Last updated: August 2010 PayPass™ Momentum PayPass™ is an innovative “contactless” payment feature that provides consumers with a fast and convenient alternative to cash for their everyday purchases, and can be added to any MasterCard® or Maestro® account. Consumers simply tap their PayPass-enabled card or device (such as a key fob enhanced with a payment tag) on a specially equipped merchant terminal, eliminating the need to fumble for cash and coins, swipe or hand their card over to a clerk. Signatures are not required for PayPass purchases $50 or less (or local currency equivalent) in all regions except Europe or countries which have previously approved PayPass limits, further speeding customers’ transactions. PayPass also provides better record-keeping than cash and is ideal for quick payment environments where speed is essential, such as quick-serve restaurants, gas stations, drug stores, vending machines, movie theaters, transit stations, and sports arenas. PayPass Continues to Gain Strong Momentum Worldwide As of 2Q 2010, there are approximately 78 million PayPass cards and devices in use at approximately 245,000 merchant locations worldwide. There are a number of PayPass trials and rollouts currently underway in 34 countries including Australia, Brazil, Canada, China, the Czech Republic, France, Germany, Hungary, India, Indonesia, Italy, Japan, Korea, Lebanon, Malaysia, Mexico, Mongolia, New Zealand, Norway, Philippines, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Switzerland, Taiwan, Thailand, Turkey, the United Arab Emirates, the United Kingdom and the United States. PayPass Delivers on Consumers’ Preference for Electronic Payments, Speed and Convenience According to the MasterCard-commissioned Global Cash Usage Survey conducted in 2007 by KRC Research, consumers worldwide – as reflected by the 13 countries surveyed – are using less cash these days than they did five or more years ago. • A majority of respondents (56%) believe that one day the world will be a cashless society where credit and debit cards will replace cash and checks for payments • 75% of respondents believe that it is no longer necessary to have lots of cash on hand • Two-thirds of respondents (66%) use cash less often than they did five or more years ago • Only one-fifth (21%) of consumers are willing to wait in line for more than 10 minutes to make a purchase of less than $25 These survey results also indicate that consumer preference is driving PayPass growth and usage globally. • About half of respondents (49%) are likely to use a contactless card if provided by their issuer • 47% of those likely to use a contactless card cite convenience as the greatest benefit • Aside from convenience, consumers like the security, speed and ease of contactless technology • Women are the most motivated to use contactless payments in order to avoid carrying cash A 2008 MasterCard PayPass Benchmark Study found that a majority of PayPass users are satisfied with their cards, and merchants are benefiting from increased consumer usage of PayPass: • 94% of PayPass users are “very satisfied” or “satisfied” with their cards and 90% say that PayPass either “exceeds” or “meets” their expectations • 95% of consumers say they will use PayPass “more often” or “just as often” in the future Last updated: August 2010 • Of consumers that are aware of the PayPass functionality on their cards, 77% have said they use it as their primary card • Of consumers that use PayPass, 14% said they have made purchases at a new merchant because they had PayPass • Of consumers that use PayPass and visited new merchants, a majority have done so at grocery, pharmacy and quick-serve restaurants. Since launching PayPass in 2002 and the first implementation in 2003, MasterCard has seen significant momentum that follows the global secular shift from paper-based to electronic payments. MasterCard PayPass Momentum To-Date 2009-2010 Mobile is advancing as a key form factor for PayPass as consumers turn to their mobile devices for more than telecommunications. Merchants are also increasingly accepting contactless payments and public transportation trials of contactless payments are entering new markets. As the PayPass footprint continues to grow around the world, MasterCard gained industry recognition and accolades. • MasterCard and its partners launched or completed a number of mobile trials continuing the momentum of the mobile form factor for contactless payments. o Citi announced that they will be making MasterCard PayPass contactless payment tags available for a majority of Citi credit cards. The tags can be affixed to the back of mobile devices and can be used to make contactless payments at any merchant worldwide that accepts PayPass transactions. o MasterCard announced plans to pilot Gemalto’s Upteq N-Flex mobile payment device in Singapore. MasterCard