Understanding Your Merchant Statement

SPECIAL REPORT

MERCHANT PROCESSING CE SUITE 10 12202 AI 0 BROOMFIELDRPORT CO WAY 80021 MERCHANT SUPPORT (800) 254-7171NTER Page 1 of 2

Pro ces sing Mon Ass th: ocia tion Nu 09-12 Me mbe 302 PROPERTIES rcha r: nt N STE L umb 0955 Rou er: ting 23 3195 250 CORPORATE BLVD Nu LLC mbe 5436-8455-5 NEWA DeVISA,p MAST r: osi RK DE 19702-3329 TO THt Ac cou 564-0969 INTERCHANGE PRnt N xxxxx0089 BASE DISCOEIR CURRENTum INTERCHb ERCARD, ANDer: DISCOVER ASSOCIATIONS HAVE P IN YOUR C xxxxxx9787 lan EFFECTIVE OC C ode N CONTINUE T Page 2 of VS umb er o MERCHANT ACCOUNT.UNT RATES. ASSO S f URRENT RATESO OR AD MC ales GRA Am 2 DS 10 oun MS. WE t of O WORKTOBER HARD 1ST, T 2012 01 Sa Am ANGE RATES A ** 5, les Nu oun 392.97 mbe $ t De 00 r of 39.21 ARduc 212.97 Cred Pl CIATI ted 11 its an E VERY: PLEASED T Am Sum .00 00 oun m DED TOO NON-QUALI 5,60 t of ar . WE THANKN YOU FORND YOUR BUSINESS 00 Cred y O MINIMIZE THE CI 5.94 its AR HAVE INTRODUCED SEV 00 .0 D PROGRAM CHANGES WIL Da R 0 Net y efer S 05 N en 00 .00 ales A um ce 5,39 NNOUNCED M ber .0 2.9 Ave O A 06 012100 0 7 rag 212.97 T e MP NNOUNCE 07 012100 51 T .00 ick D FIED CATEGORIES AS A 017 ran 539.30et isc ACT OF THESE CHANGES TO YOUR 10 01210 61017 Cod .00 D e Plan 5,605.94 P/I isc 13 0121008101607 D 212.97 .000 1020 Cod % N ER ODIFICATIONS e O INCREASE T 19 01210 D T Nu .000 .050 Dis A mbe D .00 cou L NEW 24 01210 131016 D r of ep 50 nt L BE INCLUDE T S osi 9.63 .000 .050 D 25 191016 D ales ts ue 01210221016 T A .000 2. 02 mou 70 AND WE 01210251016 D T nt of PPLIC D D 01 Sa .11 O ep T 90 les osi D 03 0.00 A .00 W A D t To T 1,050.00 mou BLE tal D 01 nt of 2.81 ILL s T 1, Cre 01 521.43 dits T 1,200.0 .00 D N 01 isco umbe 121.540 .00 unt r 01 Pai 01 400. .0 d 00 0 .00 A 212.97 .00 N mou 11 .00 D et n epos t 200. .00 900.00it De 5,60 00 .00 13 scr .00 1,050.0 TRANSACTIiptio ON C 5.9 .00 01 n 4 .00 1,521.4 0 ACCOUNT F .00 09 ee .00 1,200. 3 VISA ACQUIRER N s .00 02 121.54 ENTRAL .00 00 UNDERSTANDING YOUR VISA ASSOCO N FILE F .00 121. 01 5,271.43 54 VISA CPS REWARD EE PLUS MONTHLY F .00 400.00 01 771.43 VISA US APF FEEETWORK FEE (FANF)-AUG .00 212.97 14 212.97 200. VISA REG @ .05% EE 00 01 212.97 DEBIT INTEGRITS 2 @ 1.95% + $.10 5,60 MC ASSOC 5.94 MC MERIT I + $. 11 212.97 NABU/LICENSE22 5,392.97 TRANSACTIO Y FEE DB @ 5,605.94 MC ASSESSMENTS 1.64% + $.16 T VISA ASSESSMENTN/NETWORK AC FEEC otal V/MC/DS KIL 10.00 5.00 OBYTE/BASS ESS FEE 2.00 .25 D EII FEES isco 2.47 F unt ees Du 4.62 A Du e mo e .20 unt Ded .02 V uc S ted 3. V T 65 L -V ot V IS al F .7 D -V A ee 0 V IS s B -V A D IS L ue .23 V -V A A $ I R 5.93 VS - S D G 2. -V V A EB E 81 V ISA IS B I T L A U T IC 36.40 1.33 -VI C S K VD SA A IN E 36.40 -V LAR S E T M 39.21 V ISA GE H SS C B - DE TI A M - VIS BI CK MD C L M V$ A B T ET V -M M A -V US M AN A -M S ISA IN L C STE D A TE CA ESS -MAE MRC -M S R SH M S B ARA TE C A D - TME -M DS R A DV MA $RC T C R AN MB ST - ARA E A D C -M ER M SDTL R R P E M A CAA EARC D LA $ STE RSD R GAE N -M RC TED C RT LA CO AS A REB A DICK R D DE TE RD C ITR D ETG S S RC BU A D E E -DIS AR SINR B B DD CP D C EDS U IT TI -D LOV AS CS S C IS A ER H A IN DZ K CO N AD S E -DE VE C VA H SD ITSC D ROD NCA S J - OVS DE ED DIS D ER- EBIT JC VD$ C D DB S - A -D DOV ISUS JC N ISC Z ER-D C INE AM B C DO IJSC O SS -A E J VE-D CB V D ME RISC O E B RI D - CA V R -D CA $ D OSH E E EB N E - IS ARD C - IT X D C VE DV EL PR T - IS O R EEB ECT ESS ALL C VE B B -E RO 1 PL O R U IT BT NIC -PL AN TR VE J S CH 2 AN S AN R C IN JC EC -P ON D SA C B E K LA E -D CT A S A - 3 N T EP ION S S M JC -PL W C- OS C H D - B AN O CH IT OD A B A TH A AR ES D M R -A GE V E -D E EE DJ BA C E R B US CK E -E B IC -CH TM B L IT A AR EN -E E N GE T B C E BA T TR X CK O PR RE N E VE IC S T RSA C S -A L H 1 L E -P L C 2 L P K - A L 3 P N A LA O N -P N N S T LA T E R N W D AN TH O -D S R C E A E -C P C E A H O TI -A A S O B D R IT N -C J G C H U E O A S BA D R TM C E G K S E EN BA T C K R E VE R S MERCHANT STATEMENT AL

