet effects and reduced fraud

FOR

CONSUMERS

Eliminates the

use of PIN.

Offers a

consistent, fast

and convenient

user

experience.

Peace of mind

For consumers Zwipe eradicates the need to use

cash, or enter a PIN

Superior convenience and increased security

For merchants Zwipe reduces cash handling and

increases customer throughput

For the card networks Zwipe strengthens the growth of contactless by improving convenience & security

For the banks Zwipe ensures brand visibility by enhancing

top of wallet effects and reduced fraud

FOR

MERCHANTS

Reduces

cash

handling,

saves

transaction

time and

increases

customer

throughput

For consumers Zwipe eradicates the need to use

cash, or enter a PIN

Superior convenience and increased security

For merchants Zwipe reduces cash handling and

increases customer throughput

For the card networks Zwipe strengthens the growth of contactless by improving convenience & security

For the banks Zwipe ensures brand visibility by enhancing

top of wallet effects and reduced fraud

Strong adoption of contactless cards, but cardholders still have security concerns with contactless…

…and banks introduce transaction limits to limit fraud

Zwipe solves challenges for several groups

Source: Fingerprint Cards Research, 2018

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Biometric authentication is fast becoming a necessity for all devices

…especially for banking and payments

1010

Biometrics perceived as delivering superior security

Source: VISA Ready for Biometrics Report, AYTM Market Research, April 2018, among pilot participants

2,84

7,23

49,3

4,4

4,36

52,17

40,6

13

14,5

24,6

5,7

15,9

46,4

14,5

4,4

66,7

31,9

1,5

NO AUTHENTICATION

SIGNATURE

NUMERIC PIN

BIOMETRICS

Very Secure Secure Neutral Insecure Very Insecure

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First-of-its kind Bank of Cyprus and Areeba pilots yielded valuable feedback on user experience and product performance

88%

of Bank of Cyprus pilot

participants surveyed

would like to have a

biometric payment card in

the future and would

recommend it to a friend

59%

of Bank of Cyprus pilot

participants would be ready

to pay a premium fee for a

biometric payment card

64%

of Areeba pilot participants

were satisfied with the user

enrolment experience

84%

of Areeba pilot participants

were enthusiastic or

interested in biometric

payment cards

Top benefits from Bank of Cyprus exit surveys

1. No need to enter PIN & convenience

2. Extra security

3. Wow Effect/Cool factor

Top benefits from initial Areeba exit surveys

1. Fast and secure checkout

2. Making contactless transactions easier

3. Overall more convenient than existing payment methods

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Millions

1 380 1 481

1 985

2 605

3 100

3 637

4 0204 221

4 432

1 6201 670

1 323

868

547

191

2024e2018e

3 647

2017 2019e 2021e2020e 2022e 2023e 2025e

3 0003 151

3 3083 473

3 828

3bn EMV payment cards shipped in 2017, with dual-interface

cards representing 46%, expected to increase to over 80% in

2021

• Annual shipments of EMV payment cards from 2012-2017 had a CAGR of

20%, with forecasted annual growth of 5% between 2017-2025

• Dual-interface cards expected to be the main driver, with a CAGR of

15.7% between 2017-2025

• Annual shipment of dual-interface cards expected to double by 2021

VISA & Mastercard industry mandate that all payment

terminals must accept contactless payments by 2020

• As of 31st December 2015, any new deployments of payment cards must

offer the facility for the client to pay by contactless means

Regulatory directives like PSD2 in the EU & Aadhaar in India

are likely to force the adoption of biometric authentication

• By January 2020 all point of sale terminals in Europe and many other

markets must offer the facility for the client to pay contactless

Contact-based EMV payment cards Dual-interface payment cards

Source: Eurosmart, Zwipe. Note: 2012-2018 numbers based on Eurosmart. 2019-2025 numbers based on Zwipe projections, Paymentscardsandmobile.com, Payment Service Directive (PSD2)

