Contactless Payments

• ~100 Million Contactless cards issued by July 20091 • Inside Contactless shipped 65 million chips for Visa and MasterCard in 2008 (Contactlessnews.com, August 2009) • MasterCard alone has issued 55M Paypass enabled cards and devices2

• 550,000Contactless readers deployed at over 130,000 merchant locations in the USA3

• Analysists predict worldwide contactless card transactions will come in at 3.5 billion this year, 7.9 billion in 2010, 15 billion in 2011, 23.6 billion in 2012, and 31.8 billion in 2013. 4

1 ViVOtech, July 2009 2 MasterCard Press Release , July 2009 3 ViVOtec h, Ju lly 2009 4 Yankee Group as reported in Digital Transactions, June 2009 “Tap” or “Wave” Copyright 2008, First Data Corporation. All Rights Reserved. at the POS These materials are Proprietary and Confidential to First Data Corporation 2 Where Are Contactless Transactions Taking Place?

• In November 2007 Visa reported 64% of payWave transactions occur in NY, NJ and PA

• Map of Contactless enabled merchants from MasterCard iditindicates hihhigher penetration in Eastern USA as well

C-Store Grocery Petroleum Pharmacy QSR Retail Stadium Theater Copyright 2008, First Data Corporation. All Rights Reserved. These materials are Proprietary and Confidential to First Data Corporation 3 Contactless Payments Are Gaining Momentum Acceptance Contactless Transactions in the US2 • 130,000 contactless-enabled merchant locations in 3 2.2 billion USA in 2011 2 • 500,000+ contactless readers deployed Billions 2 • ~2.2 billion contactless transactions by 2011 1 23% CAGR •Major merchants include 7-Eleven, BP, CVS, Jack in the Box, McDonald’s, Office Depot, others… 0 2007 2008 2009 2010 2011 1ViVOtech, July 2009 2Packaged Facts as quoted by First Annapolis, Nov 2007

• ~500k retail locations enabled for mobile commerce by end of 2008 globally

• Examples of first adopters are: •QSR • Taxi/Livery • Parking • Stadium • Pharmacy •C-Store • Toll Booths • Retail • Theater • Drive-Thru

• Increase in distribution of cards in wider geography - Washing Mutual recently announced they will be issuing 12-15 Million Contactless cards with primary footprint in TX and Western US Issuance Contactless Cards in the US2 • 100 million contactless credit and debit cards issued by 200 Jul y 20091 Up from ~18 million by end of 2007 109 million • in 2011

• ~109 million contactless credit and debit cards issued Millions 100 by 20112 41% CAGR • Major issuers include American Express, Bank of 0 America, Chase, Citi, Key Bank, Wells Fargo, others… 2007 2008 2009 2010 2011 1ViVOtech 2Packaged Facts as quoted by First Annapolis, Nov 2007 - MasterCard announced the issuance of their 50 millionth Contactless card in Q4 2008 • Research indicates Contactless cards have a 30+% higher usage rate than non-Contactless enabled cards

Copyright 2008, First Data Corporation. All Rights Reserved. These materials are Proprietary and Confidential to First Data Corporation Sources The Nilson Report 5 Associations Continue to Push Growth in Contactless Payment

• Programs in place geared toward merchant adoption of Contactless payment similar to the no-signature programs for Mag-stripe cards - No signature requirements under $25 - Merchant chargeback protection - Consistent interchange fees with current magnetic stripe card rates - Consumer option if they want a receipt • Subsidies available to reduce costs of Contactless readers - Subsidies may differ by association and merchant type - Need to determine eligibility requirements to ensure merchant meets terms & conditions specified by the particular association for subsidy reimbursement - Requirements may include: •Specified MCC •Full chain or franchise rollout •Full installation with counter presence for X period of time •Specified marketing collateral that is visible to consumer