877.517.4678 phone 250 Corporate Blvd. Suite L www.hostmerchantservices.com 888.535.7463 fax Newark, DE 19702 TABLE OF CONTENTS

The Importance Of Analyzing Your Statement 3

The Anatomy Of Your Statement 4

Part 1 5 - Processor and Merchant Information

Part 2 6 - Transaction and Deposit Summary

Part 3 7 - Fee Breakdown

Part 4 10 - Summary and Announcements

Glossary 11 WHY IT’S IMPORTANT

Reading and understanding your monthly merchant processing statements can be difficult or confusing. The industry itself is filled with complicated figures and fees, strung together through each transaction. There are buzzwords and specific language chosen by both federal laws and the credit card associations themselves that don’t make it apparent what the statement contains. Add to that morass a layout or design to the statement that is overbearing or text-heavy, and many merchants find themselves lost or puzzled by what is presented to them each month.

Host Merchant Services is about bringing trust to the payment industry. We deliver personal service with clarity. We believe that when you get your statement every month you should understand every item and it should match what you were promised in the sales process. Being able to read and understand your merchant account processing statement is crucial to maintaining the best merchant account for your business -- and Host Merchant Services is here to provide that insight.

This special report explains how to correctly read and understand your merchant processing statements.

HMS Statement Generic Statement

Page 1 of 2

Processing Month: 09-12 3195 MERCHANT PROCESSING CENTER SUITE 100 Association Number: 095523 12202 AIRPORT WAY BROOMFIELD CO 80021 Merchant Number: 5436-8455-5564-0969 MERCHANT SUPPORT (800) 254-7171 Routing Number: xxxxx0089

