1. Payment Cards and Interchange Banking Enquiry, South Africa Competition Commission

2. 2 Agenda Payment Systems and Role of Interchange – Carl Munson, Associate General Counsel, MasterCard Economic Function of Interchange – Christian Koboldt, DotEcon Competition in the MasterCard scheme – Webber Wentzel Bowens MasterCard in South Africa – Eddie Grobler, General Manager, Africa, MasterCard Setting Interchange in South Africa: Status Update – Caleb Raywood, SAMEA Region Counsel, MasterCard Concluding Remarks

3. South Africa: The Card Payments Landscape

4. 4 Agenda MasterCards Business The Economy: MasterIndex Payment Channel Trends Fraud / Risk Product Trends Summary

5. 5 Leading, globally integrated technology platform 1 billion cards in consumer pockets, useable at +25 million locations 40 years of virtually flawless execution One corporation operating across 210 markets Priceless global brand Partner with over 25,000 financial institutions worldwide We have unsurpassed relationships, skills, and market position Franchisor ProcessorAdvisor

6. 6 MasterCards processing solutions are global, flexible, and trusted to deliver value Over 16 billion clearing transactions 36 billion messages $1.2 trillion settled Capacity to handle 140 million transactions/hour 127 millisecond response time 99.999% network availability

7. 7 The Economy: MasterIndex Research study conducted twice a year Banked individuals between the ages of 18-64 The MasterIndex has a range of 0 to 100 with 50 as the mid-point – A score of 50 denotes no change in consumer confidence or a neutral situation – A score of above 50 indicates consumers are optimistic about quality of life over the next six months. The higher this score is, the higher the consumer confidence – A score below 50 indicates consumers are pessimistic

8. 8 The Economy: MasterIndex Geared towards providing economic signals for the future 6-month period, thus making it possible to monitor economic turning points Five factors evaluated: – Employment – Economy – Regular income – Stock market – Quality of life

9. 9 Overall South Asia Middle East Africa MasterCard MasterIndex 2005 vs 2006 Consumer in South Africa most optimistic for future 6 month period in non oil producing countries.

10. 10 All SA categories are positive

11. 11 Per Capita disposable income Source: SARB 54 56 58 60 62 64 66 68 70 72 7476 78 80 82 84 86 88 90 92 94 96 98 0002 04 06 8000 9000 10000 11000 12000 13000 14000 15000 16000 Increase in disposable income of black majority. Increase in personal wealth and disposable income – trend to save less and spend more.

12. 12 Payment Channels 000 Units200420052006 POS terminals525568655 ATMs13.214.015.2 POS:25% growth over 2 year period ATM:15% growth over 2 year period Internet:Transactions increased with more than 500% over the past 5 years (Estimated value: R9.5 billion (7,5%), 14.5 million (4,8%) transactions) Source: Euromonitor International: 4Q, 2006

13. 13 Fraud R million200120022003200420052006 Counterfeit cards4.95.86.57.59.412.2 Cards stolen10.411.913.015.118.824.5 Other *5.05.96.57.69.512.3 Value20.323.625.930.137.749.0 * ID Fraud: New trend Function of increased acquisition, and fraud migration Source: Euromonitor International: 4Q, 2006

14. 14 Product Trend: Transaction 2001 - 2006 Source: Euromonitor International: 4Q, 2006 Million transactions

15. 15 Product Trend: Value 2001 - 2006 Source: Euromonitor International: 4Q, 2006 R million

16. 16 Product Trend: Number of Cards Source: Euromonitor International: 4Q, 2006 mn Cards

17. 17 Cash, Charge Cards, Store Cards and Co-branded Cards Cash versus Card (Debit and Credit) – Cash dominated: More than 85% of transactions Charge cards under performs: – 6% decrease of number of cards in circulation – Credit cards, debit cards and corporate cards a more attractive option Store Cards: Increasing unpaid debts Co-branded cards – Increased focus – Virgin Money (Absa): Low interest rates and no annual fees – Kulula Card (FNB): Loyalty program – Edgars (SBSA): No annual fees – Voyager (Nedbank): Loyalty program – Pick n Pay Go Banking (Nedbank)

18. 18 Product Trend: EMV Smart Card Acceptance infrastructure – POS – ATM Issuance: 2H, 2007

19. 19 Summary POS channel growth (Merchant demand) Strong growth in debit card (transactions and value) Migration from ATM. Credit- and debit cards (4 party) growing faster than charge- and store cards (3 party). Co-brands: Attractive alternative for retailers, impact on current business model.

20. Thank you.