Positive outlook for dual-interface payment cards

Annual shipments of EMV payment cards Comments

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Growth in contactless drives demand for dual-interface biometricpayment cards

Addressable market for biometric payment cards growing fast Case study: Dual-interface cards in the UK

23 61 148370

866

1 504

2 566

4 298

6 805

10%

16%

25%

38%

2020e

0% 0%

2018e

0%

2019e 2027e

1%

2021e

3%

2022e

6%

2023e 2024e 2025e 2026e

Demand from different key players in the payments ecosystem expected to trigger exponential adoption of biometric sensors on payment cards:

• Biometric authentication technology already validated and accepted by the mass market

due to smart phones

• Card issuers looking for new ways to differentiate and meet evolving consumer

expectations

• Governments and regulators promoting use of biometric solutions to minimise fraud and

identity issues

• VISA & Mastercard industry mandate that all POS terminals must accept contactless

payments by 2020 in Europe

27

1323

3138

59

82

103

120130

24%37%

50%63%

74%81%

1%

20%15%

2008 2011

5%

2009

9%

2010 2012 2013 2014 2015 2016 2017 2018

• Gradual adoption due to latent demand and lack of NFC compatible POS terminals

– i.e. consumers did not know or were unaware of their preferences until they got used to

contactless (“tap and pay”)

– Today, over 2/3 of payment terminals in stores are compatible with NFC

Biometric payment card addressable rate

Biometric payment cards in circulations

*Key determinants of the timing and speed of adoption of biometric payment card will be;

i) timing and completion of certification processes and systems for enrolment, ii) the successful

execution of pilot programs and consumer acceptance and adoption of the new technology, iii) inlay

production capacity, iv) the competitive intensity at every step in the value chain (from technology

solution providers to issuers), and vi) manufacturing cost development for biometric cards

Source: Edgar Dunn 2018. The addressable market represents the total number of payment cards that could potentially be converted to biometric payment cards according to Edgar Dunn’s analysis.

MillionsMillions

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Technology trend for Biometric Payment Cards

• Several initiatives to integrate and consolidate electronics

• The market is moving towards passive inlay solutions by 2022-23 with major

investments from payment schemes, semiconductor companies, inlay

makers and SCMs

• A dedicated Secure Element combines functions of Secure Element and

Microcontroller (MCU) from today’s designs in one chip

‒ Fingerprint image processing and feature extraction is computationally expensive

‒ Requires a powerful MCU and memory to run generic biometric algorithm

• The target is to cut costs compared to today’s solutions

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This disruptive biometric payment card platform:

• replaces Secure Element, Microcontroller and >30 components with a single chip

• offers best in class biometric performance and energy efficiency

• enables significant cost reduction and mass volume market take-off

• will be piloted H2/2020, with mass volume deployment 2021

• this disruptive technology is expected to play a leading role in the BPC market

This partnership entails:

• co-investment in the technology development

• Zwipe retains worldwide exclusive distribution rights for the lifetime of the product

to all manufacturers of payment cards, wearables and other payment solutions,

and also to their suppliers

• IDEMIA retains technology ownership and will sell in their cards to financial

institutions (embedded in their F-Code biometric payment card offering)

• Zwipe will also offer accompanying functionality, software and services around

the technology platform

Landmark partnership with Idemia

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Enhanced security that does not compromise the user’s privacy will enable even greater convenience for

consumers…

…not only in payments cards, but also wearables

Zwipe is well-positioned to leverage these opportunities

Fingerprint sensor solution incorporated in a wristband

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Revenue

Annualised revenue of USD 125 million (NOK 1 billion)

Volume

Annual sales of 20-40 million embedded systems for dual-interface biometric

cards, with expectations to reach cash-flow break-even at these volumes

Price

Average sales price in the range of USD 3-4 per unit at full volume

Market position

No.1 in the market for dual-interface biometric payments with 30% market share

Key medium term financial aspirations

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