The Rules of A CQRPay Inc. White Paper 260, 2323-32nd Ave NE E-commerce Have Calgary, AB, T2E 6Z3 Changed. 1-888-227-8421 www.arvic.com

By Victor G. Arcuri President, CQRPay Inc. A division of Arvic Search Services Inc.

October 3, 2011 Page 1

Contents

Contents ...... 2

Introduction ...... 3

E-commerce rules have changed...... 3

New Rules Protect Consumers ...... 3

New Rules Protect Merchants ...... 4

How the Digital Wallet Operates ...... 5

Shopping Cart Developers ...... 5

Web Hosting Developers ...... 6

Your Smartphone Application ...... 6

Your Banker’s PPOS ...... 7

About Arvic Search Services Inc...... 7

Facial Recognition ...... 7

Partnership Requirements ...... 7

Advantages to Partnership ...... 7

PPOS Distribution ...... 8

Income Opportunities ...... 8

Web Hosting Companies ...... 9

Advantages to Developers ...... 9

Summary ...... 9

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Introduction

When the was conceived, it was developed as an ‘information highway.’ It has evolved into an e- commerce solution that is a mandatory component for every business.

E-commerce rules have changed.

In September 2011, both Visa® and MasterCard® launched their own digital wallets as (m-payment) applications for smartphones equipped with NFC chips. With the introduction of these two applications, the rules of e-commerce have forever changed for both the bricks and mortar retailers and online merchants.

On the surface there does not appear to be a real advantage for retailers to adopt the new hardware required to be installed at the cash register. There are more significant advantages to the online merchants and the businesses that offer online sales.

Consumers concerned about identity theft will need to know that the new digital wallets are guaranteed to protect their identity. The safest place to store details is with the bank or institution that issues the credit card. The second safest place to store profile and card data is in one of the cloud computing services designed specifically for that purpose. After all, they already have this information.

The new digital wallets will be fully functioning Personal devices (PPOS). They will not only provide all the functions of existing Point of Sale devices, but will also provide several new levels of security and identity protection.

Initially, the PPOS is being deployed to interact with e-commerce enabled . The shopping cart applications will no longer ask for any information from the consumer. The will simply generate a transaction number that will be pasted into the PPOS.

New Rules Protect Consumers

Doing business online can be an alarming situation for both merchants and consumers. Merchants are concerned about fraud, chargebacks, high discount rates, and being sued if someone steals data from them. Consumers are concerned about identity theft.

It seems to us, the solution to both problems is the same. The consumer never gives the merchant any data that can be stolen. In reality, the merchant never needs the consumer’s identity or card details. The merchant only needs confirmation the credit or debit card was approved. If that is all the merchant needs, then why does current shopping cart software ask for so much more information that could be deemed to be confidential?

The new PPOS will guarantee:

1. The User is, in fact, the owner of the PPOS. 2. The Merchant is, in fact, the operator of the and duly accredited. 3. The Service works with every merchant account provider. 4. The Service operates across all web-based applications that accept credit cards. 5. The Service will work with an ever-growing collection of smartphone applications. 6. The Data collected within PPOS is secure. 7. The off-site data storage facility, or facilities, allows for data retrieval in the event the smartphone is ever lost or stolen.

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New Rules Protect Merchants

The prime concern of all online merchants is cost. The PPOS will be treated as a card-present sale, so its use will reduce discount rates, lower incidents of charge backs and help to fight fraud. In addition, merchants will no longer need to purchase SSL Certificates, additional firewalls, or secure Payment Card Industry (PCI) compliance. The average online merchant, with 150 transactions per month at $86 each, will save over $2000 per year.

Once implemented, the PPOS will be the basic building block for the further enhancement of a merchant’s advertising and marketing efforts, as more merchants turn to the deployment of smartphone applications tied to the PPOS to promote sales and build customer loyalty.

In summary, here is an overview of how the PPOS processes online purchases. A consumer visits a website, selects the items he/she wants to purchase and adds the items to the shopping cart. When the consumer selects the check out feature, he/she proceeds to the payment area of the website where he/she is presented with a number of payment options.

When the consumer selects the CQRpay button:

1. The shopping cart software generates and uploads to the processing gateway, a file containing the merchant identification, as well as the invoice details. 2. The shopping cart software receives confirmation from the gateway that the transaction was received, displays a transaction number, and then closes the invoice.

