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Visa payWave in transit environments - Update

May 2013

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Our vision for Visa payWave/ payWave for Mobile

VISION To enable contactless payments with any product (mobile or card), for any amount in every European market

ACTIONS

1. Put the infrastructure in place (Issuance & Acceptance) and get the basics right (business case and product proposition) to enhance the customer experience and drive adoption/usage

2. Publish Terminal mandates and develop product enhancements to facilitate (mobile) card adoption

3. Engage with Members, Partners, Stakeholders & Ecosystem participants to expand NFC usage

AMBITION

• 50% of terminals in Visa Europe to be capable of accepting NFC transactions by the end of 2015; all terminals by 2020.

• 50% of all cardholders having access to a contactless payment instrument (card and/or mobile) by 2015; all by 2020.

A day in the life our vision

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Leave home Park the car Buy newspaper

Grab a coffee

Lunch Board the train

Back on the train

Grab a snack Pick up the car Home again

Key insights from the European market

>70 Acquirers

>100Issuers

21 markets

55 million cards

700k terminals

volumes x5contactless transaction in last year

Pilot

Study phase

Consumer rollout

•Iceland•Norway

•UK•Ireland

•Germany

•Finland

•Sweden

•France•Austria

•Poland

•Slovakia

•Hungary

•Czech Rep

•Lithuania

•Estonia

•Latvia

•Italy•Spain

•Portugal

•Turkey•Greece

•Romania

•Luxembourg

•Bulgaria

•Switzerland

•Cyprus

•Israel

•Slovenia

•Denmark

•Netherlands

•Belgium

Key insights from the European market

Key insights from the European market

Apr 2011 Feb 2013

PolandUKTurkeySlovakiaSpainFranceSwissItalyCZRomaniaP

oS s

pend

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Background

Transit agencies across Europe face significant challenges

• Seek new solutions that boost operating efficiency

• Need to free up time and resource to focus on core services

• Require to make services accessible, interoperable, inclusive

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The Visa contactless payments advantage

Any Visa contactless card accepted

No ticket queuing

Fast, simple experience

Travel on any network

Passenger benefits

No ticketing or top-up queues

Reduction in op-ex

Improved accessibility and security

Enables sharper focus on core transit provision

Transit operator benefits

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Trends in transport fare collection

Transport ticketing strategies are being driven by key trends towards contactless bankcards and NFC mobile telephones

Smart

Paper

Account-basedCard-based

Major trend Major trend

Direct p

ath

Direct p

ath

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Our vision is clear

We want to boost the passenger propositions and stimulate usage of public transport

• Convenience – an compelling offering that’s easy to understand

• Speed – transactions that will not slow busy passengers down

• Security – all the usual levels of transaction security people expect from Visa

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Visa Contactless Transit Solutions

To address the needs and requirements of transit operators, we have developed various Visa contactless Transit Solutions

Retail Known Fare Variable Fare

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Retail model

The Retail Model is ideal in environments where transaction speed is not essential

Retail

Delivering the goal of ‘one card, go anywhere’

• Retail model – all cards accepted

• Pay at terminal onboard or at station

• Fare calculation at point of sale

• Payment made to buy ticket

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Known Fare model

The Known Fare transit model enables simple known-value ticketing in environments where speed is critical

Known Fare

Delivering the goal of ‘one card, go anywhere’

• Transit model – contactless only

• Pay known fare onboard or at gate

• Fare calculation at point of sale (reader)

• Payment card is ticket

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Variable Fare model

The Variable Fare transit model enables complex, multi-modal ticketing in environments where transaction speed is critical

Variable Fare• Transit model – contactless only

• Present card for authentication onboard or at gate – entries and exits

• Fare calculation in back office at end of day

• Payment card is ticket

Delivering the goal of ‘one card, go anywhere’

Variable Fare transaction sequence

Variable Fare transit acceptance represents a new transaction model for Visa Europe Issuers

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1. Final fare amount is not known until the end of the day’s travel

2. Transit terminals perform offline authorisations with the card

3. Records taken of ‘entries’ and ‘exits’ from the system, plus any intermediate validations performed during a journey

4. Back office system reconstructs journeys made

5. Journey information is used at EoD to calculate the final fare

6. Transit agency’s central systems generate the authorisation and/or clearing messages, as specified

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Summary of Visa Contactless Transit Solutions

The versatility of Visa Transit Solutions enables contactless to be deployed in a wide range of transit environments

Retail Model Known Fare Variable Fare

Ideal transit environment Known fares, speed not essential

Known fares, high- speed

Complex multi-modal fares, high-speed

Acceptance All cards Contactless-only (transit only)

Contactless-only (transit only)

Fare calculation method Point of entry Point of entry Zero value taps, journey is host-calculated

Special fares supported No No Capping, travel cards & concessions

Special requirements None None Touch in/out, requires host

System components

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Bank system

Merchant back-office

systems

Terminal equipment

Passenger control systems

Acquirer

Auth Processing Fare Processing

Inspection deviceRetail terminal

Gate or turnstile mechanisms

Contactless terminal

Mobile or static terminal

Retail model

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Passenger Journey

Contactless usage

Transport

Back office processing

VisaNet

Cardholder Entry Exit

AuthorisationsClearing

Transaction processing

Known Fare (offline terminals)