and Gemalto will team up with DBS Bank, local prepaid card specialist Ez-Link and telco StarHub to conduct the trial, which will be available for EZ-Link Fevo MasterCard cardholders. The device is a wafer-thin chip that can be inserted into a variety of different mobile phones to enable users to make NFC payments at PayPass-enabled terminals throughout the city. o Barclaycard and Orange announced they would enable consumers to use their mobile phones to pay for goods and services at retailers by taping a handset against a reader, targeting a customer base of 28 million UK consumers. o In Turkey, MasterCard, Akbank and Turkcell launched one of the first mobile payments pilots in Europe. All transactions made with Akbank’s Axess PayPass credit cards will be made through GSM phones with Turkcell lines having the PayPass technology. No PIN and signatures will be required for payments under 35 TL’s. o In Canada, results from the Canada NFC trial with Bell Mobility were deemed a success. MasterCard worked with Bell Mobility to introduce near-field communication mobile phones with PayPass payment functionality. During the trial, subscribers were able to make secure purchases with their phones at any location in Canada that accepted PayPass. • MasterCard PayPass adoption for public transportation payment continues around the world: o In Brazil, MasterCard, Credicard, Citibank’s Brazilian credit card administrator, and acquirer Redecard launched MasterCard PayPass in Rio de Janeiro for public transportation and other quick service merchants - the first contactless transit payment product to be introduced in Latin America. o In the UK, RBS WorldPay and MasterCard launched a PayPass trial in Liverpool with Stagecoach buses. o In the US, MasterCard continued to see momentum in acceptance at airport parking lots with McCarran International Airport in Las Vegas, Norfolk International Airport, Miami Last updated: August 2010 International Airport and Philadelphia Parking Authority announcing their acceptance of PayPass. • MasterCard marked the fifth anniversary of PayPass in Asia/Pacific with a charitable ‘Tap & Give’ initiative benefiting needy communities in Korea, Taiwan and Malaysia. Each time a cardholder taped a PayPass card or device to pay for a purchase at selected merchants in the three markets, MasterCard donated a fixed amount or percentage of the transaction to appointed charities. • MasterCard was recognized by Frost & Sullivan as “Company of the Year” for the global performance of PayPass, innovation and unparalleled excellence in the global contactless payment market, competitive strategy, customer satisfaction and leadership. • Europe saw significant PayPass momentum with key retail partners. o MasterCard and global retail leader Carrefour announced the launch of the PASS MasterCard card as a result of a partnership designed to offer French consumers the very latest in ‘best-in-class’ card payments. The new card was rolled-out in France in February 2009 by Carrefour’s financial services’ subsidiary, Société des Paiements PASS. o In Italy, MasterCard and IntesaSanpaolo deloyed PayPass cards and terminals across the city of Milan starting in November. At the end of 2009 there were more than 80,000 cards and over 800 POS terminals PayPass enabled with acceptance at retailers such as: Esselunga, a major supermarket chain - leader in the Milan area, Zara (fashion), Decathlon (sportswear), Blockbuster (media), Mondadori and Feltrinelli (two large bookstores and editorial groups), UCI Cinemas,Total (petrol), Chicco and Prenatal (Babywear), BricoCenter (DIY) and Autogrill group (fast food chains). • Merchants that implemented PayPass acceptance so far in 2009 have expressed their satisfaction: o Philadelphia Parking Authority: "Accepting MasterCard PayPass at our airport parking facilities makes traveling easier by offering our passengers a fast and convenient payment option to quickly get to their final destinations," said Vincent J. Fenerty, Jr., executive director of the Philadelphia Parking Authority. "Making this upgrade to our airport parking facilities fits well with our commitment to provide the highest levels of customer service and enhance the overall airport experience." (press release) o Stagecoach: "This new state-of-the-art technology will make bus travel in Liverpool faster and more convenient than ever before and we believe it will help attract more people onto our greener, smarter bus services. Customers will soon be able to use their PayPass credit and debit cards on all 200 Stagecoach Merseyside buses across Liverpool - all it takes is a tap of their card and off they go." (Press release) o Sports Authority: According to Tom McVey, senior vice president, Store Operations, Sports Authority. “Accepting MasterCard PayPass will help keep our checkout lines short, so customers