1 Prepaid Payment Instruments: Implementation and Challenges Navin Surya, Managing Director, ItzCash Card Ltd.

Is Prepaid the best instrument for financial inclusion/micropayment? Can prepaid lead India from Cash to Cashless Society? With the RBI Guidelines in Place, what would be the best model for the country? Roadmap for making prepaid payments a 20Billion USD industry in next 5years? 2 Agenda

Is Prepaid the best instrument for financial inclusion/micropayment? Can prepaid lead India from Cash to Cashless Society? With the RBI Guidelines in Place, what would be the best model for the country? Roadmap for making prepaid payments a 20Billion USD industry in next 5years? 3 Agenda

India needs payments options beyond debit/credit cards to move from cash to cashless economy Demographics of Republic of India Population of India, Population:1,147,995,904 (2008 est) Growth rate: 1.578% (2008 est) India is one of the largest Cash economy with approximately USD529BN annual cash spent India is one of the largest Cash economy with approximately USD529BN annual cash spent Middle and bottom of the pyramid users are already exposed to prepaid and have adopted well to use the same

Prepaid Can drive financial inclusion and eMicropayments across the target segment *Payment User Segments and % Source: payment industry reports on cards 5% (57mn) 50K/month spends 24% 25% (280 MM); ~INR 20K-50K /month spends 41% 50% (565 MM) ~INR 5K~20K / month spends 30% 20% (226 MM) < 5K / month spends 5% Payments Categories /Users Utility TravelMobileGovernment Services Entertai nment Public Transport & Toll Shoppi ng Holder & User of Credit Card (< 1%) Holder & Non- user of Credit Card (< 1%) Banked & Non-holder of Credit Card (35%) Unbanked & Underserved (44%) unbanked (20%) Prepaid is the best instrument for financial inclusion and micro payments Majority of middle and bottom of the pyramid use cash for most of their transactions in their daily lives Top of the pyramid segment also prefer using cash for selected micropayments

Is Prepaid the best instrument for financial inclusion/micropayment? Can prepaid lead India from Cash to Cashless Society? With the RBI Guidelines in Place, what would be the best model for the country? Roadmap for making prepaid payments a 20Billion USD industry in next 5years? 6 Agenda

7 Prepaid Instruments as per the RBI guidelines and Market Maturity for the same Close ended Semi close ended open ended TraditionalModernFuture Calling Cards Mobile refill coupon Gift Vouchers Fleet/Fuel Cards Virtual calling Cards eTop ups for Mobile DTH Subscription Toll Cards Transit Cards Online Gaming Cards Government Payments Virtual Toll & Transit Gift Cards Health Cards Insurance Meal Coupons Gift Vouchers Online Services Mobile Services Gift Cards Food Cards Virtual A/c Retail Payment Multipurpose Toll Multipurpose Transit Hybrid Cards Travelers' Cheque Travel Cards Payroll Cards No-frills A/c Card G P R Cards Govt. Reimbursements Hybrid Cards Cobranded/White-label These products and business model would be different basis target segment of B2B2C market and/0r B2C market

Is Prepaid the best instrument for financial inclusion/micropayment? Can prepaid lead India from Cash to Cashless Society? With the RBI Guidelines in Place, what would be the best model for the country? Roadmap for making prepaid payments a 20Billion USD industry in next 5years? 8 Agenda

Prepaid Industry Recognition –To establish Prepaid as important category of products in all stakeholders (consumers, merchants etc.) mind Business Model –Various products are still evolving and business model in some of these products is yet to be very clear –Organization planning to expand Semi-close prepaid category other than Gift/Meal Card products needs to have long term commitments and deep pockets to fund the evolution of business model Regulatory Environment –Very good start but miles to go for evolving industry –Level playing field in terms of escrow requirements and eligibility to issue various type of cards would be key for success of non-bank players –Framework for collaboration between banks, telcos and other entities would be key Competition: expansion of market vs. copy cat models –Innovation vs. stereotyped following would be key issue –Inter-operability would be key in near future 9 Key Challenges India would be one of the largest Prepaid Payment Instrument Market across the globe in next 3-5 years!

Product –KISS –Communication and Education to the value chain Sales Network Reach with optimum margins –Across the length and breadth of the country –Low Cost of network with adequate ROI Merchant Mix –Across the Physical and electronic channel –Across the category of goods and services –Across No Revenue, Low Revenue and High Revenue Clearing and Settlement Discipline –Low fraud risk –Flexibility for settlement basis time/value or other hybrid options 10 Critical Success Factors for prepaid in India

Infrastructure Investment and patience for profitability –Willingness to invest in infrastructure across the value chain –Road to profitability could be long and depends on creating critical mass and large scale of operations Manage External Environment to ensure Trust and Credibility –Hear Say in India matters a lot for all stakeholders –Regulatory Compliance –High Governance compliance –Success stories with benefits to societies and customers at large –Overall positive affinity towards the brand and the products 11 Critical Success Factors for prepaid in India India would be one of the largest Prepaid Payment Instrument Market across the globe in next 3~5 years!

Thank You 12 Online Bill Payment category as the best site for 'Technology usage' Pay Before Award - Best general purpose spending card program Product of the year 09 - Multipurpose cash card