• Faster throughput through the check out process - Customer time at POS is reduced an average of 30-40% Transaction Type Average Time Cash 33.7 seconds Card (with Signature) 48.4 seconds Card (without Signature) 26.7 seconds Contactless 12.5 seconds - MasterCard data indicates that the most significant time savings can be seen at the drive thru, where Contactless can reduce the transaction time by 12-18 seconds versus cash • Increased consumer spending -Switchinggpyg cash paying customers to Contactless pypayment cards will increase their spending 20-30% - Consumers use their payment cards more frequently once their cards become Contactless enabled – approximately 18% on average • IdtlltImproved customer loyalty - Customers that realize a faster checkout process are more likely to return Copyright 2008, First Data Corporation. All Rights Reserved. These materials are Proprietary and Confidential to First Data Corporation Sources: Smart Card Alliance, Chase Bank, The Nilson Report and AITE group/Food 7 Marketing institute Consumer Benefits for Accepting Contactless

• Speed - 71% of consumers cited that speed at ccheckoutheckout was a primary reason for using Contactless • Security - Consumer maintains control of their card throughout the checkout process, reducing the possibility for skimming • Convenience - No more fumbling with cards and/or handing it over the counter; consumers simply hold their Contactless payment device ttoo the reader and proceed through checkout - Alternative form factors (fobs on keyrings, enabled phones, Go-Tag stickers, wrist bands, etc) can eliminate the need to carry a wallet or purse • Differentiation (()or "Cool" factor) - Many consumers keep up to date with the latest technological tends and view demonstrating early adoption of these technologies as cool

Sources: Smart Card Alliiance and Chase Bank

• Contactless payment cards are as secure as, and probably safer to use, than traditional magnetic stripe cards • The card never leaves the cardholder’s hand during the transaction • The contactless chip is passive and does not transmit data until it is within about 2 inches of a reader • Any data that could be theoretically “captured” by a thief amounts to less information than what is printed on the outside of a plastic credit card or stored on a standard card’s magnetic stripe • Illegally captured data could not be used to make fraudulent online purchases because the security code printed on the card is not stored inside the chip

• The contactless chip allows more security features than mag stripe • Card specific encryption • Dynamic CVV embedded in chip

• Contactless payments use a very different application of radio frequency technology than is used in devices for RFID inventory tracking or toll passes

• Replace cash, especially for small ticket purchases - 40% of consumer carry less cash than they did five years ago • Operational effiency - Faster checkout -Higher customer satisfaction - Less handling of cash - Reduced risk of skimming and other fraud at POS • Increase revenues - 20% spending lift per transaction over cash - Faster checkout leads to loyal customers and attracts new customer base • Readiness for future payment types - Early adopter subsidy and marketing programs - Return customers and marketing opportunities associated with cutting edge technology

Source: Smart Card Alliiance

First Now Soon

“Outside the Phone” “On the Phone” “In the Phone”

• Deploy and support • Issue closed loop • Mobile-enhanced contactless readers sticker solution loyalty • Contactless cards • Tie loyyyalty / reward to • Targeted customer • Contactless key fobs program interaction through • Other alternative device form factors • Offers • Auto Order • Alt payment options

Evolving from Plastic Cards and Fobs to Stickers to the Mobile Handset

Moving from Credit and Debit to Stored Value to New-to-World Mobile Commerce Solutions

Copyright 2008, First Data Corporation. All Rights Reserved. These materials are Proprietary and Confidential to First Data Corporation 12 Over 550,000 Contactless/NFC Readers are Already Enabling Merchant Acceptance at 130,000+ Locations in United States

Nationwide Enabled in United States:

Regionally Enabled or in Pilot:

(Million units) 300 250

200 150

100 50

0 2009 2010 2011 2012 2013 ABI Research, December 2008

• What is it: - Private Label is a MCC or merchant restricted open loop card. - The card rides association rails (Visa / MasterCard) - Same settlement process as open loop - Acts like a closed loop card • Why it may needed: - More flexibility with card design - Allows unlimited reloads - KYC not required - Less regulation - Uniform Settlement