Visa Digital Solutions Rocio Beckham Community Issuers
Notice of Confidentiality This presentation is furnished to you solely in your capacity as a customer of Visa and/or participant in the Visa payments system. By accepting this presentation, you acknowledge that the information contained herein (the "Information") is confidential and subject to the confidentiality restrictions contained in Visa s operating regulations, which limit your use of the Information. You agree to keep the Information confidential and not to use the Information for any purpose other than in your capacity as a customer of Visa or as a participant in the Visa payments system. The Information may only be disseminated within your organization on a need-to-know basis to enable your participation in the Visa payments system. Please be advised that the Information may constitute material nonpublic information under U.S. federal securities laws and that purchasing or selling securities of Visa Inc. while being aware of material nonpublic information would constitute a violation of applicable U.S. federal securities laws. Forward-Looking Statements Today s presentations may contain, in addition to historical information, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on our current assumptions, expectations and projections about future events which reflect the best judgment of management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by our comments today. You should review and consider the information contained in our filings with the SEC regarding these risks and uncertainties. Visa disclaims any obligation to publicly update or revise any forward-looking statements or information provided during today s presentation. 2
EMV: What s the status of chip? Digital Landscape: How do you remain competitive? 3
4 EMV Update: What s the status of chip?
U.S. EMV chip migration status as of August 2016 50% of US cards now have chips Adoption (number of cards) 176.2M US issued EMV Visa credit cards (3% increase from July) 187.2M US issued EMV Visa debit cards (7% increase from July) 1.46M US EMV Visa acceptors (6% increase from July) Usage 1 Fallback 2 29.8% 18.6% US credit card chip on US chip credit transaction card chip on chip PV adoption 38.3% by PV 13.8% 8.2% US debit card chip on US chip debit transaction card chip on chip PV adoption 20.4% by PV 2.3% 2.8% US EMV credit card US EMV fallback credit ratecard fallback rate 2.3% by PV 4.0% 5.7% US EMV debit card US fallback EMV debit ratecard fallback rate 4.0% by PV Sources: Current cards based on MARS data through August 31, 2016. 1 Visa branded chip cards processed as chip transactions. 2 Magstripe transactions using a Visa branded chip card in a chip terminal. 5
U.S. EMV chip migration EMV chip as % of U.S. total 70% 60% Liability shift 64% credit cards 50% 40% 30% 42% 32% debit cards activated locations* 20% 10% 0% 6 *Total Face to Face merchant locations is 4.6M. Previous calculations used the total number of merchant locations which included non Face to Face locations, and totaled 8.0M. Sources: MARS Details
Chip Acceptance Locations by State Currently in the US, 32% of merchant locations accept chip cards Penetration of Chip Locations 35%+ 30-34% 25-29% 20-24% CA OR WA NV ID UT MT WY CO ND SD NE KS MN WI IA IL MO MI IN TN KY OH NY PA WV VA NC VT ME NH MA RI CT NJ DE MD DC AZ NM OK AR MS AL GA SC TX LA FL AK HI Source: Visa Net Data as of August 31, 2016. US Acquired, POS EM 05 7
EMV chip usage 25 32 Number of Visa U.S. chip payment transactions (Millions) 79 176 220 303 345 440 482 International U.S.-issued Visa chip card approval rate 96.8% May '15 Jul '15 Sep '15 Nov '15 Jan '16 Mar '16 Apr '16 May '16 June '16 US$20.7 Billion Source: VisaNet settlement and authorization data 8
U.S. EMV Visa Credit and Visa Debit migration forecast 80% 70% Liability shift Actuals Forecast 76% Credit cards 60% 50% 40% 51% 34% 32% 56% 50% Debit cards Merchant locations 30% 20% 15% 26% 30% Chip-on-chip adoption (based on PV) 9 10% 0% 13% 3% 10% Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Calendar year Note: These forecasts are based on information currently available to Visa. Actual results will depend on a variety of factors, both known and unknown, and could vary significantly. Top 25 credit and debit issuers and merchants were individually evaluated. Remaining issuers assumed 3 year conversion window (i.e., no mass reissuance). Remaining merchants estimated by the conversion rates of their acquirers. Excludes Interlink. Source: October Monthly Executive EMV Migration Report, MARS, excludes Interlink, Interviews with top issuers, acquirers, processors, merchants, and EMV hardware and software providers
10 Chip Card Transactions: Improving the Cardholder Experience
How Quick Chip for EMV works at the POS Insert the card face up, chip end first Remove card when prompted. Processing should take 3 seconds or less. Follow prompts on screen to finalize transaction 1 2 3 Insert card Remove card Follow prompts 11
How Visa Quick Chip processing works behind the scenes As with magnetic stripe processing, the cardholder can insert the card at any time during the check-out process Quick Chip processing Insert card Store chip data in terminal Remove card Finalize amount Request authorization Receive approval Cardholder leaves $12.34 Standard chip processing Insert card Store chip data in terminal Finalize amount Request authorization Receive approval Remove card Cardholder leaves $12.34 12
Benefits of Visa Quick Chip Easy implementation Based on standard, secure EMV processing Integrates Works with any Cardholder Verification Method No additional testing Only requires small changes to the application Improved customer satisfaction Improves with a faster, safer transaction No card-based changes Can immediately impact all Visa cards 13
EMV Summary Issuance continues to grow Fallback Management has improved as the merchants execute EMV strategies. Counterfeit Fraud has decreased as result of EMV. EMV: More improvements to come, like Visa Quick Chip. 14