Deposit Account Number: xxxxxx9787

302 PROPERTIES LLC STE L Amount Deducted: 250 CORPORATE BLVD $ 39.21 NEWARK DE 19702-3329

Plan Summary Plan Number of Amount of Number of Amount of Net Average Disc Disc Discount Code Sales Sales Credits Credits Sales Ticket P/I % Due VS 10 5,392.97 00 .00 5,392.97 539.30 .000 .050 2.70 MC 01 212.97 00 .00 212.97 212.97 .000 .050 .11 DS 00 .00 00 .00 .00 .00 .000 .000 .00 ** 11 5,605.94 00 .00 5,605.94 509.63 2.81

Deposits Reference Tran Plan Number of Amount of Amount of Discount Net Day Number Code Code Sales Sales Credits Paid Deposit 05 01210051017 D T 02 900.00 .00 .00 900.00 06 01210061017 D T 01 1,050.00 .00 .00 1,050.00 07 01210071020 D T 03 1,521.43 .00 .00 1,521.43 10 01210081016 D T 01 1,200.00 .00 .00 1,200.00 13 01210131016 D T 01 121.54 .00 .00 121.54 19 01210191016 D T 01 400.00 .00 .00 400.00 24 01210221016 D T 01 212.97 .00 .00 212.97 25 01210251016 D T 01 200.00 .00 .00 200.00 Deposit Totals 11 5,605.94 .00 .00 5,605.94

Fees Number Amount Description Total TRANSACTION CENTRAL PLUS MONTHLY FEE 10.00 ACCOUNT ON FILE FEE 5.00 VISA ACQUIRER NETWORK FEE (FANF)-AUG 2.00 13 VISA ASSOC APF FEE .25 01 121.54 VISA CPS REWARDS 2 @ 1.95% + $.10 2.47 09 5,271.43 VISA US REG @ .05% + $.22 4.62 02 771.43 VISA DEBIT INTEGRITY FEE .20 01 212.97 MC ASSOC NABU/LICENSE FEE .02 01 212.97 MC MERIT I DB @ 1.64% + $.16 3.65 14 TRANSACTION/NETWORK ACCESS FEE .70 01 212.97 MC ASSESSMENTS .23 5,392.97 VISA ASSESSMENTS 5.93 11 5,605.94 V/MC/DS KILOBYTE/BASEII FEES 1.33 Total Fees Due 36.40

Discount Due 2.81 Fees Due 36.40 Amount Deducted 39.21

PLAN CODES TRANSACTION CODES VS -VISA MC -MASTERCARD DS -DISCOVER JC -JCB T -ALL PLANS D-DEPOSIT VL -VISA LARGE TICKET ML -MASTERCARD LARGE TICKET DD -DISCOVER DEBIT AM -AMERICAN EXPRESS 1 -PLAN ONE C-CHARGEBACK VD -VISA DEBIT MD -MASTERCARD DEBIT DZ -DISCOVER BUSINESS DB -DEBIT 2 -PLAN TWO A -ADJUSTMENT VB -VISA BUSINESS MB -MASTERCARD BUSINESS DJ -DISCOVER JCB EC -ELECTRONIC CHECK 3 -PLAN THREE B -CHARGEBACK REVERSAL V$ -VISA CASH ADVANCE M$ -MASTERCARD CASH ADVANCE D$ -DISCOVER CASH ADV EB -EBT

Please Note: While this information specifically illustrates the Host Merchant Services statement, keep in mind that much of what is shown here will clarify the statements of other processors as well. Each provider may have a slightly different layout to their statements, but all statements follow the same general guidelines. Some providers offer more detailed statements than others. The more detailed a statement is, the easier it will be to read and decipher. THE ANATOMY OF YOUR STATEMENT To get a clear understanding of the individual elements on your Host Merchant Services Monthly Merchant Statement, we are going to break it down into four separate parts:

Page 1 of 2 PART ONE Processing Month: 09-12 3195 MERCHANT PROCESSING CENTER SUITE 100 Association Number: 095523 This is the top section of your 12202 AIRPORT WAY BROOMFIELD CO 80021 Merchant Number: 5436-8455-5574-0041 statement, containing contact MERCHANT SUPPORT (800) 254-7171 Routing Number: xxxxx0102 information, account numbers and Deposit Account Number: xxxxx2942 the time period reflected in the statement’s transaction data. SPATULA CITY 1313 MOCKINGBIRD LN Amount Deducted: TWIN OAKS NY 10304-5106 $ 512.07

