A different view of EMV opportunities State-of-the-art of multiapplication cards in the world

1. EMV (Chip & PIN) perspectives
October, 22nd 2008

2. Chip capabilities
A Chip is a Computer => able to offer various functionalities
Security (card-present and card-not-present environments)
Card authentication (digital signature, digital certificate)
⇒ Mitigate risks of counterfeiting card (through a data breach) and
phishing (secure remote authentication for e-commerce & e-banking)
Cardholder authentication (off-line PIN)
=> Mitigate risks of fraud due to stolen/lost and not-received card
Value added application(s) can be added onto a chip card
e-purse (low value payment), e-ticket/e-fare (transit), e-coupon
(loyalty program)
Cash
easy-to-use and convenient
Credit card
Card-present transaction
Numeric signature and secrets
Encrypted PIN
Bus fare
Card-not-present transaction
Digital certificate and secrets for
Coupon ($)
secure remote authentication
Retailer loyalty
program
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Nathalie Caye - nathalie.caye@e-excellence-inc.com - © e-excellence inc. 2008

3. What kind of perspectives can we except with the
chip & PIN card ?
Offer new products and/or services Context:
Economic situation
New cards with value-added services (multi-function
Fraud issues
cards), self-service devices, PIN change service, etc. Consumers needs
New consumer habits
Develop the acceptance network
PIN off-line functionality (debit and prepaid cards), new
channels of payment, partnerships
Reduce costs
Fraud, operational and processing costs
Interchange
Provide a better customer service Network(s)
Processor
Convenience, time savings
Acquirer Issuer
Enhance your public image
Innovation & Security ATM
Processor
Terminal
Profitable for all stakeholders
Debit/Credit/
Prepaid cards
Merchant Cardholder
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Nathalie Caye - nathalie.caye@e-excellence-inc.com - © e-excellence inc. 2008

4. Demo: chip and PIN card transaction in a restaurant
WELCOME Chip & PIN card
ENTER AMOUNT Cardholder
Merchant
16.08 $ Ok?
WAITING FOR CARD
INSERT OR SWIPE
Check card digital signature
PROCESSING
(Static or dynamic card
authentication)
DO NOT REMOVE CARD
Terminal
ADD TIPS ? YES ->
NO ->
AMOUNT ->
% ->
2.00 $
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Nathalie Caye - nathalie.caye@e-excellence-inc.com - © e-excellence inc. 2008

5. Demo: chip and PIN card transaction in a restaurant
ENTER PIN
PRESS OK Chip & PIN card
Cardholder
Merchant
****
Process online/offline authorization Check PIN (Cardholder authentication)
DO NOT REMOVE CARD
(eventually dynamic card Generate a dynamic digital
GIVE TERMINAL TO CLERK
authentication) certification
Store the transaction into the
chip application
APPROVED
Print cardholder and merchant
REMOVE CARD
receipts Terminal
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Nathalie Caye - nathalie.caye@e-excellence-inc.com - © e-excellence inc. 2008

6. Trends in terms of value added chip cards
Canada
Russia
Low-value payment Kiok
Travel ticket Welfare services
Offline PIN Debit card vending machine
Wireless
terminals
Asia Pacific
e-coupon (Instant reward)
e-purse
Mexico – Brazil Europe
e-fare (transport)
Offline PIN Credit card e-fare (transport)
e-ID
Transport (unbanked Low-value payment
population in Brazil) Secure Remote authentication
Prepaid card
Offline PIN Debit card
Combination of a Debit and a Credit
application on the same chip card
Payment markets implementing
Value added chip application depends on: only chip payment card
Culture of payment First adopters: mature payment market
Maturity of payment market implementing value added services card
Level of confidence in forms of payment
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Nathalie Caye - nathalie.caye@e-excellence-inc.com - © e-excellence inc. 2008

7. Conclusion: short-term, mid-term and long term
short-term, mid-
perspectives
Issuer Cardholder Merchant Acquirer/Processor ATM/ABM
/ISO Processor
Fraud mitigation (C, Fast check-out Fast check-out, time saving Cost reduction PIN Change services
PIN
S/L, MNR) Convenient and Convenient and easy-to- New range of (new revenues)
(off-line
New card products easy-to-use (same use (same process for all chip terminals offering Value-added
auth)
offering a larger process for all chip cards) (Wireless, self-service services at the ATM:
acceptance network (off- cards) New card acceptance devices, etc.) e-fare reloading (new
line PIN Debit card, Larger acceptance (offline PIN Debit card, New merchants revenues)
Prepaid card ) network Prepaid card) ; Could
encourage higher spending
New services (self-service
Short -
devices with higher floor
term
limit)
Less paper (till rolls)
Contact/Contactless Replace cash for low New card acceptance Increase revenues
New card
card (increase revenues value payment (could encourage higher (number of
products
by replacing cash) Secure e-banking, e- spending) transactions)
Secure remote commerce (protection
authentication (e- against phishing )
banking, e-commerce)
Differentiation
Increase revenues Larger acceptance Wireless terminal New merchants
New
(number of transactions) network and services (convenience) Increase revenues
terminal
long -term
Mid and
Self-service devices for high (number of
devices
amount purchase (kioks), for transaction)
items rental (DVD, bicycles,
trolleys, etc.)
Convergence and New services : Loyalty and reward Cost reduction Application
Misc.
Nathalie Caye (transport,
Partnership - nathalie.caye@e-excellence-inc.com -program
transport, loyalty and (private network) downloading service
© e-excellence inc.
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retailers) reward program Loyalty and reward Partnerships
2008
Mitigation of a part of (instant reward) program for
fraud due to data merchants
breaches

8. Thank you for your attention