At this point the merchant has an open unpaid invoice with no knowledge of the consumer’s identity.

3. The consumer then opens the PPOS and retrieves the transaction number. 4. The PPOS displays the identity of the merchant, the invoice number and the invoice details, as well as a number of payment options. 5. The consumer selects the payment option and processes the payment.

Once the transaction is processed:

6. The PPOS displays the authorization number and saves a record of the transaction. 7. The gateway then sends the authorization to the merchant to complete the transaction. 8. The merchant may choose to send an e-mail confirmation to the consumer.

The same file, passed to the transaction processor, can also be read by the smartphone application specific to the needs of the merchant. For example, consider how a hypothetical grocery chain might take advantage of the methodology employed with the PPOS. Assume the retailer provides a smartphone application and offers a loyalty card. The invoice file passed to the consumer at the time of purchase could include additional information, including the ability to alert consumers of upcoming events, specials, coupon offers, etc.

Let us assume this grocer includes a meal planner as part of their smartphone application. The consumer can plan meals for the week, select main course items based on the grocer’s advertised specials, and receive suggestions regarding additional ingredients such as seasonings, vegetables for the meal, etc. The app may then offer recipes, appetizer suggestions, beverages to include, and perhaps a dessert selection. Over time, the app could track shopping habits and remind the consumer of purchases made in the past, such as milk or sugar, or whatever the household has purchased on a regular basis.

To register as a merchant and to download the application programming interface (API), click HERE.

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How the Digital Wallet Operates

The new CQRpay PPOS is a smartphone application that will be introduced in three versions. The first application is for older model smartphones which do not have forward facing cameras. The second is an application for newer model smartphones with forward facing cameras. This application will employ facial recognition software to confirm the owner of the PPOS. Third is a desktop application that will also employ facial recognition software to confirm the owner of the PPOS.

The new CQRpay PPOS is not a storage device, but rather a payment application. None of the data entered on the application is saved or stored within the application. All saved and stored data resides in a cloud computing service, which is usually owned and operated by the bank or the company that issued the credit card.

When the PPOS is initially launched, you are presented with data collection forms to create your profile and enter your card details. The submit function uploads the profile to the gateway that encrypts the data, returns an unlock key, and then stores the encrypted file with the appropriate cloud. The returned unlock key is stored within the PPOS, along with a description of the card, but not the card details. For example, the stored description might read Capital One MC Platinum.

When the time comes to make a purchase, the consumer simply enters the transaction number and selects the card description. The PPOS uploads these two pieces of data, along with the unlock key, to the gateway processer. The processor then retrieves the card details from the cloud and processes the transaction.

These security features and the employed methodology of the PPOS guarantees that confidential information of the consumer is never revealed to the merchant, and thus can never be saved, stored or compromised.

Shopping Cart Developers

The introduction of this new technology means that shopping cart developers will need to revise their applications. The new model of shopping carts provides merchants with an enhanced level of security. We have developed a complete set of API’s to satisfy all vendors. In summary, here is an overview of how the PPOS processes online purchases.

When the consumer selects the CQRpay button:

1. The shopping cart software generates and uploads to the processing gateway a file containing the merchant identification as well as the invoice details. 2. The shopping cart software receives confirmation from the gateway that the transaction was received, displays a transaction number, and then closes the invoice.

At this point the merchant has an open unpaid invoice with no knowledge of the consumer’s identity.

3. The consumer then opens the PPOS and retrieves the transaction number. 4. The PPOS displays the identity of the merchant, the invoice number and the invoice details as well as a number of payment options. 5. The consumer selects the payment option and processes the payment.

Once the transaction is processed:

6. The PPOS will display the authorization number and save a record of the transaction. 7. The gateway then sends the authorization to the merchant to complete the transaction.

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8. The merchant then sends an e-mail confirmation to the consumer.

The same file, passed to the transaction processor, can also be read by smartphone applications specific to the needs of the merchant. The invoice file passed to the consumer at the time of purchase can include a variety of additional information, including the ability to alert the consumer of up coming events, specials, coupon offers, etc.

If you would like a copy of the developer’s API for shopping carts, click Cart Developers.