Plan Summary Plan Number of Amount of Number of Amount of Net Average Disc Disc Discount Code Sales Sales Credits Credits Sales Ticket P/I % Due VS 600 16,529.65 00 .00 16,529.65 27.55 .000 .250 41.38 MC 109 2,640.94 00 .00 2,640.94 24.23 .000 .250 6.62 PART TWO DS 11 2,186.95 00 .00 2,186.95 198.81 .000 .250 5.47 ** 720 21,357.54 00 .00 21,357.54 29.66 53.47 This part of your statement

Deposits summarizes the transactions Reference Tran Plan Number of Amount of Amount of Discount Net Day Number Code Code Sales Sales Credits Paid Deposit processed on your account and 03 90001357015 D T 42 1,267.80 .00 .00 1,267.80 03 90001367082 D T 21 651.40 .00 .00 651.40 03 90001377129 D T 22 652.35 .00 .00 652.35 details exactly what the deposits 05 90001387169 D T 14 332.25 .00 .00 332.25 06 90001397210 D T 23 661.50 .00 .00 661.50 were to that account. 07 90001407261 D T 24 596.95 .00 .00 596.95 10 90001417330 D T 40 1,046.20 .00 .00 1,046.20 28 90001060255 D T 29 749.40 .00 .00 749.40 Deposit Totals 720 21,357.54 .00 .00 21,357.54

Fees Number Amount Description Total PART THREE ACCOUNT ON FILE FEE 10.00 VISA ACQUIRER NETWORK FEE (FANF)-AUG 2.00 613 VISA ASSOC APF FEE 11.95 This part of your statement, 09 VISA MISUSE OF AUTHORIZATION SYSTEM FEE .41 33 352.26 VISA CPS/SML TKT DB @ 1.55% + $.04 6.78 07 257.45 VISA CPS/RESTRNT CR @ 1.54% + $.10 4.66 which tends to be the largest, 153 4,988.50 VISA CPS/RESTRNT DB @ 1.19% + $.10 74.66 details the fees charged for Fees - continued Number Amount Description Total processing transactions. Because 10 227.15 VISA CPS REWARDS 2 @ 1.95% + $.10 5.43 08 142.50 VISA SIG PREF ELEC TRVL @ 2.40% + $.10 4.22 Host Merchant Services uses 01 14.50 VISA BUS ENH ELTRVL @ 2.75% + $.15 .55 01 8.00 VISA SML TKT PP @ 1.60% + $.05 .18 109 2,640.94 MC ASSESSMENTS 2.91 Interchange “Plus” pricing, the 16,529.65 VISA ASSESSMENTS 18.18 720 21,357.54 V/MC/DS KILOBYTE/BASEII FEES 18.66 majority of the fees here are Total Fees Due 458.60 Interchange pass-through fees charged by the card associations.

Discount Due 53.47 Fees Due 458.60 Amount Deducted 512.07

VISA, MASTERCARD, AND DISCOVER ASSOCIATIONS HAVE ANNOUNCED MODIFICATIONS TO THEIR CURRENT INTERCHANGE RATES AND HAVE INTRODUCED SEVERAL NEW PART FOUR INTERCHANGE PROGRAMS. WE ARE VERY PLEASED TO ANNOUNCE NO INCREASE TO BASE DISCOUNT RATES. ASSOCIATION CARD PROGRAM CHANGES WILL BE INCLUDED IN YOUR CURRENT RATES OR ADDED TO NON-QUALIFIED CATEGORIES AS APPLICABLE The final part of your statement EFFECTIVE OCTOBER 1ST, 2012. WE THANK YOU FOR YOUR BUSINESS AND WE WILL CONTINUE TO WORK HARD TO MINIMIZE THE IMPACT OF THESE CHANGES TO YOUR MERCHANT ACCOUNT. summarizes the above parts’

PLAN CODES TRANSACTION CODES VS -VISA MC -MASTERCARD DS -DISCOVER JC -JCB T -ALL PLANS D-DEPOSIT calculations, and also provides VL -VISA LARGE TICKET ML -MASTERCARD LARGE TICKET DD -DISCOVER DEBIT AM -AMERICAN EXPRESS 1 -PLAN ONE C-CHARGEBACK VD -VISA DEBIT MD -MASTERCARD DEBIT DZ -DISCOVER BUSINESS DB -DEBIT 2 -PLAN TWO A -ADJUSTMENT VB -VISA BUSINESS MB -MASTERCARD BUSINESS DJ -DISCOVER JCB EC -ELECTRONIC CHECK 3 -PLAN THREE B -CHARGEBACK REVERSAL the area for announcements V$ -VISA CASH ADVANCE M$ -MASTERCARD CASH ADVANCE D$ -DISCOVER CASH ADV EB -EBT related to your account. PART ONE OF YOUR STATEMENT