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Passenger Journey

Contactless usage

Transport

Back office processing

Clearing

VisaNet

Cardholder

Transaction processing

Entry Exit

Contactless-only terminal

Variable Fare (online terminals, entry only)

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Passenger Journey

Contactless usage

Transport

Back office processing

AuthorisationsClearing

VisaNet

Cardholder

Custom auth processing

Fare & aggregation processing

Entry Exit

Variable Fare (online terminals, entry/exit)

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Passenger Journey

Contactless usage

Entry ExitTransport

Back office processing

AuthorisationsClearing

VisaNet

Cardholder

Custom auth processing

Fare & aggregation processing

Variable Fare (revenue inspection)

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Passenger Journey

Contactless usage

Entry ExitTransport

Back office processing

AuthorisationsClearing

VisaNet

Cardholder

Revenue Inspection

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Learning from European transit projects to date

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Customers will vote with their cards

transactions by week 16

1.5million

of bus transactions are Visa

93% Contactless payments already represent approximately 20% of cash payments

Other major transit projects in Europe

contactless transit transactions per month from Poland

400k

of transit transactions in Wroclaw

Visa

70%

• Wroclaw (buses & trams)

• Warsaw (buses & trams)

• Istanbul (ferries)

• Others coming soon

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What have we learnt?

A great passenger experience begins and ends with seamless authentication of their Visa contactless card

• Card collision / tearing

• Multiple reader technologies

•Authentication speed

•Deny list management

•Customer messaging

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What have we learnt?

The Custom Auth Model is a risk management system which is a back-office feature of a Variable Fare implementation

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What have we learnt?

The Custom Auth Model is a risk management system which reduces the volume of online-authorised transit transactions

Custom auth processing

Merchant Floor Limit

Cumulative Offline Spend

Max Time Between Auths

Online Auth Requested

£15 £15 14 days by Card

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Characteristics of a transit terminal

Transit terminals are unlike retail terminals in that they:

• are contactless-only

• do not support PIN or signature

• may be attended, semi-attended or unattended

• are online-capable

• may not be capable of processing online transactions in real time

• may not be able to print receipts

• may not allow amount entry

• do not support refund or reversals (except via back office)

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Offline card authentication

Visa cards, tags and mobiles can verify their authenticity in an offline manner using cryptography

• Visa payment devices can be personalised to return an Offline Data Authentication (ODA) certificate for every transaction, including those with a value of zero.

• This feature is essential in transit due to the deferred authorisation process which is utilised.

Contactless acceptance in Variable Fare model

• Transit terminals require all cards and mobiles to support Offline Data Authentication (ODA) functionality

• Any card or mobile which does not perform ODA will always be rejected by a transit terminal

• Transit terminals are configured to indicate to cards and mobiles that they are online-capable

ODA

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Tried and tested

Visa continues to carefully monitor learning from transit projects to refine and enhance the proposition

• Substantial transaction volume – but only just getting started

• Important learning has been incorporated into transit models

• New learning has given us better operational understanding

• We look forward to a significant market pull in 2014

Variable Fare model compatibility

Specification Perso profile Accepted in TfL Phase 1? Accepted in TfL Phase 2?

VCPS 2.0.2

Online-Only

Offline-Capablewith offline funds

VCPS 2.1.1

Online Onlywith template BF63 and

ODA bit set

Offline Capablewith template BF63 and

ODA bit set

No support for ODAagainst rules

Transit documentation

Specs & Implementation Guides Document Description Ver. Target

Visa Europe Transit Terminal Implementation Guide Terminal requirements and capabilities 1.0 Terminal

vendors

Merchant Implementation Guide (Variable Fare)

Contactless Capabilities Overview description of the Contactless Capabilities data and processing

1.1 Merchants

Issuer Implementation Guide (Variable Fare)

The purpose of this guide is to help Visa issuers that issue Visa payWave cards understand the implications of cardholders using those cards on public transit systems that implement Visa payWave Transit Solutions – Variable Fare acceptance

1.0 Issuers

Acquirer Implementation Guide (Variable Fare)

The purpose of this document is to help Visa acquirers to process payments from “Variable Fare” transit merchants

1.0 Acquirers

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Operating Regulation changes

Member Letter Document description Release Date

Member Letter: VE 74/11 Proximity payment-only acceptance for transit merchants 19 Dec 2011

Member Letter VE 03/12 Visa payWave Transit – Commercial Framework 16 Jan 2012

Member Letter VE 43/12 Visa payWave Transit Solutions – Variable Fare Technical Requirements 31 Jul 2012

Member Letter coming soon Visa payWave Transit Solutions – Variable Fare liability model H1 2013

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Any more questions?

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Thank you

visaeurope.com/transit

38Visa Europe Confidential. This information is not intended, and should not be construed, as an offer to sell, or as a solicitation of an offer to purchase, any securities.