1. Turkish Contactless & NFC Ecosystem
Yapı Kredi Perspective & Products
June 21, 2012
Burak ILGICIOGLU

2. Agenda
2
• Turkey Card Payments Overview
• Turkish NFC Ecosystem
• Yapı Kredi NFC Architecture & Products

3. About Yapı Kredi
3
• Owned equally by Koç Holding and UniCredit
• 17 K+ employees
• 900+ branches
• 2,500+ ATMs
• 7 M+ credit cards
• 7 M+ debit cards
• 450K+ POS Terminals

4. Turkey Overview
4
75 M
35 M internet users
30 M+ 1 M+
4 M+
Ranks 17th biggest
economy in the world17
14,615
USD GDP per capita
Member of
OECD & G20
1 out of 5 card user is
E-Commerce User

5. Turkish Card Payments Market Overview
5
Third in Europe Fourth in Europe
Average annual growth rate = 9%
0
20
40
60
80
100
120
140
2005 2006 2007 2008 2009 2010 2011
Credit Cards Debit Cards Total
Credit 51 M
Debit 82 M
Total 133 M

6. Turkish Card Payments Market Overview
6
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2005 2006 2007 2008 2009 2010 2011
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2005 2006 2007 2008 2009 2010 2011
Number of POS terminals
Number of ATMs
1,9 M
32,5 K
Average annual growth rate = 10%
Average annual growth rate = 14%

7. Agenda
7
• Turkey Card Market
• Turkish NFC Ecosystem
• Yapı Kredi NFC Architecture & Products

8. Turkish Contactless Market Overview
8
6 M
2005
14
60 K
Start of contactless projects Number of banks issuing
contactless products
Number of contactless
enabled POS terminals
Number of contactless cards issued

9. Turkish Mobile & NFC Overview
64 M
20083
87 %
Number of mobile subscribers Mobile penetration
Number of MNOs
Start of NFC trials

10. Turkish NFC Ecosystem
Customers
MNOs
Banks
NFC
Handsets
Merchants
Regulators
Solution
Providers

11. Turkish NFC Ecosystem - Customers
• 6 M current contactless card customers
• MNOs and banks share the NFC customers
• User experience for enrolling / installing /
transacting are the key issues
Customers

12. Turkish NFC Ecosystem - Handsets
• Very limited number of handset available
• NFC does not come with feature phones
• Low smartphone penetration
NFC
Handsets

13. Turkish NFC Ecosystem - MNOs
• All 3 MNOs are actively involved in NFC projects
• MNOs’ strategy is based on mobile wallets
• All 3 MNOs have their own TSMs
• No cooperation like ISIS
• MNOs consider NFC as a loyalty tool & value added
service, not as a revenue generator
• Multiple banks
• Not just for payment;
– Transport ticketing
– Access control
– Location based campaigns
– Couponing
– Smart posters
– Loyalty programs
Mobile Wallets
MNOs

14. Turkish NFC Ecosystem - Banks
• Enablers of contactless payment infrastructure
• Not just SIM centric model
• Mobile is more than just NFC;
– Mobile banking
– Mobile money transfer
Banks

15. Turkish NFC Ecosystem - Merchants
• Banks provide POS terminals and contactless readers
to merchants
• Essentially part of bank infrastructure
• Important component for contactless acceptance &
experience
• Limited awareness (no extra financial benefit) for
contactless
• Limited contactless reader penetration
Merchants

16. Turkish NFC Ecosystem – Regulators & Solution Providers
• Visa, MasterCard and BKM are actively involved
in NFC trials & projects.
• In close cooperation with banks & MNOs.
• Solution providers have required know-how and
technology for NFC
Regulators
Solution
Providers
• TSM
• National Switch
• Clearing House
• National Regulator

17. Turkish NFC Ecosystem – User experience & acceptance
• The most critical component of the
ecosystem
• Enrollment & installation differs from
bank to bank
• Contactless penetration is %12
• Contactless : low or high value?
• Contactless : online PIN?