To get a clear understanding of the individual elements on your Host Merchant Services Monthly Merchant Statement, we are going to break it down into four separate parts:

Page 1 of 2

1 Processing Month: 09-12 3195 MERCHANT PROCESSING CENTER SUITE 100 Association Number: 095523 12202 AIRPORT WAY BROOMFIELD CO 80021 2 Merchant Number: 5436-8455-5574-0041 MERCHANT SUPPORT (800) 254-7171 3 Routing Number: xxxxx0102

4 Deposit Account Number: xxxxx2942

6 SPATULA CITY 1313 MOCKINGBIRD LN 5 Amount Deducted: TWIN OAKS NY 10304-5106 $ 512.07

1 The month reflected in the statement.

2 Your Merchant Identification Number or MID. This is a unique number we use to identify your account. Having this number handy when calling support can assist us in helping you quickly. It is also printed on a sticker on the side of your terminal if you use a physical point of sale device.

3 The routing number associated with the bank account where we deposit your funds and deduct our fees.

4 The bank account number where we deposit your funds and deduct our fees.

5 The total amount of fees we charged for this billing statement. You can find out yourEffective Rate by dividing this number by your gross sales (which are found below in Part 2, Number 10).

6 The address where we mail your statements. With Host Merchant Services, this can be your legal address, DBA address, or another address of your choosing. PART TWO OF YOUR STATEMENT

7 Plan Summary Plan Number of Amount of Number of Amount of Net Average Disc Disc Discount Code Sales Sales Credits Credits Sales Ticket P/I % Due VS 600 16,529.65 00 .00 16,529.65 27.55 .000 .250 41.38 8 MC 109 2,640.94 00 .00 2,640.94 24.23 .000 .250 6.62 DS 11 2,186.95 00 .00 2,186.95 198.81 .000 .250 5.47 ** 720 21,357.54 00 .00 21,357.54 29.66 15 53.47 9 10 11 12 13 14 16

Deposits Reference Tran Plan Number of Amount of Amount of Discount Net Day Number Code Code Sales Sales Credits Paid Deposit 03 90001357015 D T 42 1,267.80 .00 .00 1,267.80 03 90001367082 D T 21 651.40 .00 .00 651.40 03 90001377129 D T 22 652.35 .00 .00 652.35 17 05 90001387169 D T 14 332.25 .00 .00 332.25 06 90001397210 D T 23 661.50 .00 .00 661.50 07 90001407261 D T 24 596.95 .00 .00 596.95 10 90001417330 D T 40 1,046.20 .00 .00 1,046.20 28 90001060255 D T 29 749.40 .00 .00 749.40 Deposit Totals 720 21,357.54 .00 .00 21,357.54

7 This section summarizes the transactions processed on your account.

8 Plan code – break down of transaction volume by Visa (VS), MasterCard (MC), Discover (DS), pin-based debit (DB), or EBT (EB). NOTE: American Express transactions are sent via separate statement.

9 Total number of transactions processed on your account, excluding American Express.

10 Gross sales volume for your account for this statement month, excluding American Express.

11 Total number of credits -- or refunds -- issued for this statement month.

12 Total credit -- or refund -- volume for this statement month.

13 Net sales volume for this statement month. This is calculated by Gross sales minus refunds.

14 Average ticket – the average size of your transactions for this statement month. This is calculated by dividing total sales (#10 above) by number of transactions (#9 above).

15 Discount Percentage. This is our Host Merchant Services mark-up on your account. We price everything as Interchange plus, meaning you pay a fixed rate over our cost.This discount rate is reflected here in basis points.

16 The fees you pay to us based on our discount rate. We calculate this by multiplying the rate (#15 above) by the total sales volume (#10 above).

