Taiwan has been an important market for MasterCard innovation. It has been an early adopter of technology and is one of the leading markets in Asia/Pacific that has successfully adopted smart cards and contactless payments. Since the introduction of PayPass in early 2005, MasterCard, together with the support of its vendors and customer financial institutions, has paved the way for the successful roll-out of MasterCard PayPass in Taiwan.

In just over 9 months, Taiwan has been a market at the forefront of leveraging contactless payments for usage on different payment forms. A noteworthy and recent milestone was the pilot launch of MasterCard PayPass on mobile phones, which leverages Near Field Communication (NFC)* technology. This launch placed Taiwan as the first market in Asia/Pacific for MasterCard to launch this innovative payment solution.

The launch of MasterCard PayPass on mobile phones marks yet another significant milestone for the payments industry in Taiwan and more specifically across the region. In the past year we have seen a watch, a key fob and now -- the next most essential item consumers carry with them everyday -- a mobile phone all being equipped with PayPass.

This displays the receptiveness and commitment of a diversified set of industry players who are consistently searching for innovative ways to satisfy a consumer," added Ghaidan.

Other significant milestones achieved in Taiwan in the last 9 months include the launch of the world's first soccer-themed watch equipped with MasterCard PayPass, in collaboration with Chinatrust Commercial Bank, LAKS GmbH, and On Track Innovations Ltd. (OTI) (NASDAQ: OTIV). MasterCard also joined hands with OTI and Taipei Fubon Bank to introduce a 3D Soccer Ball Key Chain for consumers in Taiwan. This marked the first three-dimensional soccer ball key fob with PayPass by MasterCard.

Advancing the Contactless Payments Arena

In further establishing a globally interoperable communications standard for contactless payment solutions, in 2006, MasterCard assigned to EMVCo the MasterCard PayPass ISO/IEC 14443 Implementation Specification as a common communications protocol for radio frequency-based contactless payments. Benefiting industry players, this agreement meant that cards and terminals supporting MasterCard , Visa, JCB and other contactless payment applications will conform to the same communications protocol and undergo equivalent testing.

Moreover, in line with accelerating the adoption of payment cards to dual-interface (contact and contactless) smart cards, MasterCard collaborated with Keycorp Limited (ASX: KYC) in November 2006 to announce the availability of a US$2.99 MasterCard PayPass M/Chip 4 Combi Card for card issuers in Asia/Pacific, Middle East & Africa (APMEA).

Continued Momentum

In 2006, MasterCard also saw its PayPass contactless feature roll out in Malaysia and announced a pilot program in Australia. Moreover, in Korea, MasterCard collaborated with Samsung Card and three mobile phone companies, SK Telecom, LG TeleCom and KTF, to pilot the use of mobile phones as contactless payment devices. Additionally, in Japan, MasterCard announced its first full scale roll-out of PayPass in collaboration with Orient Corporation and IKSPIARI Co., and celebrated the launch of a pilot program with Pocket Card Co. Ltd and ITOCHU Enex Co. Ltd.

As of Q4 2006, MasterCard globally is approaching 13 million MasterCard PayPass cards and devices in use at over 46,000 merchants worldwide, including new acceptance environments such as vending, taxis, tollbooths and transit.

For years, MasterCard has been the industry innovator in contactless payments. From consumer research and development efforts to conducting market trials and standardizing communications protocols for contactless payments, MasterCard has paved the way for the increasing demand and successful roll-out of PayPass globally. In recognition of its success in leading the contactless payment market with its innovative PayPass programs, MasterCard was awarded:

• • In October 2006, the 2006 Frost & Sullivan Company of the Year Award for its performance in the contactless payment market segment. The annual award is given to a company that has demonstrated excellence within its industry. Several factors were assessed for the award, including MasterCard's business development, competitive strategy and market leadership.

 

• • In January 2006, Frost & Sullivan’s "2006 Market Penetration Leadership Award" and subsequently in October the 2006 Frost & Sullivan Company of the Year Award for its performance in the contactless payment market segment.

 

• • In May 2006, Card Technology's "Most Significant Implementation" award and "Visionary of the Year" award, which was presented to Art Kranzley, executive vice president and group executive, Advanced Payments, MasterCard Worldwide.

 

• • In November 2006, an OSCARDS 2006 Award as one of the most innovative banking cards in the world for the world's first wristwatch equipped with MasterCard PayPass technology. The Chinatrust MasterCard PayPass watch came in first in the Shapes and Design Forms category.

 

• • In 2005, the "Best Transportation Application" at the 2005 CARTES Sesames Awards.

* NFC is a short-range proximity technology that uses radio frequency (RF) to enable secure, contactless communication between two devices. It is used to emulate the ISO 14443 proximity protocol required to perform a MasterCard PayPass transaction and allows other proximity applications to co-exist on the same handset with PayPass, which makes it an attractive product for carriers looking to increase handset utility for consumers.