18. Turkish NFC Ecosystem – Main Barriers for NFC
• Low contactless reader penetration (3%)
• Consumers still need to be tech-savy to setup
and activate (setups not convenient)
• Lack of NFC enabled handsets
• Lack of single customer experience
• Standardization is still an issue

19. Turkish NFC Ecosystem – Critical Success Factors for NFC
• Development of entire ecosystem by the main
players and expanding contactless/NFC POS
• More smartphone penetration
• Enabling high value payments for NFC
• Expansion towards P2P for complete
ecosystem and user experience
• Campaigns & customer education for NFC
• More use cases for NFC other than payment

20. Agenda
20
• Turkey Card Market
• Turkish NFC Ecosystem
• Yapı Kredi NFC Architecture & Products

21. Yapı Kredi Contactless Overview
21
• One of the market makers in Turkey
• Yapı Kredi started issuing contactless credit cards
in 2009
• Full range of credit card products have contactless
feature
• 1 M+ contactless cards have been issued
• 14 K+ contactless readers are deployed with %25
market share

22. Yapı Kredi Contactless Overview
22
• Contactless as enabler of faster and better user
experience
• Active engagement for contactless
• Strong campaigns for contactless (1 out of 4
contactless transactions is credited back)

23. Yapı Kredi NFC Overview
23
• NFC positioned as an extension of current contactless
product line up
• PayMobile : branding for mobile product portfolio
• Customers are encouraged to try the mobile payment
products
• Works closely with all MNOs in Turkey
• Two NFC products are commercially available now:
– MasterCard Mobile PayPass
– Visa iCarte for iPhone
• Two more NFC projects are in the pipeline for commercial
launch

24. Yapı Kredi NFC Products : MasterCard Mobile PayPass
24
PayMobile MasterCard SIM product on
Turkcell Cep-T Cüzdan

25. Yapı Kredi NFC Products : MasterCard Mobile PayPass
25
• MasterCard Mobile PayPass v0.91 (1.0 coming
soon)
• N-Flex antenna and NFC enabled phones are also
supported
• Transactions below 35 TL are processed offline
• Online transactions over the contactless interface
is possible
• Both MNO wallet and STK have UI’s for accessing
the payment application

26. Yapı Kredi NFC Architecture for Mobile SIM based products
26
Core Card
Management
NFC Gateway
Internet
/Telephone
Banking
MNO Sales
Point
(via EFTPOS)
TSM
Online
Application
Process
Online
Application
Process
MNO OTA
3G/EDGE/GSM
Perso file
Eligibility
Check
Personalization
MNO
Total personalization time is between 3 – 25 minutes
Life cycle & counter
reset scripts
Personalization
Issuer Scripting

27. Yapı Kredi NFC Products : Visa iCarte
27
• Awarded Visa Europe’s Most Innovative Product of 2011
• VMPA 1.3.1 is used on iCarte’s SE
• Online only profile
• Personalization is initiated by
the customer
• Works with iPhone 3G, 3GS,
4 and 4S
• Users can save personal
notes on transactions
(merchant name, merchant type,etc)

28. Yapı Kredi NFC Architecture for iCarte
28
Core Card
Management
NFC Gateway
Internet/SMS
TSM
Batch
Application
Perso file
Personalization
iCarte app
installation
Mobile Gateway
Passcode Change Script
Personalization
Issuer Scripting

29. Conclusion: Towards a New Era
29
• NFC products are not intended to generate revenue in the
short run for both banks and MNOs
• NFC will not drive high usage volume before contactless POS
terminals become widespread and NFC handset penetration
reaches critical mass
• MNOs consider NFC products as a loyalty tool as well as a
value added service for subscribers
• Yapı Kredi’s perspective on NFC is to position its NFC
products as part of the mobile payment portfolio, which
includes;
– Location based services
– Campaigns & loyalty program integrations
– Expansion towards other P2P network
– Expansion in POS network

30. PayMobile Ads
30
Newspaper & Magazine Advertorial

31. PayMobile Ads
31
Poster for Branches
Newspaper & Magazine Ad

32. PayMobile Ads
32
Web content

33. 33
Thank you