European Alternative Payments

October 2015

€157bn €65bn Total consumer spend Total consumer spend €71bn Total consumer spend 14% 12% 2012-17 CAGR 2012-17 CAGR 15% €1,173 2012-17 CAGR €2,618 per capita spend* per capita spend* €1,112 per capita spend*

€19bn €15bn Total consumer spend Total consumer spend 13% 16% 2012-17 CAGR 2012-17 CAGR €516 €391 per capita spend* per capita spend*

Source: PSE Consulting Analysis 2015 * Per capita spend relates to spend per person connected to internet •03/10/2016 2 • PSE - EU Alternative Payment Methods v1 © 2015 Payment Systems Europe Limited Differing Consumer Habits

67%

ONLINE SPENDING ONLINE SPENDING UNITED KINGDOM GERMANY Source: PSE Consulting Analysis 2015 •03/10/2016 3 • PSE - EU Alternative Payment Methods v1 © 2015 Payment Systems Europe Limited Alternative Payment Method Definitions

Type Example Advantages Disadvantages • Consumer preference for anonymity • Costs of acceptance eWallets • Additional perceived security • Lack of reach (in some segments and markets) • Service for non cardholders • Differing settlement processes

ACH Credit • Extend acceptance to uncarded • Nationally specific solutions Transfer/ consumers • Security is dependent upon the participating banks • Guaranteed payment for merchants (typically different for each one) Overlay/ (confirmation of funds available) • Reconciliation and refund issues OBeP • Same day or next day settlement • Extend acceptance to uncarded • No funds guarantee consumers • Fraud exposure ACH Direct SEPA • Merchant initiate the payment • Strong consumer protection (no questions asked Debit Direct Debit process (can generate more sales if refund period of 47 working days; refund with recurring) investigation period of 13 months) • Inappropriate for digital content • Consumers access to credit without • Not widely spread across markets Invoice having a credit card • Inappropriate for digital content

• Cards dominate with 56% of the total • Various Automated Clearing House (ACH) methods cover 16%, approximately equal to wallets. • Invoices play a significant role at 8%, dominated by products such as Klarna. • Cash on delivery, still important in markets such as Poland, accounts for just 4% of the total in Europe.

Source: PSE Consulting 2015

Please note that this data excludes cash on delivery and invoice payments (where the settlement type is uncertain) Sources: PSE Consulting eCommerce databank •03/10/2016 6 • PSE - EU Alternative Payment Methods v1 © 2015 Payment Systems Europe Limited Regulation – Driving Change

European Banking UK European Commission

Authority Regulators

Open Data Initiative Data Open

Services Directive Services Access Standards Account Information Payment Services PaymentAccount Strong Customer

2nd Payment 2nd Service (AIS) Interchange

Regulations Authentication Regulator

Payment Initiation Service (PIS)