spend less time waiting in line when they make their purchases.” (Press release) o Compass Group: “Our on-site cafeterias typically handle large groups of people at lunchtime, and our operators need the best use of technology to maximize speed of service to our customers to enhance their dining experience,” said Rob Watkins, CIO, Compass Group North America. “By expanding payment options to include MasterCard PayPass, we are able to offer not only convenience, but also peace of mind from using a secure system.” (Press release) o Hess: “Our customers are always looking for greater speed, security and convenience at Hess locations, and increasingly they prefer electronic forms of payment over cash,” said Rick Lawlor, vice president, Retail Sales and Marketing, Hess Corporation. “Accepting MasterCard PayPass means we can meet our customers' needs and continue to enhance the customer experience, which is the Hess Way.” (Press release) Last updated: August 2010 o Manchester City Football Club: The technology “will help reduce queuing time and allow supporters to get into their seats for the game.” (Contactless News) 2008 Growing validation for PayPass continues as acceptance grows across retail, transit and sports stadiums around the world, amplifying the benefits of Tap & Go technology. • More mobile trials launched around the world, including: o ING launched NFC mobile Maestro PayPass trial in Romania o Bell Mobility NFC trial in Canada o U.S. Bank, MasterCard Worldwide and Nokia announced the introduction of a mobile payments pilot program in Spokane, Washington o MasterCard, Garanti Bank and Turkcell announced mobile wallet pilot in Turkey • The transit sector continues to benefit from the speed and convenience of PayPass. o RATP working to improve speed of access to transit in Paris with PayPass o Liverpool buses accept PayPass o Taxis in London accept PayPass o Taiwan MoneyCard officially launched for Kaohsiung Mass Rapid Transit o Authority and NJ Transit announced pilot test that will allow customers to use MasterCard PayPass and other contactless cards and devices to pay their transit fare • Prepaid cards also incorporated contactless PayPass technology. o Delta City and Banca Intesa sold top-up gift cards with PayPass in Serbia o MBNA and the Manchester City Football Club to launch Europe’s first pilot program to issue season ticket holders with a reloadable MasterCard Prepaid with PayPass contactless card • Retailers around the world leveraging the benefits of speeding consumers through the lines with PayPass accepted in New York & Company stores, Faber Coe & Gregg US locations, Sobeys stores in Canada, Staples, Bureau en Gros, Rite Aid and the Paradies Shops. • Merchant testimonials in support of PayPass included: o Paradies Shops: "After installing MasterCard PayPass readers we immediately began to receive positive feedback from our customers about not having to hand over their payment card to a clerk, and about the increased speed at checkout when payments are made using PayPass," said John O’Hare, Managing Director of IT, The Paradies Shops. "As a company we have seen more customers using payment cards as a method of payment verses cash, and as a result our average ticket has gone up, since customers aren't limited to the cash they have on hand when making purchases.“ (Press release) o Liverpool Stagecoach buses: “This new state-of-the-art system will make bus travel faster and more convenient for thousands of people in Liverpool every day and help attract car users to more sustainable public transport. (Press Release) o Manchester City Football Club: The technology “will help reduce queuing time and allow supporters to get into their seats for the game.” (Contactless News) 2007 By the end of 2007, there were 20 million MasterCard PayPass devices in circulation globally accepted by 80,000 merchants in 20 countries. This was a significant milestone for PayPass as electronic payments continued to grow around the world. • Mobile PayPass began to build momentum outside of the US as a new form factor Last updated: August 2010 o PayPass MasterCard, in collaboration with SoftBank Mobile Corp., Orient Corp., Samsung Electronics Co., Ltd, Gemalto and Hitachi Ltd., announced plans to launch Japan’s Near Field Communication (NFC)-enabled mobile payment platform o Taiwan Mobile and Taipei Fubon Bank began the launch of MasterCard PayPass in mobile phones o MasterCard and GSMA began pilot on International Mobile Money Transfers o RBS trialed mobile Maestro PayPass in U.K. o DnB NOR and Telenor, represented by Telenor Nordic and Telenor Research and Innovation in Norway worked with MasterCard to offer mobile PayPass functionality • Quick service restaurants, vending machines and gas stations remain key merchant verticals for growing PayPass acceptance around the world o McDonald’s in Poland