Setting Interchange in South Africa: Status Update

1. Setting Interchange in South Africa: Status Update

2. MasterCard Interchange Setting Methodology • Interchange Setting Process • Interchange Strategy • Cost Study Analysis • Rate Structure

3. Interchange Setting Process • CEO or designee (the COO) sets cross-border interchange fees upon recommendation of internal management committee • Similarly, CEO or designee (COO) sets domestic interchange fees in Argentina, Australia, Brazil, Canada, Japan, New Zealand, Singapore, U.K., U.S., Uruguay and, soon, South Africa • Elsewhere, domestic interchange are fees determined by customers (banks) pursuant to delegated authorities in MasterCard’s rules

4. Interchange Setting Process • Staff committees formed for the purpose of developing and evaluating interchange proposals • Region/country management • Interchange Group • Acceptance • Systems and Operations • Product Groups • Member Relations • Legal • Finance

5. Interchange Strategy MasterCard’s interchange fee strategy is to optimize both the issuance and acceptance of MasterCard cards, taking into account: • costs, • competition, • appropriate issuer and acquirer behaviour, • business environment, and other relevant factors, in order to maximize the value of the MasterCard brand for the benefit of its customers, merchants and cardholders

6. Cost Study Analysis • Conducted by an independent consultant • Individual bank data not provided to MasterCard or to other banks • Different methodologies for credit /debit • Consultant reports weighted average costs • Evolution in cost measurement methodology

7. Interchange Rate Structures In establishing interchange rates, MasterCard typically also considers: Transaction Criteria Product Type Merchant Category Volumes

8. Thank you.