Contactless Payments 2008

Table of Contents

OVERVIEW

• Catalyst
• Summary

EXECUTIVE SUMMARY

• Chapter one - Contactless payments allow payment cards to expand into low value payments
• Chapter two - Datamonitor estimates the global contactless market to be worth $963 billion a year
• Chapter three - The outlook for contactless payments is bright

CONTACTLESS PAYMENTS ALLOW PAYMENT CARDS TO EXPAND INTO AREAS TRADITIONALLY ASSOCIATED WITH CASH

• Contactless payments allow quicker transactions for low value payments
  • Datamonitor definition of contactless payments
  • All contactless payment devices operate to the same standards
  • Contactless erodes the traditional advantages of cash

• Contactless should therefore appeals to a range of merchant sectors
  • Transport systems have the potential to incorporate contactless payments
  • Convenience stores are a natural environment for contactless payments
  • Contactless payments would improve customer convenience at petrol stations
  • Fast service restaurants, pubs and bars can also be suitable
  • The rollout of contactless card has been relatively slow
  • Most of the activity has been in the US, but developments have been taking place in Europe and Asia
  • Several other US issuers have since launched contactless
  • Product design and positioning in the US differ from that elsewhere
  • Further developments suggest more growth in the near future

DATAMONITOR ESTIMATES THAT THE GLOBAL CONTACTLESS MARKET HAS A POTENTIAL VALUE OF $963 BILLION A YEAR

• Datamonitor' s Contactless Payment Market Opportunity Model
  • The model covers 42 countries in three global regions, and focuses on six key retail sectors in each
  • Methodology and key assumptions
  • Datamonitor estimates the global potential for contactless payments to be worth $963 billion per year
  • The key areas for players to focus on are petrol and convenience retailers in the US and European markets

THE OUTLOOK FOR CONTACTLESS IS BRIGHT

• Contactless payments have a positive outlook
  • The success of the rollouts suggests that the technology and the business model works for all parties
  • A number of potential problems have been either solved or mitigated
  • Contactless is still unlikely to be an overnight success

• Issuers considering contactless should learn from the US rollout
  • Working with merchants is key to a successful launch

• Looking ahead, growth in the US and Asia Pacific looks set to continue, while there will increased activity in Europe
  • The Americas - the success of Chase will inspire others to roll out contactless
  • Asia Pacific - interest is strong in several markets, and this will drive future growth
  • Europe - current interest suggests strong growth in the future
  • The current economic slowdown could well lead to a delay in the rollout of contactless payments

APPENDIX

• Definitions
  • (Untitled sub-section)

• Methodology
• Further reading
• Ask the analyst
• Datamonitor consulting
• Disclaimer

TABLES

• Table: Timeline of US contactless payment launches, 2005- 2008
• Table: Geographic coverage in Datamonitor' s Contactless Payments Market Opportunity Model, 2008
• Table: Payment value ranges in Datamonitor' s Contactless Payments Market Opportunity Model, 2007
• Table: Current relevant publications
• Table: Future relevant publications

FIGURES

• Figure: Speed is central to the contactless proposition
• Figure: Long queues can result in customers going elsewhere for their caffeine fix
• Figure: Key facts about Chase Bank' s contactless offering, 2008
• Figure: Screenshots from Chase Bank' s US contactless card commercial, 2005
• Figure: Contactless payments have developed from 2003 to 2008
• Figure: The contactless opportunity is worth $963 billion a year
• Figure: On a regional level, Europe has the greatest potential for contactless payments, 2008
• Figure: The US has the greatest potential for contactless payments, estimated at $297 billion, 2008
• Figure: The largest potential market is the petrol retailing business
• Figure: The biggest potential region for contactless payments in petrol is Europe, while North America has the biggest potential for fast food, 2008
• Figure: The top 20 opportunities account for more than two thirds of the global potential for contactless payments, 2008