accepting PayPass o KFC restaurants throughout Malaysia began accepting PayPass o USA Technologies and Canteen Vending add PayPass acceptance o BP adds PayPass acceptance at all retail sites o Taco Bell tests PayPass in their locations • Other merchant categories began to implement PayPass acceptance to improve experience for cardholders and continued to express their satisfaction with PayPass o Lufthansa Miles & More Credit Card in Germany, enabling customers to benefit from innovative PayPass technology for contactless payment o In the US, ShopRite, Office Depot, Einstein Bagels and Tully’s Coffee announced PayPass acceptance o Meijer Inc.: "The egg has hatched," said Andrea Brandt, financial services manager at Meijer inc., which has accepted and issued contactless payment cards since 2005. Based on 15,000 contactless payment terminals in 181 stores, Brandt reported a monthly sales lift of 44% for customers paying with contactless cards. (Smart Card Alliance) o Tim Hortons: "It was really important to us to implement a technology that was going to be fast, especially in our drive-throughs, where we do quite a brisk business," said a [Tim Hortons] spokeswoman. Since rolling out PayPass, Tim Hortons' transaction times are faster, she said, although she couldn't give specifics. "People aren't fumbling for change." (Card Technology) o Boston Culinary Group, Dolphin Stadium: "Typically hockey fans have the half hour before and the two 15-minute [intermissions]. I have one hour to do my business." He estimated the new devices should speed service by at least 25 percent. (South Florida Sun-Sentinel) o Xcel Energy Center: On average, the cards shave close to 30 seconds off a transaction that usually involves groping for cash and fumbling with change, said Kathy Ross, Xcel Energy Center public relations manager. "Anything that helps people speed up the process and get back to their seats and don't miss a moment of the action, that's what we're looking for," Ross said. (Star Tribune) 2006 Increased momentum outside of the U.S. helped drive industry leading growth as identified by Frost & Sullivan’s “Market Penetration Leadership Award” in 2006 and Card Technology’s recognition of Art Kranzley as “Visionary of the Year”. • By the end of the year, PayPass had been rolled out in the United States, Canada, United Kingdom, Japan, Turkey, Korea Lebanon, Malaysia, Mexico, Taiwan, Philippines, South Africa, Australia and France. Last updated: August 2010 • In the U.S., MasterCard worked closely with USA Technologies to trial and rollout PayPass acceptance for tollbooths and vending machines, including those with Cadbury Schweppes and Coca-Cola Bottling Company • Stadiums continue to see benefits of PayPass o Nine Major League Baseball teams accept PayPass at concession stands o Acceptance at NFL Chicago Bears’ stadium, Soldier Field • New form factors for PayPass were rolled out o PayPass wristband trialed at Giants Stadium compliments of MasterCard o NFC phone pilots with Cingular, Nokia and Citigroup in New York and with Nokia and 7- Eleven in Dallas while MasterCard and G&D launched the world’s first full-scale over-the- air secure personalization solution for contactless mobile payments o First PayPass watch launched with ChinaTrust as companion to credit – the technology on a prestigious OSCARDS 2006 Award o Taipei Fubon Bank launched the world’s first three-dimensional MasterCard PayPass key fob for 2006 FIFA World Cup™ • Transit remained an area of focus for PayPass o Acceptance starting in taxicabs and at tollbooths in the U.S. o MTA, Citigroup and MasterCard trialed PayPass in select subway stations o Acceptance at public highway service and rest areas in Taiwan in collaboration with Nan Ren Hu Corporation • MasterCard remained industry’s contactless technology leader with the first internationally accepted, dual-interface contactless EMV payment solution launched in Malaysia. • Merchant testimonials expressed satisfaction with PayPass o Sheetz, Inc.: Mr. [Rich] Steckroth, [manager of new business development, Sheetz Inc.,] said Sheetz decided to accept contactless cards mainly to speed up transactions and free up parking spots. Convenience stores need to move customers in and out fast, he said. "If there's a full lot, a person will drive by, so if we can make an empty spot, that's a good thing…The time savings - about eight seconds a transaction - comes from consumers' not having to extract cards from their wallets, put them back in, and sign receipts.” (American Banker) o Baltimore Ravens Stadium: At the 70,000-seat M&T Bank Stadium, home to the Baltimore Ravens football team, cardholders seem to be spending more at concession stands. The stadium began accepting credit, debit, and contactless cards last season, and the amount of money spent on food and beverages increased about 10%. (American Banker) 