Designing an EMV Trial – What Should You Consider Now? Tracey Black GFH Group Inc. Cardware GFH GROUP INC.

Agenda EMV Global Deployment Overview EMV Trial Considerations and Objectives UK Chip and PIN Trial and Implementation Ireland Chip and PIN Trial and Implementation Canada Chip and PIN Trial and Implementation 2 GFH GROUP INC.

Worldwide EMV Deployment and Adoption – March GFH GROUP INC.

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SEPA EMV Compliance, Deployment Percent of Total Source: - European Central Bank SEPA Indicators EMV Readinesswww.ecb.int/paym/sepa/about/indicators/html/index.en.html SEPA compliance requires EMV migration by December 31, 2010 GFH GROUP INC.

K-W Trial Timeline 6 January 2007 October 2008 October 2007 March 2008 December 2008 Market Trial Trial Review Prepare Infrastructure Interoperability Adoption Communications GFH GROUP INC.

Implementation Considerations - Industry Industry Structure – Identify factors that will impact implementation such as fragmentation, processor ownership, POS ownership; ABM ownership; integrated vs. standalone merchants; merchant receptivity Payment Brand support – Incentives; Liability shift; Alignment of key milestones; Fallback policies; Testing and Certification approach; Competition vs. coordination PIN Management – Reciprocal or Proprietary Communication – Consistent, clear, aligned between industry and individual stakeholders 7 GFH GROUP INC.

Trial Considerations - Industry Location – Representative of larger region (demographics, retail footprint etc.) Number of Participants – Require multiple issuers, acquirers, small merchants, large merchants and consumer groups to provide representative results and identify issues prior to broader rollout Payment Brand support – Certification; Testing; Leverage learnings from other implementations Communication and Training – Industry level messaging to support consistent communication Trial Governance, including Project Management resources – Governance structure; Scope of work and provider(s) 8 GFH GROUP INC.

Trial Considerations - Issuers Select, implement and deploy chip card platform Upgrade card production and personalization processes to support EMV Determine PIN Management strategies Update internal policies, processes and procedures to support EMV(operations, fraud, disputes, chargebacks etc.) Develop internal and external communication plans, including creation and distribution of cardholder materials 9 GFH GROUP INC.

Trial Considerations – Acquirers and Merchants Select, certify, test and deploy EMV-enabled POS terminals (hardware and operating systems) Upgrade host systems to support authorization and settlement of EMV transactions Revise internal policies, processes and procedures to support EMV (chargebacks, disputes, help desk training etc.) Develop internal and external communication plan, including creation and distribution of retailer training materials 10 GFH GROUP INC.

11 K-W Chip Trial – Key Industry Objectives INTEROPERABILITY Confirm that the infrastructure works together as expected: all chip cards work at all chip terminals (POS, ABM) Validate industry-level chip-related policies, testing and certification processes, production testing Validate processes to be followed by issuers, acquirers and schemes regarding issue identification, issue management and issue resolution COMMUNICATION Focus on the Trial with industry level PR communication at key points during Trial Provide an industry voice for the Trial Validate industry level key messages GFH GROUP INC.

12 K-W Chip Trial – Key Industry Objectives (continued) ADOPTION Chip cards and terminals are rolled out in the Trial footprint Chip to chip transactions are occurring between chip-enabled cards and chip-enabled terminals No decline in payment card usage Confirm a positive merchant and customer experience using chip Confirm positive awareness and perception of chip technology GFH GROUP INC.

Trial Comparisons – UK, Ireland and Canada UK Trial Northampton, March Ireland Nathan-Newbridge Canada Kitchener-Waterloo Industry Structure -Bank owned acquirers -Limited number of players -Bank owned acquirers -Limited number of players -Independent acquirers -Limited number of players Payment Brand Support -Liability shift January 1, 2005 (Visa and MC) -CVM Fallback allowed until Feb 14, Liability shift January 1, 2005 (Visa and MC) -Laser participation -CVM Fallback allowed until Mar 17, Visa Liability shift; Interac migration dates to Dec 31, No CVM fallback Implementation Timelines Big BangLeverage reissue and replacement PIN Management Reciprocal PIN change Proprietary PIN change 13 GFH GROUP INC.

Trial Comparisons - Continued UK Trial Northampton Ireland Nathan-Newbridge Canada Kitchener-Waterloo Trial Communica- tion and Training Centrally managed communication plan incl. website Metrics and Reporting Industry level deployment reporting during national rollout Surveys every quarter during national deployment Monthly industry level reporting during Trial Trial Management APACs and contracted project management resources IPSO (4) and contracted consultants (2) and PR resource PMO funded by the Payment Brands; Trial management committee 14 GFH GROUP INC.

