T h e G lo b a l D e bi t C ard s I nd ex

LAFFERTY T h e G lo b a l C re d i t Card s I nd ex A ND T h e G lo b a l D e bi t C ard s I nd ex w w w. laffe rty. com

Introduction Lafferty s Best in Class series of reports provides you with everything you want to find out, fast, about the cards business. Why is Profit Per Card higher in Country X than in Country Y? Which markets are the best on receivables? Some banks are finding remarkable profits, some not: how is that? Best in Class: The Global Credit Cards Index and Best in Class: The Global Debit Cards Index have the answers. Best in Class leverages Lafferty Global Research s incredible benchmarking powers, telling you where banks have learned to make money out of cards. Learn the lessons revealed by Lafferty s careful study of different markets. Learn best practice in other countries to better your own performance. The reports use Lafferty Global Research s unparalleled data on 72 global cards markets to reveal the characteristics of best in class markets. Markets are ranked according to a suite of more than 50 unique metrics on a global and regional level. These reports, available in mid-december, will help you to: Discover which markets are best in class for credit cards and debit cards Benchmark your business against international best practice Identify opportunities to grow your business nationally, regionally and internationally Despite the emergence of alternative payment methods in recent years, cards markets around the world are thriving. In 2014, the global payment card market grew by ten percent in terms of number of cards, transactions and billed volume. But global trends hide a fascinating variety of individual markets at different stages of maturity. Economic development, culture and regulation all influence a country s payment cards market. While some markets are well on the way to becoming cashless societies, cash continues to be the preferred method of payment in many. Meanwhile in emerging markets, card use is growing fast, creating opportunities for issuers, acquirers and other players to grow revenue. Global Credit Cards Index Credit cards offer one of the most profitable product lines in retail banking, having survived the impact of the global financial crisis. Just as credit cardholders are designated as revolvers or transactors depending on their repayment habits, credit card markets can be identified by their specific characteristics. Markets with higher rollover rates will generate greater interest revenue for issuers but may have higher rates of credit losses. In markets with low rollover rates but higher merchant service charges, revenue is driven by transaction volume. The Global Credit Cards Index reveals the dynamics that drive credit card revenue in individual credit card markets. Data includes: Number of credit cards Average transaction value POS billed volume POS transactions Average POS transaction value ATM billed volume ATM transactions Average ATM transaction value POS billed volume % POS transactions % ATM billed volume % ATM transaction % Outstandings Pre-tax profit Revenue Merchant revenue Net interest revenue Rollover rate Net credit losses APR 2

Table of contents outline Regions Covered Global Asia-Pacific Western Europe Eastern Europe Latin America Middle East North America Africa Data Covered Overview Number of credit cards Number of cards per 100 adults Transactions POS POS percentage of total transactions Transactions ATM ATM percentage of total transactions Transactions Total Billed Volume POS POS percentage of total billed volume Billed Volume ATM ATM percentage of total billed volume Billed Volume Total Average Transaction Value POS average transaction value ATM average transaction value Total average transaction value Credit card outstandings Outstandings Outstandings per card Credit card profitability Rollover rate Weighted average APR Net interest revenue Net interest revenue per card Weighted average merchant service charge Merchant revenue Merchant revenue per card Total revenue Total revenue per card Pre-tax profits Pre-tax profit per card Sample 1 China s average credit card transaction value is the highest in the world at $388. To encourage spending on credit cards, banks offer credit card instalment schemes on big ticket items, like cars and home supplies. These schemes allow cardholders to pay for their purchase in instalments over an agreed time period and interest rate. Average spend is also boosted by the growing popularity of Premium cards. Issuers are targeting high-net-worth individuals who make large purchases and carry comparatively low risk. Asia Pacific: Credit card POS Average Transaction Value ($) China 388 Vietnam 188 Hong Kong 137 Country D 120 Country E 108 Country F 100 Country G 96 Country H 90 Country I 80 Country J 75 Country K 64 Country L 60 Country M 58 Country P 54 Country Q 50 NB.Sample data only 3

