What’s next when America turns EMV – Comparing Europe and America EMV rollout

What’s next when America turns EMV – Comparing Europe and America EMV rollout

Yiru Zhong, Analyst

Information & Communication Technologies

24 September 2009

224th September 2009

What’s next when America turns EMV?

• This analyst briefing aims to achieve two objectives:

• Provide an overview on EMV payment trends in Europe and North America

• Identify best practices in Europe for America


What is EMV?

1994 1996 2004 20092008

Source: EMVco

EMV specifications development

began

EMV specifications Version 3.1.1

published

EMV specifications Version 4.2 published

Europaybecame part

of MasterCard

2002

JCB joined EMVCo

American Express joined

EMVCo


Lay of the land – EMV deployments in the world

Europe

• EMV compliance deadline 1Jan05

Asia

• EMV compliance deadline 1Jan06

Canada

• Liability shifts 2010• Full migration 2012 / 15

America

• Issues still to be resolved


Is the economic downturn still a drag in the payment industry? Not necessarily so

Opportunities

• Tighter grip on bottom line – can EMV

help?

• Changing end user payment habits –

debit cards come to the fore

• Opportunity cost of new market

expansion falls in an economic

downturn

Obstacles

• Investment inertia

• End user payment habits – credit

cards usage declines

Quarterly Real GDP YoY, %

-4%

-3%

-2%

-1%

0%

1%

2%

2Q07 4Q07 2Q08 4Q08 2Q09

EU Japan US

Source: OECD Quarterly GDP Press Releases

2007 2008 2009


UK: One of the European Market Leaders in EMV

Continuous innovation to entrench digital payment methodsContinuous innovation to entrench digital payment methods

1999 2003 2006 2009 2012 2020

Timelines

Use of chip in bank cards

PIN introduced

EMV compliance

deadline

CHIP & Pin introduced

Micro-payments enabled

SEPA compliance


UK: Barclaycards example

• Eradicate chicken and egg dilemma

• Seek partnerships to generate transactions

• Invisible influences on end-user habits


Poland: An emerging champion from Eastern Europe

Widen customer reach to drive adoptionWiden customer reach to drive adoption

South Europe

35

182

133

UK & Ireland

145

Germany & Austria

Benelux & Switz

Nordic + Denmark

Legend

EMV Deployment

Sup to 50%

5% to 50%

Under 5%

651

12645

Central Europe

53

3

Central Europe + Greece

Baltic

62

Eastern Europe

Eastern Europe + TURKEY

124

50

EMV Cards

Total Of cards

2110

Source 2006: Business Dev Xiring

South Europe

35

182

133

UK & Ireland

145

Germany & Austria

Benelux & Switz

Nordic + Denmark

Legend

EMV Deployment

Sup to 50%

5% to 50%

Under 5%

651

12645

Central Europe

53

3

Central Europe + Greece

Baltic

62

Eastern Europe

Eastern Europe + TURKEY

124

50

EMV Cards

Total Of cards

2110

Source 2006: Business Dev Xiring


Poland: Closed loop communities

• Expand acceptance network




Turkey: An unlikely candidate

Innovative payment alternatives for an emerging economyInnovative payment alternatives for an emerging economy

Contact PaymentGaranti Bank Bonus

Card: chip-based credit

and loyalty card program

Contactless PaymentMasterCard PayPass system

launched in 2006

SMS-based Mobile payment

Turkcell

MobilOdeme

Mobile paymentNFC

Ca

rd b

ase

dD

evic

e b

ased

Evolution of payment enablers


The value chain describes the relationships between stakeholders and end users

Infrastructure and service enablers

Payment service providers

End

user

Emerging

Traditional

Mobile operators

Mobile devices

Retailers

Financial

institutions

Non bank affiliated

payment communities

CampusesPublic transport

Payments IT &

Communications

infrastructure providers

Software

applications

providers

Service

providers

Hardware providers


Key success factors in America

• Expand acceptance network




Looking ahead

• Changing end user payment habits

• Co-existence of alternative payment methods

• Innovations to expand beyond EMV


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For Additional Information

Jake Wengroff

Director, Corporate Communications

(210) 247-3806

[email protected]

Craig Hays

Director of Sales


(210) 247-2460

[email protected]

Yiru Zhong

Analyst


(48) 22 390 4128

[email protected]

What’s next when America turns EMV – Comparing Europe and America EMV rollout

Business

emv payment trends

emv cards

payment industry

america emv rolloutyiru

land emv deployments

north america

enduser habits

chipbased credit