Source: IPSO, Úna Dillon Head of IPSO Card Services Programme Structure - Ireland IPSO BOARD Chip & PIN Steering Group PIN Mgmt Working Group Technical Group Acquiring Forum Communications Forum Testing Working Group Programme Office IPSO Vision – Operations & Implementation PR Company Card Payments Group GFH GROUP INC.

16 K-W Trial Governance Structure - Canada Trial Planning MAF Technical Communi- cations Policy Testing and Certification Note: MAF – Merchant Advisory Forum Source: GFH Group Consulting STEERING COMMITTEE Management Committee Project Management Office GFH GROUP INC.

UK Trial Launch Press Release May 2003 The Chip and PIN Programme is an initiative backed by the UK’s banks, card companies, building societies and retailers, coordinated by the British Retail Consortium (BRC) and the Association for Payment Clearing Services (APACS). They have joined forces to combat the serious problem of card fraud in the UK. Chip and PIN is a much more secure way for more than 40 million UK consumers to use their credit, debit and charge cards and most UK cardholders will be using it by 2005…. Northampton has been chosen for the chip and PIN trial as it is demographically representative of the UK as a whole. The town’s trial will be crucial in confirming the best ways to roll out the new technology and communications programme nationwide. It is expected that by the end of the trial, Northampton consumers with the new cards will be prompted to use their PIN for one in every two or three transactions as they shop in local stores participating in the trial. Source: 17 GFH GROUP INC.

Canadian Trial Launch Press Release October 2007 Canadian Payments Industry Commences Chip Trial in Kitchener-Waterloo, Ontario Kitchener-Waterloo, Ontario – October 16, 2007 – Members of the Canadian payments industry — Interac Association, MasterCard Canada Inc., Visa Canada Association and many of their respective card issuers, payment processors and merchants –– today announced the beginning of Canada’s migration to chip- enabled debit and credit cards, Automated Banking Machines (ABMs) and merchant terminals starting with a trial in Kitchener-Waterloo, Ontario. The trial of chip-based payments is designed to assess communications to customers and merchants and allow participants to monitor merchant and consumer awareness and adoption before continuing with the national chip rollout. The trial will also allow participants to ensure the interoperability of their respective cards and devices in a secure and controlled manner. Source: GFH Group Inc. 18 GFH GROUP INC.

Reporting – UK Implementation 19 GFH GROUP INC.

Reporting – Canadian Trial, Card Deployment 20 Total Chip Cards in KW Footprint Forecast Actual There were ~460,000 cards in the Trial Footprint as of October 31, 2008 Source: GFH Group Inc. GFH GROUP INC.

Reporting - Canadian Trial, POS Deployment 21 1 Brand 2 Brands 3 Brands 0 Brands 3,168 59% 2,981 55% 2 or More Brands Total Terminals in KW Trial Footprint 2,105 39% 2,174 40% 2,479 46% 2,660 49% 2,663 49% 3,080 57% Source: GFH Group Inc. GFH GROUP INC.

Lessons Learned, UK - Retailers Specifically designed for retailers, the report looks at lessons learnt from the three-month chip and PIN trial in Northampton which started in May 2003 and how these should be used during the national rollout. A key message of the report is that retailers who own their own integrated point-of-sale equipment should act early to implement chip and PIN. “The trial showed that time is a crucial factor and allowing enough time for planning, testing, approvals, training and implementation is crucial to success.” (David Smith, British Retail Consortium) Specific lessons for retailers for the national rollout included: – The need to engage software and hardware suppliers early – A good two-way relationship with acquiring banks is crucial – Allowing enough time for testing is key to success – Retailers should consider the needs of people with disabilities early in the process Source: 22 GFH GROUP INC.

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Lessons Learned, Canada – June 2010 “Did Well” Inter-scheme technical harmonization was extremely valuable Independent PMO was invaluable in bringing all stakeholders together to focus on launching chip Industry trial identified issues in a contained setting and permitted for resolution plans prior to national rollout 25 GFH GROUP INC.

Lessons Learned, Canada – June 2010 cont’d. “Next Time” Alignment of brand timelines could have facilitated implementation Engage merchant associations earlier on to support merchant awareness Ensure understanding of stakeholders with unique needs Identify the impacts of multiple large initiatives 26 GFH GROUP INC.

27 Lessons Learned, Canada –June 2010 cont’d. “Always” Be prepared for domestic and international surprises – Multiple areas of focus EMV, PCI, Contactless, Debit, Mobile – Security threats – Hardware and software issues (kernel expiry, ESD) – Merchants not allowing magnetic stripe transactions Keep an eye on the future – Mobile – Authentication – Fraud GFH GROUP INC.

Questions? 28 GFH GROUP INC.

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