China s average credit card transaction value is the highest in the world at $388. To encourage spending on credit cards, banks offer credit card instalment schemes on big ticket items, like ca and home supplies. These schemes allow cardholders to pay for their purchase in instalments o an agreed time period and interest rate. Average spend is also boosted by the growing popular Premium cards. Issuers are targeting high-net-worth individuals who make large purchases and comparatively low risk. Sample 2 The UK has one of the strongest credit cards markets in the world and its high level of profit per card is a reflection of that. Credit card profitability fell during the financial crisis as net credit losses reached an all-time high level of 8.5 percent and issuers tightened their credit criteria and strengthened their risk management policies. As a result, default rates dropped to around 2.2 percent in 2014, which is below precrisis level. This coupled with growth in billed volume and outstandings saw profitability per card reach historic highs in 2014 Sample 3 Ukraine has the highest credit card rollover rate globally ahead of Morocco and its near-neighbour Russia. A common theme among these markets is that credit card use is relatively unsophisticated with credit cards used predominantly for cash withdrawals. The predominance of cash advances and high rollover rates mean that credit cards are effectively used as a form of premium rate cash loan. Although this trend leads to interest revenue for issuers, it is offset by high default Credit card sample 2 Western Western Europe: Europe: Profit Profit per per card card The UK has one of the strongest credit cards markets in the world and its high level of profit per card is a reflection of that. Credit card profitability fell during the financial crisis as net credit losses reached an all-time high level of 8.5 percent and issuers tightened their credit criteria and strengthened their risk management policies. As a result, default rates dropped to around 2.2 percent in 2014, which is below pre-crisis level. This coupled with growth in billed volume and outstandings saw profitability per card reach historic highs in 2014 Credit card sample 3: Global: Credit card rollover rate Global: Credit card rollover rate Ukraine has the highest credit card rollover rate globally ahead of Morocco and its near-neighbour rates which are inevitable due to the risky nature of Russia. A common theme among these markets is that credit card use is relatively unsophisticated with credit unsecured cards used predominantly cash loans. for cash Increasing withdrawals. The the predominance use of credit of cash advances cards and high rollover at the rates POS mean that is crucial credit cards in are these effectively markets used as a form and of premium will lead rate cash to loan. Although more this trend stable leads to profits interest revenue over for time. issuers, it is offset by high default rates which are inevitable due to the risky nature of unsecured cash loans. Increasing the use of credit cards at the POS is crucial in these markets and will lead to more stable profits over time. Debit Card Sample 1 4

Global Debit Cards Index The global debit card market has grown at an incredible rate with the number of cards in issue doubling between 2008 and 2015. Although debit cards do not generate as much direct revenue for issuers as credit cards, their importance in no less significant. Greater use of debit cards at the POS means that retail banks retain a stronger deposit base and costs associated with operating an ATM network are reduced. The Global Debit Cards Index will help you to understand the features of 72 global debit card markets. Data includes: Number of cards Cards per 100 adults Average transaction value POS billed volume POS transactions Average POS transaction value ATM billed volume ATM transactions Average ATM transaction value POS billed volume % POS transactions % ATM billed volume % ATM transaction % Table of contents outline Regions Covered Global Asia-Pacific Western Europe Eastern Europe Latin America Middle East North America Africa Data Covered Overview Number of debit cards Number of cards per 100 adults Transactions POS POS percentage of total transactions Transactions ATM ATM percentage of total transactions Transactions Total Billed Volume POS POS percentage of total billed volume Billed Volume ATM ATM percentage of total billed volume Billed Volume Total Average Transaction Value POS average transaction value ATM average transaction value Total average transaction value 5

