1. 1 Card Acceptance Business In India

2. 2 M-Commerce Call Center/ MOTO ATMs POSBranches E-Commerce Card Acceptance channels

3. 3 Presentation Flow – Trends Card Payments – Trends Changing Demographics Card Acceptance - Key Drivers Card Acceptance - Key Drivers Industry Predicaments Industry Predicaments Opportunities Opportunities Summary

4. 4 Market RequirementsGrowth In Payment Cards in India CAGR 60% 4M 46M 32M 19M 11M 6.5M 5M

5. 5 Growth In Card Spends in India CAGR:45% 4 Bn 24Bn.

6. 6 Growth In Debit Card Spends in India

7. 7 Growth In Merchant Establishments in India CAGR: 29% 155 K 80K Select merchant focus Large non- carded merchants

8. 8 Widening Gap 0102 03 04 05 10 20 30 40 Terminal per million cards Cards in million Year Cards in million No. of Terminals per million card 1500 3000 4500 6000 7500

9. 9 Top 10 Cities- by MSV c 12 Mn retail Outlets across 370 cities

10. 10 New Growth Categories

11. 11 Countrys Cards Spends (2004-05)

12. 12 Overall online spend increased significantly to INR 16,440 million per annum INR 4,100 INR 5,300 INR 7,900 INR 10,800 INR 11,120 INR 16,440 1H 20022H 20021H 20032H 20031H 20042H 2004 Total annual online spend (in millions) INR 4,100 INR 5,300 INR 7,900 INR 10,800 INR 11,120 INR 16,440 1H 20022H 20021H 20032H 20031H 20042H 2004 E-Commerce - Market Size in India Four fold increase in sales volume Growth in cross border transactions Huge potential for debit card acceptance

13. 13 Emerging Trends Volumes -INR Growth- % e-ticketing In-bound travel B2B Shopping Govt. payments 15 30 45 60 75 Bill payments Airline Source: Visa Analysis

14. 14 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Books Clothes/shoes Music DVDs/Video Cassettes Electrical appliances Media subscriptions Computer games Airline tickets Digital content Educational software Cosmetics/Perfume Computer peripherals Jewellery Travel (other) Gift vouchers Flowers Health care products Food and groceries -20% -15% -10% -5% 0% 5% 10% 15% 20% 1H 20042H 2004% change in last six months B2C- Key Growth Categories Visa Analysis

15. 15 Presentation Flow – Trends Card Payments – Trends Changing Demographics Card Acceptance- Key Drivers Card Acceptance- Key Drivers Industry Predicaments Industry Predicaments Opportunities Opportunities Summary

16. 16 Highest proportion of population below 35 years (70%) in India Per cent of population, 2003 >60 35-59 15-34 0-14 A Young population... … Highest proportion of population below 35 years (70%) in India…

17. 17...which means a bigger opportunity 0-14 15-35 35-59 >60 20032009 E Total Population in million 1,0441,221 130 mn plus people get added to working population

18. 18 Building an affluent middle class… Number of households** (population), millions 1995 - 96 2001 - 02 FY2009(E) Rich: > Rs 0.5 Mn CAGR: 15% Upper Middle: Rs 0.3 – 0.5 Mn CAGR: 10% Middle Income: Rs 0.1 – 0.3 Mn CAGR: 2% Lower Income: < Rs 0.1 Mn CAGR (-8%) 1.2 (7)2.6 (15)7.0 (40) 32.5 (186)46.4 (265)91 (525) 54.1 (312.2)74.4 (429)85 (490) 77.0 (444.3)57.2 (332)30 (177) Household Income Class 55 million families (320 million people) added in the middle income group NCAER McKinsey Estimates

19. 19 What does all this mean……………… Increasingly affluent, with bulging middle class The youngest population in the world Increasing literacy levels Higher adaptability to technology Urbanization is a continuing trend Increasing "consumption" mindset in India Changing consumer demographics

20. 20 Presentation Flow – Trends Card Payments – Trends Changing Demographics Card Acceptance- Key Drivers Card Acceptance- Key Drivers Industry Predicaments Industry Predicaments Opportunities Opportunities Summary

21. 21 Key Drivers Credit/ Debit CARDS SMART & PREPAID B2B SEGMENTS Private Label & Loyalty Value Added Services Card Acceptance –Key Drivers

22. 22 Channels- Key Drivers POSE-Commerce M-Commerce Growing Internet users Inbound Tourism Remittance Utility Payments E-Ticketing High mobile penetration Mobile Operators Micro Payments Large card base Low cost of EDC New Cities New Segments Reducing MSF

23. 23 Presentation Flow – Trends Card Payments – Trends Changing Demographics Card Acceptance- Key Drivers Card Acceptance- Key Drivers Industry Predicaments Industry Predicaments Opportunities Opportunities Summary

24. 24 Industry Predicaments Managing Merchants Loyalty & Stickiness Cash Economy Surcharging Managing Competition Lowering service fees Intense competition in Metros Managing ROI High cost of acquisition Managing spreads High Capex & Opex Managing the environment Fraud Management Parallel Cash Economy

25. 25 Presentation Flow – Trends Card Payments – Trends Changing Demographics Card Acceptance- Key Drivers Card Acceptance- Key Drivers Industry Predicaments Industry Predicaments Opportunities Opportunities Summary

26. 26 Credit & Debit Card Acceptance Thru POS & PG B2B Payments – Instruction Card, Air Deccan E-Purse – HP Smart1 Banking Inquiry – Balance Inquiry Proprietary Payment products – HP Smart1 Custom Payment platform – EMI MOBILE PAYMENTS MICRO PAYMENTS NET PURSE UTILITY PAYMENTS GOVERNMENT AND CIVIC PAYMENTS BANKING THROUGH POS CURRENCY DEPOSIT / WITHDRAWAL / EXCHANGE INSTITUTIONAL PAYMENTS – IP CONNECTIVITY IN MALLS PROPRIETORY PAYMENT DEVICES – PCs / Cash Registers Opportunity Map Internet card

27. 27 Way Forward Terminal penetration in mid & small sized cities Enabling Govt. Depts. on card platform Rural Push- Kisan card, Micro Financing Small & Medium Enterprises Emergence of new platforms- mCommerce In Conclusion Rapid Terminal penetration in mid/small sized Cities Enabling govt. dept. on card platform Rural Push- Kisan card, Micro Financing Small & Medium enterprises Emergence of new platforms- m-commerce

28. 28 Thank You