2005 MasterCard gained global recognition of its innovative achievements with PayPass. Key vertical areas – particularly those where speed is essential – began seeing the benefits of accepting contactless payment technology. • PayPass awareness begins to build through advertisements and implementations in new merchant environments Last updated: August 2010 o The first broadcast execution of a the “Priceless” campaign supporting PayPass is also launched featuring acceptance at a McDonald’s location o Football stadiums and rewards programs began benefiting from PayPass – the technology was incorporated into the MBNA Seahawks and MBNA Ravens Extra Points credit card programs with acceptance implementations in their stadiums o To support PayPass awareness NFL legend Troy Aikman “paid” with PayPass and then “passed” lunches out to members of the Madison Square Boys and Girls Club at a McDonald’s restaurant in midtown Manhattan o World’s first MasterCard OneSmart™ PayPass™ Chip Combi Card implemented as part of the Kaohsiung City Government (KCG) e-ticket transportation project in Southern Taiwan o MasterCard and USA Technologies begin working together to provide a faster and more convenient payment option for use at vending machines • MasterCard received recognition for its PayPass innovation and implementations o The MasterCard OneSmart PayPass Combi card – the TaiwanMoney Card used for transit fares in seven cities in Southern Taiwan with a contactless application – won first place in the transport competition of the 10th annual Sesames Awards Ceremony held at CARTES, the international smart card show in Paris o MasterCard OneSmart™ PayPass™ was recognized as the most innovative payment product launched in 2004 by the European Payments Consulting Association (EPCA) and European Card Review Innovation Awards • Convenience stores and gas stations across the U.S. and Canada accept PayPass o Citi Cards Canada and Petro-Canada, Canada’s Gas Station launched first PayPass technology in Canada o Wawa convenience stores and gas pumps, 7-Eleven stores and Sheetz locations in the U.S. began accepting PayPass o PayPass pilot launched in Japan with Pocket Card and Itochu Enex o U.S. super center chain Meijer Stores accept PayPass at all of its locations, including gas pumps; also launched PayPass-enabled Meijer Platinum MasterCard® card issued by GE Money o Duane Reade drugs stores began accepting PayPass at all of its locations • Banks around the world continue to rollout contactless technology for debit and credit products o Citibank Debit MasterCard PayPass™ key fob in NY launched to Citibank customers o Chase rolled out contactless credit card programs – called “blink” – across U.S. cities o MBNA began issuing credit cards with PayPass contactless payment technology to its new and existing customers in Atlanta o HSBC Bank USA became first bank to completely reissue its debit cards to include PayPass while KeyBank was the first bank in the U.S. to offer its customers PayPass debit cards 2004 PayPass momentum picked up with deployments globally and growing acceptance by major merchants. • McDonald’s began accepting PayPass at select McDonald’s restaurants in the U.S. • Bank of the Philippines Islands pilot PayPass – first bank in Southeast Asia to implement trial Last updated: August 2010 • Launch of OneSmart PayPass – industry’s first dual-interface contactless EMV solution • Motorola NFC mobile trial • People’s Trust Company of Vancouver and Mint Technology Corp. of Toronto began issue PayPass- enabled cards in Canada as part of a pilot program • Orient Corporation launched a PayPass pilot program in Japan 2003 MasterCard trials PayPass in Orlando and Dallas. MasterCard’s objectives in the trials were to test the real-world application of contactless payments – specifically, to ensure that the operational reliability achieved in its headquarters test could be achieved on a larger scale with a variety of terminals at the point of sale. MasterCard also sought to better understand the actual cardholder and retailer experience associated with contactless payments. MasterCard saw clear evidence that consumers were using their PayPass cards when they once would have used cash. • In Orlando, MasterCard worked with Chase, Citibank and MBNA and more than 60 retail locations and 16,000 cardholders using PayPass in a traditional card form factor. • MasterCard also conducted a PayPass trial in Dallas, Texas, where MasterCard worked with Nokia to incorporate MasterCard PayPass into mobile phones. Results from the Dallas trial reinforced speed and convenience as top benefits. 2002 MasterCard launches PayPass. In December, MasterCard announced the availability of MasterCard PayPass™, a new “contactless” payment program that provided consumers with a fast and convenient way to pay for their small-ticket purchases.