17 This section is a summary of your daily deposits. Important data noted here includes the day of the batch, number of transactions in that batch, total amount of sales, credits, and net total deposit. You will notice that the “discount paid” column is always zero because we take your fees out monthly in arrears. We don’t charge a Daily Discount like some other processors. PART THREE OF YOUR STATEMENT

18 Fees Number 19 Amount Description Total ACCOUNT ON FILE FEE 10.00 20 VISA ACQUIRER NETWORK FEE (FANF)-AUG 2.00 613 21 VISA ASSOC APF FEE 11.95 09 22 VISA MISUSE OF AUTHORIZATION SYSTEM FEE .41 33 352.26 VISA CPS/SML TKT DB @ 1.55% + $.04 6.78 23 07 257.45 VISA CPS/RESTRNT CR @ 1.54% + $.10 4.66 153 4,988.50 VISA CPS/RESTRNT DB @ 1.19% + $.10 74.66 Fees - continued Number Amount Description Total 10 227.15 VISA CPS REWARDS 2 @ 1.95% + $.10 5.43 18 08 142.50 VISA SIG PREF ELEC TRVL @ 2.40% + $.10 4.22 This section01 details the 14.50fees chargedVISA BUSfor processingENH ELTRVL transactions.@ 2.75% + $.15 The majority of the fees in this section,.55 except as outlined01 otherwise,8.00 areVISA Interchange SML TKT PP pass-through @ 1.60% + $.05 fees charged by Visa, MasterCard, and Discover..18 76 852.30 VISA SMLTKT REG @ .05% + $.22 17.15 263 8,335.29 VISA US REG @ .05% + $.22 62.03 19 Account on04 File Fee. This145.00 is a HostVISA RESTRNTMerchant PP Services @ 1.15% fee.+ $.15 It includes your Monthly Statement fee and2.27 PCI Compliance05 Fee in a single132.50 line VISAitem. DEBIT INTEGRITY FEE .50 03 169.75 VISA BUS CP DB @ 1.70% + $.10 3.19 01 22.60 VISA DOMESTIC SALES @ 2.70% + $.10 .71 20 Visa Acquirer29 Network898.10 Fee (FANF).VISA EIRF This @ is 2.30% a fee + instituted$.10 by Visa on April 1, 2012 as a response from23.56 Visa 01 7.50 VISA EIRF-US DB @ 1.75% + $.20 .33 to deal with10 the losses 108.75the creditVISA card CPS/SML company TKT was @ 1.65% set to + incur$.04 through the Durbin Amendment’s hard2.19 cap on debit swipe34 fees. FANF647.41 appliesMC WRLDto the RESTRNTacceptance @ 1.73% of all + Visa-branded $.10 products and is based on both14.60 the size and the04 number of109.25 merchantMC locations. ELITERESTRNT Visa waived@ 2.20% the+ $.10 FANF for eligible Charitable and Social Service2.80 23 605.75 MC ENH MERIT3 @ 1.73% + $.10 12.78 Organizations01 (MCC 8398).20.00 To MCfind COMM more TE1 details MWB @about 2.67% FANF, read the Host Merchant Services Guide to.53 FANF. 04 54.50 MC HV RESTRNT @ 2.20% + $.10 1.60 109 2,640.94 MC ASSOC NABU/LICENSE FEE 2.56 01 18.75 MC REG DB @ .05% + $.21 .22 21 Visa Network21 Acquirer583.95 ProcessingMC REGFee. DB Visa FA introduced@ .05% + $.22 the Network Acquirer Processing Fee (APF) in4.91 July 13 329.33 MC MERIT III @ 1.58% + $.10 6.50 of 2009. This03 fee is considered158.00 toMC be MERIT Visa’s III DBversion @ 1.05% of +the $.15 MasterCard NABU fee. In 2012, The Network2.11 Acquirer Processing05 Fee114.00 on Visa-brandedMC REST DB signature @ 1.19% + debit $.10 was reduced – going from $0.0195 per authoriza1.86 - tion to $0.015508 per authorization.338.20 DISC The RESTAURANT fee for credit RW card @ 1.90% authorizations + $.10 however remained at the original7.23 01 36.00 DISC RESTAURANT PR @ 2.20% + $.10 .89 $0.0195 per02 authorization.1,812.75 SinceDISC revenue COMM from ELEC the @ 2.30% APF +fee $.10 goes directly to Visa, most processors assess41.89 the fee to businesses28 at cost. BATCH CLOSE FEE 5.60 777 TRANSACTION/NETWORK ACCESS FEE 77.70 2,186.95 DISC ASSESSMENTS 2.30 22 Visa Misuse109 of Authorization2,640.94 SystemMC ASSESSMENTS Fee. On October 1, 2009, Visa introduced its Misused 2.91 16,529.65 VISA ASSESSMENTS 18.18 Authorization720 Fee to21,357.54 the world. V/MC/DSThis fee KILOBYTE/BASEII is assessed for FEESauthorizations that are not either settled or reversed18.66 within certain timeframes, and impacts merchants accepting Visa cards for Ttheirotal F epaymentes Due processing.458.60 Visa refers to these as “ghost authorizations.”