15 Digital Landscape: Are you prepared to participate?
Visa Digital, designed for today s payment needs mcommerce ecommerce In-App Contactless Internet of things 16
Mobile Commerce continues to grow $400 $300 $200 mcommerce is Increasing as a Share of ecommerce 19% 24% 28% 33% $100 17 $0 2013 2014 2015e 2016e ecommerce Mobile commerce ecommerce YoY growth (2014 2015) 10% Mobile commerce YoY growth (2014 2015) 32% Source: emarketer U.S. Retail Ecommerce and Mobile Commerce Comparative Estimates; comscore Thanksgiving-Cyber Monday Period estimates
Strategies to Drive Top of Mind Establishing top of wallet, top of merchant, and top of phone is crucial for issuers in the fast evolving, and crowded, payments space Drive top of merchant behavior amongst cardholder base Drive top of phone behavior amongst cardholder base Digital Strategy Drive cardholders to spend using Visa Checkout by promoting and publishing merchant offers: o Higher conversion rates o Displays dynamic issuer card art, driving 8x higher conversion 2 o Offers: E.g. Walgreens, 1-800-Flowers and Starbucks Encourage cardholders to sign up for tap and pay solutions via marketing efforts to establish your card as top of wallet Develop an effective mobile app strategy o Offer own mobile app in marketplace or use Visa s white-label app o Connected Card & Instant Digital Card Issuance: Get to cardholders first (establishing top of wallet) by encouraging cardholder to automatically sign up for solution upon card activation in issuer mobile app Digital Marketing Tactics Utilize high impact digital marketing channels Develop integrated campaigns across multiple touch points Use enrollment and/or usage incentives to drive behavior change Leverage analytics for better targeting and campaign optimization Sustain marketing efforts over extended period of time 1 comscore 2015 Visa Checkout Study, commissioned by Visa. Based on data from the comscore research panel, December 2015;. 2 Internal Visa analysis, January 2015 Note: All brand names and logos are the property of their respective owners, are used for identification purposes only, and do not imply product endorsement or affiliation with Visa. 18
Driving Top of Merchant: Visa Checkout Performance 14M Enrollments to date 83% Active users $132B Merchant TAPV 940+ Signed Issuers Visa Checkout customers make 30% more transactions per person compared to overall customers. 1 1 comscore 2015 Visa Checkout Study, commissioned by Visa. Based on data derived from the comscore research panel of one million U.S. PC/laptop users measuring panelists purchases at 12 e-commerce domains, Apr.-Oct. 2015 (2) Milward Brown Visa Checkout Customer Experience, March 2015; commissioned by Visa. Based on data from an online survey of 1,241 U.S. consumers. (3) Proprietary Visa data that measures consumer activity in the Visa Checkout lightbox. Data reporting period from November 18 - December 8, 2015 19
What Visa Checkout solves for Visa Checkout is a service that helps consumers pay, and merchants accept payments online, simply and easily for ecommerce Challenging Liberating 20
Leading Brands see the Value to Their Business Web/Mobile Integration 1 Live In-app Integration 2 Note: Live or signed. 1 Denotes live and signed merchants. 2 May also have web and mobile integration. All brand names and logos are the property of their respective owners and usage herein may not imply product endorsement or affiliation with Visa. 21 Visa Confidential
Driving Top of Wallet: PayPal Offers a greater choice for how consumers pay with PayPal and Venmo wallets. Visa cards will be a clear and equal option for payment during enrollment and subsequent payments. Visa Issuer s digital card images will be incorporated into payment flows. Instant withdrawal of money from PayPal and Venmo to bank accounts via the Visa Debit card, leveraging Visa Direct. 22
Driving Top of Phone Issuer Apps Card on File (COF) Clients and there s more to come. Note: All brand names and logos are the property of their respective owners, are used for identification purposes only, and do not imply product endorsement or affiliation with Visa 23
Driving Top of Phone: Visa Digital Card App Reduces the cost of innovation and removes the client from the arms race. Reduce reliance on internal technologies and technology ques. Improves portfolio profitability Compresses time to market. Enables new channels Secure Visa is Secure, compliant & scalable Interoperable Enhanced Visa Services Minimizes client impact Dual App Strategy Supports new participation 24
Parallel App approach More organizations across industries adopt a parallel app strategy. Mobile Banking Apps Higher adoption of Parallel Apps across segments Mobile Payment Apps 25
Visa Digital Commerce App Enabling Visa assets 1 Visa Alerts API Visa MLC Visa CBP SDK Card Controls Next BIG Thing X10! Debit Processor Credit Processor Prepaid Processor Your Customers Pre-Integrated Visa Hosted White Labeled* 2 Visa Alerts API Visa MLC Visa CBP SDK Card Controls Next BIG Thing X10! Debit Processor Credit Processor Prepaid Processor Your Customers 26 * May require some processor dependencies. 0600 Message set
Digital Landscape Summary Visa Digital Solutions innovation designed to help you capture mobile commerce market share by establishing your institution as Top of Mind by enabling: Top of Merchant: Visa Checkout Top of Wallet: PayPal Top of Phone: ApplePay, Samsung Pay, Android Pay, Visa Digital Commerce App (white label) 27
Community Issuer Website www.visa.com/communityissuers Ahead We Go https://www.youtube.com/watch?v=uazjsb9qtbu 28