A catalyst for mobile contactless payments adoption? Nicolas Dinh, Business Leader, Mobile Payments Lead (Canada) Host Card Emulation A catalyst for mobile contactless payments adoption?

The Vision: One User Experience Enables a Network of Wallets for Shopping at Home, in Stores, and on the Go Connected digital wallets/apps from issuers and retailers At home Smartphone Tablet PC, Laptop Fridge* TV* Game Console* Merchant Apps PayPass Connected Offers Services Digital Receipts Returns Service Wallets MasterPass Connection + Value-Added Services Network In store* Tablet Kiosk Mobile in Aisle POS via NFC, QR On-the-Go* Store Window Bus Stop Subway Platform Airport Anywhere * Illustrative only, functionality not yet available Page 2

MasterCard is Enabling New and Better Shopping Experiences Tap & Go Easier, Faster, Safer Digital Transactions In-Aisle In-App On-line Any device

How? and Tokenization Digitization

Host Card Emulation (Virtual Card Emulation): What is it? Traditional SE-Based Card Emulation Host-Based Card Emulation

Acceptance Infrastructure MasterCard’s Remote SE Solution: Leverage HCE to provide flexibility in mobile contactless deployment Cloud Create a mobile payment solution without a local SE to complement the existing Mobile PayPass solution. Obtain one-time use payment credentials from a hardened cloud service. Although network connection is required to obtain payment credentials, can be used ‘offline’ since credentials are stored locally on device. Acceptance Infrastructure Card present transaction. Interoperable with existing PayPass payment terminals in market (EMV and magstripe). Use the NFC interface available on mobile devices. Will support high-value transactions with right payment terminal. Page 6

MasterCard’s Remote SE Solution: Cont’d Security Online authorization required. Mobile PIN CVM required. Mobile PIN never stored on device. New cryptographic scheme to reduce risk exposure. Encrypted local storage. Supports tokenization of the payment credential. Strengthen fraud detection systems. Page 7

Mobile Contactless: Challenges-to-date Business relationships to access SE are too complex. Vertical integration. Cost to access SE too high. Technical build/deployment is too complex. Onboarding experience is challenging (should follow the app paradigm). Not enough of NFC-capable devices in market. Apple? Not enough of contactless acceptance. No support for high value transactions. Does HCE Solve for it? Page 8

HCE: A market-by-market, issuer-by-issuer deployment choice. HCE or SE? Local market dynamics: Ease of access to SE Willingness to collaborate Readiness of MNOs and TSMs Regulatory Issuer business objectives: Risk aversion (non SE-based security model) Vertical integration Partnership strategy Page 9

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