Maximizing Cardholder ValueUsing Smart Card Technology

Rajiv Kapoor

EVP Marketing and Product Sales

Visa Asia Pacific

14 March 2002

Challenges Facing the Card Business

Diminishing returns on profitability

Saturation of credit cards in mature markets

Need for more competitive product offerings

Role for new technologies such as smart cards

Key Profitability Drivers

How can smart cards improve these factors?

LoyaltyRevolving credit

Mass transitAcquisition/reduced attrition

ID, Medical insuranceRetention

Loyalty, AuthenticationUsage/spend

Value-added applicationsDrivers

Visa’s Chip Card Vision

Over the next 10 years, all payment cards will contain a chip and carry multiple applications.

Chip cards are already used in many sectors

Chip Cards Today

Credit/debit cards

Healthcare cards

Security ID cards

Mass transit cards

E-purse cards

Loyalty cards

Telco SIMs in mobile

communications

Costs Have Fallen Dramatically

EMV chip card costs now <US$1

EMV terminal costs now <US$50 incremental

Demand

exploding

Costs

declining

Increasing Global Demand for Chip Cards

Source: Frost & Sullivan, DataMonitor, Visa

2000

Nu

mb

er

of G

lob

al C

hip

Ca

rds

Telco - 75%

Other - 25%

2 billion

(20% of all cards)

2004

Telco - 40%

Govt./Health/ID - 30%

Financial - 15%

Transport - 7%

Other - 8%

4 billion

Major Drivers for Card Migration

Fraud

Value add

Significant reduction through chip

Multiple applications on one card

Strong consumer demand

Initiatives to Accelerate Chip Migration

New policiesIncentives and

penalties

US$25 million regional investment

Country fundsframework

90% migration by end 2008

Overcome country barriers in Japan,

Korea, Taiwan

Acceleratevendor and member

readiness

Multi-application Chip Cards and U-Commerce

HealthAccess

ElectronicCommerce

Electronic Purse

Security / ID

Transit Mobile

Loyalty

VisaDebit and Credit

Open Platform Will Enhance Multi-application

Credit

Phase 1

Loyalty - Petrol

Credit

Phase 2

Healthcare, ID

Credit

Loyalty - Airline

Phase 3