Web Hosting Developers

It is estimated that less than 40 per cent of merchants who accept credit cards have an e-commerce enabled website. The new rules for e-commerce mean there will no longer be a requirement for these merchants to purchase SSL Certificates, pay for PCI compliance, or install extra security to protect stored data. There is an extensive list of cost savings.

When merchants learn of these new rules, the reductions in cost, discount rates, incidents of chargebacks, and the lowered incidents of fraud, they will want to enable e-commerce on existing sites and launch new or first time websites.

As the PPOS gains acceptance, there will be a heavy demand from merchants for specific smartphone applications that allow merchants more detailed communications with the consumer. Interactive smartphone applications will become the norm, attracting merchants to launch or upgrade their e- commerce websites.

Businesses offering services related to web hosting will now have an opportunity to be an exclusive supplier of new services, which will help build their businesses.

We are inviting web hosting businesses to partner with us in the promotion of our services to their clients. As a reseller they will earn a minimum of $20 per merchant per month. In addition, we will provide full administration services.

If you want to learn more about our reseller program, click Resellers.

Your Smartphone Application

If you are a developer or a merchant who wants to build a smartphone application that links to our PPOS, we have an API for the website, as well as a data sheet regarding how to pass data to the PPOS. In order to deploy the new app, merchants must have a merchant account from a North American provider.

Our digital wallet has three features. First is the ‘push’ feature, which allows the merchant to pass information to the PPOS. This is the feature to which developers will want access. Second is the security feature which protects the identity and details of the consumer. Developers cannot have access to this area. Third is the processing section, which is built by us and provided to developers so their application will communicate with the merchant’s acquirer.

To register as a developer and to download the API, click Developers.

To register as a merchant and to download the API, click Merchant.

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Your Banker’s PPOS

The bank that issued your credit cards will soon offer you a digital wallet (PPOS) built on our platform. When this happens, you should immediately delete our application and install theirs. In the mean time, you may wish to contact your bank to ask when they will be offering a bank-controlled PPOS.

If you are a banker wishing to deploy your own digital wallet, we ask you to contact your MasterCard® representative, who will provide you with specifications and a fact sheet. Alternately, you are welcome to correspond with us for these details.

About Arvic Search Services Inc.

Arvic has provided a secure gateway for credit card processing for Internet-based merchants for over 10 years. Our independent gateway service is unique in that it is the only application that connects to every merchant account provider and every bank in Canada and the USA.

Our platform enables merchants to use the service regardless of any affiliation they may enjoy with a merchant account provider, bank, POS device supplier or shopping cart software developer.

Facial Recognition

We deploy the same facial recognition software used by police and government agencies world-wide to unlock a secure area of the smartphone for the purpose of using a PPOS.

The CQRPay PPOS will operate across all web-based applications that accept credit cards, and will process any merchant account set up on the CQRPay gateway. The PPOS will work with an ever-growing collection of smartphone models, laptops and desktop computers.

The initial CQRPay PPOS digital wallet has been developed, and is in the hands of selected stakeholders for beta testing. The initial results have been so overwhelming, the launch date was moved up to September, 2011.

It is now time to invite e-commerce software developers to participate in the launch. To register as a developer and to download the API, click Developers.

Partnership Requirements

We are looking for retailers to initially allow the PPOS to receive shopping cart details from their web application and, once there is widespread acceptance of the web application, to make changes at the cash register to allow the PPOS to retrieve sales information.

We are now proposing to partner with software developers, of which we consider you to be a key member. To register as a developer and to download the API, click Developers.

Advantages to Partnership

Current estimates indicate that 40 per cent of the 300 million cell phones in use across North America are smartphones. The PPOS application will process all transactions, regardless of the merchant account provider.

Within one year we estimate the PPOS will process over 3 million transactions per day. Within two years we expect the volume of PPOS-based transactions will surpass the volume of today’s POS devices.

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The initial introduction of the PPOS will be via the e-commerce websites of 140 of the 400 largest retailers. Your software will now be introduced to not only the merchants who employ your competitor’s offerings, but also to those merchants who currently do not have e-commerce capabilities on their current websites, and those who do not currently maintain a presence on the Internet.

PPOS Distribution

We expect the PPOS will be distributed in several ways. The initial distribution will be through shopping cart developers.

