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内容

VISA/MasterCard Contactless Payment in China

Prepared by: Kelvin Tai

Mobile: +8613918235069 ; Email : kelvin.kf.tai@gmail.com 第一资讯的好处

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Executive Summary

Although the China policy prohibiting VISA/MasterCard from entering the business of RMB clearing and settlement, China, being the future biggest cardholder market, VISA/MasterCard needs to resolve the VISA/MasterCard POS acceptance in China until the regulation relaxation. In view of this, this document is to give out the suggestions for increasing the presence of contactless payment enabled POS in China.

Create two value attributes into contractless payment card

Intelligent life Assistant

Traveller Assistance

Alliance with Large Scale Real Estate Developer to embed the paypass/paywave function in their access control together with credit card function.

Alliance with Tourist Management company and the issuing bank to issue a Affiliate card which has the paywave/paypass with LBS function embedded.

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Organization of this presentation Provide recent development of International card scheme

Contactless Payment technology value attributes overview

Intelligent Life Assistant

Traveler Assistance

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内容Provide recent development of International card scheme.

-- Below use the Four Quadrant Market Analysis for VISA/MasterCard/AmEx/JCB in China, in the following slides, we will discuss in details for Production Innovation and Market Penetration for the next two slides

Chinese Government Relationship

Product Innovation Brand Recognition

Market Penetration

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-- For the product innovation, below listed out the initiatives in Contactless Payment, Mobile payment, online secure payment gateway as well as strategy alliance for each card scheme provider

Strategic Alliance & Investment

Contactless Payment

Online secure payment gateway

Mobile Payment

Product Innovation

- Paypass POS and paypass enabled credit card and mobile paypass with sticker or in mircoSD

- Rolled out in China but low penetration

- Paywave POS and Paywave enabled card - Rolled out in China but low penetration

- Mobile Paywave App for smart phone with Paywave chips embedded mircoSD

- Join ISIS network which is JV of US telco- Digit wallet for incorporating multiple different

banding card - Investment in Square who is providing credit card

reader for smart phone

- Leverage with Google Wallet embedded in Android phone for using Paypass POS

- Quckpass POS and QuickPass enabled card - Rolled out in China but low penetration but high

than VISA and Master

- QuickPass support for NFC-SD phone

- Align with China major Telco to rollout the digital wallet

- Align with HTC for NFC SD phone to support QuickPass

- Align with Facebook and FourSquare

- Align with Google- Signed up MOU with China UnionPay

- Align with large scale retailer eg GAP- Investment in Square/Cybersource

- Securecode for enhancing security for the online payment

- 3D secure for enhancing security for the online payment

- Non card payment via digit wallet

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-- From the research paper done by Chinese research company, it shows that the market penetration rate of Unionpay card occupied 70% of card issued, while VISA and Mastercard follow the second and third place respectively.

Below discuss why Unionpay plays dominant in China Market

Market Penetration

“Forces”

A. “China UnionPay play the role of both policy maker and market player”

B. “RMB clearing and settlement business only open for China Unionpay exclusively”

C. “Lower interchange fee charged compared to VISA/Mastercard”

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Opportunity Threat

1. The credit card penetration rate in china is comparatively lower than other countries. 2 card per person in China while 4 to 5 cards per person in HK ; 6~7 cards in Singapore.

2. World leading brand in credit card processing network

3. World leading Merchant network4. The needs of Foreign Tourism is increasing both

local china people and foreigner coming visiting to China

1. The China Market development is highly dependence on progress of regulation on RMB settlement

2. Unionpay is dominant player in China while they are also expending their merchant acceptance in foreign countries.

Strength 1. No.1 and No. 2 Global Market share as Payment Scheme

2. Merchants acceptance store spread all over the world

3. Well established security standard that give the cardholder confidence

S.O. S.T.

1. Sales to partner merchant acquiring bank for Paypass/Paywave POS reader adoption in China for Foreigner tourism in First-Level City like BJ/Shanghai and HK Macau.

2. Sales to partner issuing banks to issue the T&E (Travel and Entertainment) Card with Pay pass/Paywave chips

3. Enhance the LBS function by locating the Paypass/Paywave Terminal as well as integration of the merchant market info/coupon pushing.

1. Focus on sales to local issuing bank to issue T&E cards for overseas tourism with embedded Paypass/Paywave chips. However, the EMV cards issued needs the issuing bank significant investment on system upgrade.

2. Focus on sales to issuing bank for providing the PayPass/Paywave Mobile Tag/MicroSIM for enhancing the mobile payment security.

