Contactless Payments - An Issuer’s Perspective

Peter HoVice President & Product Manager

Wells Fargo Card Services

October 3, 2006

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Wells Fargo Card Services

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Overview

Considerations for implementing a contactlessofferingIndustry LandscapeThe Contactless Value Proposition Customer Communication and Education

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The strategic decision to offer contactlesspayments is unique to each issuer, but similar to any technology offering.Key Considerations Include:

Strategic fit with the organization.Return on Investment.Customer demographics.Complement to existing product offerings.State of technology acceptance.

“Disintermediation”Substitutes threaten revenueIrrational pricing

Substitutes

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Regulation

“Squeeze”Increasing power of merchants“Gaming” payments for least-cost

Merchants

The retail payments landscape is changing. Regulation and non-traditional payment methods are disintermediating the business.

“Liability & reputational risk”Continued threat of legal actionSecurity breachesIncreasing privacy and regulation

“Concentration”Growth & innovationRelevanceRising interest rates

“Saturation”Saturated mature markets / declining retentionHigher basic expectationGrowth in emerging markets

CardholdersBanks

Source: IBM Business Consulting Services

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At the same time, industry consolidation has spawned the emergence of mega-issuers & acquirers.

Issuers Acquirers

Merchant Services•Chase

•First USA

•JP Morgan

•Bank of America

•MBNA

•WAMU

•Providian

•HSBC

•Household

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Contactless Payments present a new value proposition where all three stakeholders in the value chain derive value.

Cardholder

MerchantIssuer

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For Wells Fargo, contactless payments serve as another opportunity to help our customers manage their finances.

Strategically complements My Spending Report, an online budgeting tool.

Captures everyday spending to budget more effectively

Promotes cash to card payments.

High Tech footprint fits with technology.

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Adoption of Contactless Payments are experiential. The goal is to communicate that these payments are about speed, convenience and security.

Customers can also learn about Contactlessonline at www.wellsfargo.com/contactless and www.visa.com/contactlesspayments.

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Thank you.