We are inviting over 100 developers to express an interest in upgrading their shopping carts. While it is true that we do not expect all invitees to respond, it is also true that only those developers that do respond will be included in the initial launch and of the first year of semi-exclusive certification.

The second line of distribution will be through the retailers that are known to primary stakeholders. First we will work with retailers who operate their own e-commerce application, to ensure they have the necessary API. It is estimated that only 40 per cent of retail merchants that accept credit cards have an e- commerce enabled website. We will target these retailers through a joint effort of the stakeholders.

The third line of distribution will be through the banks that issue credit cards. Once consumers learn of the added security features associated with the PPOS, banks will offer their own smartphone applications that incorporate the PPOS.

An additional line of distribution will be the word-of-mouth advertising of the user base. We expect 80 per cent of consumers who own a smartphone will know of the PPOS within 3 months of its introduction.

Other Requirements

As the PPOS gains acceptance, there will be a heavy demand from merchants for specific smartphone applications, which will allow merchants more detailed communication with the consumer. Interactive smartphone applications will become the norm.

The same XML file can then be tied to smartphone applications specific to the needs of the merchant. We believe the shopping cart suppliers will be the ideal developers of these new applications, and as such we have a separate API that may be built into these new applications.

Income Opportunities

Once we launch our PPOS application, shopping cart developers who install our API will have about a one year window of exclusivity before their competitors launch a competitive product.

Your Product’s Potential

We will restrict the number of shopping cart suppliers authorized to use the API and the number we certify for use with the PPOS. We believe we can drive traffic to your business. We ask you to consider the following: 1. Every North American Bank that issues credit or debit cards to consumers will promote the PPOS as the only truly secure method of shopping online. 2. Every merchant account provider will encourage their e-commerce enabled retailers to deploy shopping cart application providers that are certified to process transactions via the PPOS. 3. It is estimated that less than 40 per cent of websites are currently e-commerce enabled. The numbers of e-commerce enabled websites will more than double over the next two to five years.

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4. It is estimated that less than 60 per cent of merchants offering consumer goods and services currently have websites. This new technology will make the process much easier for these merchants, who may then be inclined to set up sites.

Web Hosting Companies

The prime focus of our marketing efforts will be attracting web hosting clients as resellers of our package of services for existing small businesses and new start-ups. Each of these new merchants will need a shopping cart application.

Our Sales Team

We are currently in discussions with 10 multi-level marketing companies. Collectively, they have over 30,000 members in their respective down lines. These individual members will be working with existing merchants who have POS devices in their stores, and now need an e-commerce website.

Advantages to Developers

Currently estimates indicate that 40 per cent of the 300 million cell phones in use across North America are smartphones. Each year, 28 per cent of cell phone users will upgrade to smartphones.

We estimate that 35 million retailers will launch a new e-commerce enabled website over the next three years.

The PPOS application will process all transactions, regardless of the merchant account provider. Within a year, we estimate the PPOS will process over 3 million transactions per day. Within two years we expect the volume of PPOS-based transactions will surpass the volume of today’s retail POS devices.

We would be honored to have your software as part of our list of certified applications. To register as a developer and to download the API, click Developers.

Summary

The digital wallet will protect the cardholder’s identity and will provide a new and convenient way to make purchases, both online and on multiple hardware platforms.

The PPOS digital wallet will be a welcome solution for merchants who wish to save costs on card-not- present sales, chargebacks and fraud attempts. With its ease of implementation for merchants and the inherent acceptance by consumers, merchants will benefit by using CQRPay.

The CQRPay PPOS digital wallet will become the distinct leader and will set the standard in digital wallet technology by meeting the security needs of cardholders, merchants, and card issuers.

If you are interested in this opportunity:

1. Visit our website and complete our developer’s agreement. 2. Download and execute the non-disclosure agreement. 3. The full API will be forwarded to you once you return the non-disclosure agreement.

The CQRPay PPOS digital wallet will become the distinct leader and sets the standard in digital wallet technology by meeting the security needs of cardholders, merchants and card issuers. We invite your questions: 1-888-227-8481 or [email protected] For more information: www.cqrpay.ca

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-30- All Media Enquiries contact: Victor G. Arcuri President, CQRPay Inc. 260, 2323-32nd Ave NE Calgary, AB, T2E 6Z3 1-888-227-8421… or 403-234-0844 www.cqrpay.ca

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