Weakness 1. The China Market development is being hindered by Chinese government regulation on prohibiting the RMB clearing.

W.O. W.T.

1. Focus on moving the battlefield from traditional card payment channel to internet transaction and mobile payment channel as the card number prefix would be the identifier for which payment channel to be routed

1. Same as W.O. (1)

At last, we use SWOT analysis tool to give an overview of VISA/MasterCard on their strength and weakness

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内容Contactless Payment technology value attributes.

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Innovative value attributes should be added in contactless payment to increase the adoption in China :

- Intelligent Life Assistance => Make the cardholder life with ease of mind

- Traveler Assistance => Act as the shopping and tourist guide for the merchants with Paypass/Paywave enabled POS

VISA/MasterCard should create two more value attributes to their contactless payment solution in order to improve the POS acceptance

What is Intelligent Life Assistant? With the contactless technology in an IC card, your life will become simple with just “One” card to control every aspect in your life.

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Access Control for real estate Real estate parking access

Build up the contactless cardreader/POS network in China.

Secure internet purchase Speedy Credit/Debit card transaction

-- Strategic Alliance with Local Mainland Real Estate Developer or Real Estate Management company to incorporate Paywave/Paypass in their access control function in credit/debit card. Below are to analyze the synergies for different parties

“Market Player” Benefit for Different Market Player

B. “Card Issuing Bank”

1) It can help to increase the Public Image of Real Estate Developer as “High Tech” and “Secure” that in turn increase the selling price and sales volumes.

2) It provides a convenient way for the household to pay for their Management Fee and Parking Fee at ease.

3) Increase the efficiency for collecting those fees.

A. “Real Estate Developer”

1) Increase the no of card issued and importantly those are active cards.

2) Increase the cardholder loyalty while providing a secure and better customer experience

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B. “Visa/MasterCard”

1) Strategic step on widening the presence of contactless payment enabled POS.

What is Traveler Assistant? With the contactless technology in an IC card, it will popup the marketing coupon and merchant store information for those VSIA/MasterCard merchant stores to provide value added both for the tourist hot spots for foreigners in China and Chinese travel aboard

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Coupon Pushing LBS based Merchant store info

Tourist Hotspot, like 田子坊 , 新天地 , 城隍廟

-- Strategic Alliance Tourist Hotspot, like 田子坊 , 新天地 , 城隍廟 , management company and partnership bank to issue Affiliate card with Paypass/Paywave.

“Market Player” Benefit for Different Market Player

B. “Card Issuing Bank”

1) It can help to promote the as “High Tech” and “Secure” that in turn increase the selling price and sales volumes.

2) It attracts more tourist and spending.A. “Tourist Management Company”

1) Increase the no of card issued and importantly those are active cards.

2) Increase the cardholder loyalty while providing a secure and better customer experience.

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B. “Visa/MasterCard”

1) Strategic step on widening the presence of contactless payment enabled POS.

2) Increase the channel interchange fee from visitors spending through international scheme.

Questions and Comments

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Feel Free to give me the comments by either mail to me or contact by phone

•Email Address : kelvin.kf.tai@gmail.com•Mobile : +8613918235069

Kelvin TaiFirst Data China Senior Client Service Manager – Greater China

Career Summary

Senior information technology professional with 11 years experience in consultative client engagement, IT solution consulting, business development. Strong on Global account management to deliver IT solutions that will add value to the business and capability transformation/modernization. Expert domain knowledge on solution portfolio for retail banking specializing on payment solution and core banking solution.

Accomplishments

– Support the Sales Director to renew the Outsourcing contract with China Everbright Bank (CEB) with Total Contract Value of RMB$10,000,000 for 2 years contract in 2009

– Define a 2 years system migration strategy for CEB and solution proposal which is about RMB$2,500,000 of professional service deal in 2010.

– Lead the Service Excellence Program to reduce at least 70% SLA penalty

Special Skills

– Consultative client engagement with over 7 years of Global Account management in financial industry for Payment/Credit Card/Core Banking system/Fraud Detection

– Business development, solution consulting and contract negotiations with Client as well as relationship building and management

– Industry Best Practice process & procedure implementation and large complex project and program delivery

Education

– Master of Business in Information System, Curtain University of Technology

– Bachelor of Social Science (Economics) , Hong Kong Baptist University

Professional Qualification

– PMP (Project Management Professional)

– CISA (Certificate of Information System Audit)

– CISSP (Certificate of Information System Security Professional)

Language

– Mandarin, English