Sample 1 In Slovakia and the Czech Republic, almost three-quarters of debit card transactions are at the POS. Both countries have been among the fastest adopters of contactless technology in the world and this has led to greater use of cards for lower value transactions. According to data from Visa Europe, Czechs make an average of 3.3 contactless payments per month, the highest rate in Europe. Slovakia ranked third in Europe with 1.3 transactions per head of population per month. As the rollout of contactless cards and terminals continues the rate of POS transactions will increase further. Sample 2 Taiwan has the highest penetration of debit cards globally with over four debit cards per adult. To encourage greater debit card use, issuers and networks have launched promotions which include cash rebates, reward points or discounts. To achieve maximum benefit from the various promotions, cardholders commonly carry multiple cards in their wallets and choose the appropriate card for each transaction. Debit cards in Taiwan come in several forms: standard debit cards are issued by most banks and can be used for cash withdrawals and retail payments, Premium debit cards Eastern Europe: Percentage of debit card transactions at the POS Slovakia 73% Czech Republic 73% Russia 71% Ukraine 69% Hungary 69% Poland 68% Slovenia 53% Romania 51% Turkey 45% In Slovakia and the Czech Republic, almost three-quarters of debit card transactions are at the Both countries have been among the fastest adopters of contactless technology in the world an has led to greater use of cards for lower value transactions. According to data from Visa Europe Czechs make an average of 3.3 contactless payments per month, the highest rate in Europe. Slo ranked third in Europe with 1.3 transactions per head of population per month. As the rollout o contactless cards and terminals continues the rate of POS transactions will increase further. Debit Cards Sample 2 450 400 350 300 250 200 150 100 50 0 Figures not shown Eastern Europe: Percentage of debit card transactions at the POS Slovakia 73% Czech Republic 73% Country C 71% Country D 69% Country E 69% Country F 68% Country G 53% Country H 51% Country I 45% NB.Sample data only Global: Debit Cards per 100 adults Global: Debit cards per 100 adults which offer additional rewards and cards with Taiwan has the highest penetration of debit cards globally with over four debit cards per adult encourage greater debit card use, issuers and networks have launched promotions which includ added functionality that extend acceptance cash rebates, reward points or discounts. To achieve maximum benefit from the various promo cardholders into other commonly payment carry multiple cards channels in their wallets such and choose as public the appropriate card for transaction. transportation Debit cards in Taiwan and public come in several telephone forms: standard booths. debit cards are issued by mo banks and can be used for cash withdrawals and retail payments, Premium debit cards which o 6

Sample 3 Debit cards in Brazil are primarily used for cash withdrawal with the average Brazilian adult using their debit card to withdraw over $3,000 per annum from the ATM. Credit cards are generally favoured at the POS due to the greater benefits attached to them although the proportion of debit card use at the POS is increasing year-onyear. Encouraging debit card use at the POS rather than consumers withdrawing their salary or benefits in cash is a priority for retail banks in the country. Latin America: ATM Billed Volume Brazil 521,077 Mexico 178,066 Country C 90,600 Country D 83,696 Country E 43,631 Country F 35,361 Country G 15,554 Country H 14,571 Country I 7,674 Country J 5,721 Country K 4,470 NB.Sample data only Lafferty Global Research Lafferty Global Research (incorporating World Cards Intelligence) is an online resource providing critical market and competitor intelligence on payment cards, e-money, acquiring/processing, retail banking and consumer lending. Covering over 70 countries, Lafferty Global Research provides clients with access to in-depth country reports and interactive databases with the information they need to undertake comparative benchmarking and make informed decisions in those markets where they already have a presence, as well as enabling them to make an accurate assessment prior to entering (or leaving) a market. Michael Lafferty Founder & Chairman, Lafferty Group E: michael.lafferty@lafferty.com David Hickey Head of Retail Banking and Cards & Payments Intelligence E: david.hickey@lafferty.com Rónán Lynch Director of the Global Knowledge Centre E: ronan.lynch@lafferty.com Tommy Morahan Senior Client Relationship Manager E: tommy.morahan@lafferty.com 7

Best in Class: Order Form Please scan and return to steven.cowan@lafferty.com or fax back to: +44 (0)20 3002 4662 Pricing $ The Global Credit Cards Index Single user PDF format 3,497 $3,997 Single user Hardcopy format 3,597 $4,097 Enterprise licence 8,997 $9,997 The Global Debit Cards Index Single user PDF format 2,497 $2,997 Single user Hardcopy format 2,597 $3,097 Enterprise licence 6,497 $7,479 Both Single user PDF format 4,497 $4,997 Single user Hardcopy format 4,697 $5,297 Enterprise licence 14,097 $12,497 Total $ Please invoice me (for EU-based organisations, please include your VAT number ) I wish to pay via credit/debit card Contact Details: Name: Company Name: Address: Country: Tel: Job Title: Postcode: Email: For payment via credit or debit card please complete the following: Card type: Visa / MasterCard / American Express / JCB (delete as applicable) Card number: CVV: Expiry date: / Date: Name (as it appears on card): I understand and accept that my subscription will be automatically renewed each year unless I cancel the renewal before the new annual subscription period commences. Signature: Data Protection: The information you have provided will be safeguarded by Lafferty Group who will keep you informed of relevant products and services in the future. Please tick how you would like to receive future information: mail email.we may wish to make your details available to other reputable organisations. Please tick this box if you would prefer your details to remain confidential. Lafferty Group, 61 Shalimar Gardens, London, W3 9JG www.lafferty.com www.laffertyresearch.com www.laffertyevents.com www.laffertynews.com www.laffertyreports.com