Banking and Insurance Forum 2016

Payment opportunities in post-regulated world

Marcel Gajdoš, Country manager Slovakia and the Czech Republic, Visa Europe

Agenda

• Overview of Payments Ecosystem

• Acceptance Challenges

• Opportunities to Accelerate Payments

High levels of electronic payment acceptance are critical to reducing cash usage

Acceptance expands from “entry” categories to a “tipping point” where card payments become ubiquitous

Source: Euromontior, Passport (2015), 2014 data, straight averages.

Globally, the advancement of electronic

payments is occurring at widely varying rates

Overview of Payments Ecosystem

Payments in Slovakia

4

€1 from€5.70 in Europe;€1 from€9 in Slovakia

522m Visa cards in Europe; 3.4m Visa cards in Slovakia (all contactless)

Nárast tržiebAll cards

Ratio of card transactions at merchants to all

card transactions

Ratio of card value at merchants to total card

value

73%

35%

• IP-enabled

terminals

• New products

and solutions via

the cloud

• Reach new merchant segments

• Allow greater flexibility in checkout process

• Support new or underserved merchant segments

• Offer promise in developing markets

• Increased real-

time transaction

monitoring

• Better

identification of

high-risk

customers

Transformation

of POS

Payment

experience

Contactless

acceptance

Mobile

acceptance

Payment

facilitators

Improved risk

management

• Growth of NFC phones and contactless cards

• Expansion of acceptance into new categories

• Tokenization improves security of data storage

• “Card-on-file” and in-app purchases lower friction

Recent developments are driving the

expansion of electronic payment acceptance

Overview of Payments Ecosystem

Regulatory & Market Support

Increased Investment Opportunities

New Technologies & Channels

Government policies to incent and promote electronic payment

acceptance

Market-driven programs to increase collaboration and investment in new

acceptance

Use of new technologies to add value to payment acceptance for merchants

and consumers

Three key types of policy levers have

successfully grown acceptance globally

Opportunities to Accelerate Payments

Government policies to incent and

promote electronic payment

acceptance

Merchant incentives

Program Examples

Regulation of market

economics

• Subsidized POS terminals

• Tax reductions for using electronic payments

• Merchant Discount Rate (MDR/MSF) caps and regulation

• Interchange Reimbursement Fee (IRF) caps and regulation

• Regulation of payment network pricing policies and rules

• VAT reductions

• Income tax reductions

• Lotteries

• Taxes and limits on cash

• Mandate electronic payments

• Acceptance of electronic payments, including taxes and transit

• Electronic distribution of social benefits

Merchant Incentives

Consumer incentives

Disincentives for cash

Government adoption of

electronic payments

Regulatory & Market Support

Opportunities to Accelerate Payments

Use of new technologies to

add value to payment

acceptance for merchants and

consumers

Program Examples

• New modes of access

• Contactless

• Mobile solutions – QR codes, NFC

• “Card-on-file” payments – convenient, secure storage

• Internet of Things

• Low-cost acceptance technology and servicing

• Mobile POS (mPOS)

• Focus on commerce enablement

• Biometric authentication for mobile wallets

• “One-click” purchase

• Enhancing merchant security

• Tokenization

• Fraud detection and management

New platforms for

payment and

acceptance

Enhancing and securing

the customer

experience

New Technologies & Channels

Opportunities to Accelerate Payments

NFC Proximity Payment

Targeted Promotions

(geo-located, data based)

Value Added Services(e.g. Item Search & Price Check)

Closed Loop Proximity Payment

(e.g. Starbucks)

Card on File

(e.g. Amazon 1-Click)

Payment Controls

Mobile notifications, alerts & information

services

Mobile and technology are driving a transformation in banking

& payments

Mobile Banking ( statements, deposits, ACH

payments & transfers)

PayPal

Cardless ATM WithdrawalP2P Money Transfer

Post Purchase Transaction Management

(e.g.. Instalments, Receipts & Warranties)

‘In-App’ Payments

(e.g. Apple Pay)

Identity Services (authentication)

Digital Wallets Tokenization

Cryptocurrencies and Blockchain

Cross selling

mPOS(mobile acceptance)

A service to connect an issuer to all token requestors,

for all devices and channels, with one connection to Visa

Visa Token Service - Scope

Device/Channel Token Requestor IssuerVisa Token ServiceToken TypeDomain Controls

Wallet-bound

Device-bound

Entity-bound

ESE

CBP

Merchant

& Many Others

COF

ESE- embedded secure element, CBP- cloud based payment, COF- card on file

Is our Core, global platform capability for enabling new digital payment experiences

Europe

Payment Token

Service

Global

Secure

Minimises

ecosystem

impact

Supports new

participation

Standards based

& Interoperable

Enables new

channels

€

Europe

Digital Enablement

Program

No

Bi-laterals

No-cost Commercial framework

Single Interconnect

Brand standards

Consumer data

protections

Visa’s Digital Enablement Program and Token Service