NOT PICTURED: Transaction Integrity Fee (TIF). This is a new fee instituted by Visa in April 2012. The credit card giant introduced this new fee at the same time it introduced the Fixed Acquirer Network Fee (FANF). The Transaction Integrity Fee is $0.10 and applies to U.S. domestic regulated and non-regulated purchase transactions made with a Visa Debit card or Visa Prepaid card that fail or do not request Custom Payment Service (CPS) qualification. The CPS rates are Visa’s best rates and apply to both regulated and non-regulated transactions. The TIF is charged in addition to the applicable interchange fee and discount rate – meaning that regulated debit transactions still receive the regulated interchange rate (0.05% + $0.22), but are also subject to the TIF if they fail to qualify for a CPS program. Fees Number Amount Description Total ACCOUNT ON FILE FEE 10.00 VISA ACQUIRER NETWORK FEE (FANF)-AUG 2.00 613 VISA ASSOC APF FEE 11.95 09 PARTVISA MISUSE THREE OF AUTHORIZATION CONTINUED SYSTEM FEE .41 33 352.26 VISA CPS/SML TKT DB @ 1.55% + $.04 6.78 07 257.45 VISA CPS/RESTRNT CR @ 1.54% + $.10 4.66 153 4,988.50 VISA CPS/RESTRNT DB @ 1.19% + $.10 74.66 Fees - continued Number Amount Description Total 10 227.15 VISA CPS REWARDS 2 @ 1.95% + $.10 5.43 08 142.50 VISA SIG PREF ELEC TRVL @ 2.40% + $.10 4.22 01 14.50 VISA BUS ENH ELTRVL @ 2.75% + $.15 .55 01 8.00 VISA SML TKT PP @ 1.60% + $.05 .18 76 852.30 VISA SMLTKT REG @ .05% + $.22 17.15 263 8,335.29 VISA US REG @ .05% + $.22 62.03 23 04 145.00 VISA RESTRNT PP @ 1.15% + $.15 2.27 05 132.50 VISA DEBIT INTEGRITY FEE .50 03 169.75 VISA BUS CP DB @ 1.70% + $.10 3.19 01 22.60 VISA DOMESTIC SALES @ 2.70% + $.10 .71 29 898.10 VISA EIRF @ 2.30% + $.10 23.56 01 7.50 VISA EIRF-US DB @ 1.75% + $.20 .33 10 108.75 VISA CPS/SML TKT @ 1.65% + $.04 2.19 34 647.41 MC WRLD RESTRNT @ 1.73% + $.10 14.60 04 109.25 MC ELITERESTRNT @ 2.20% + $.10 2.80 23 605.75 MC ENH MERIT3 @ 1.73% + $.10 12.78 01 20.00 MC COMM TE1 MWB @ 2.67% .53 04 54.50 MC HV RESTRNT @ 2.20% + $.10 1.60 24 109 2,640.94 MC ASSOC NABU/LICENSE FEE 2.56 01 18.75 MC REG DB @ .05% + $.21 .22 21 583.95 MC REG DB FA @ .05% + $.22 4.91 13 329.33 MC MERIT III @ 1.58% + $.10 6.50 03 158.00 MC MERIT III DB @ 1.05% + $.15 2.11 05 114.00 MC REST DB @ 1.19% + $.10 1.86 08 338.20 DISC RESTAURANT RW @ 1.90% + $.10 7.23 01 36.00 DISC RESTAURANT PR @ 2.20% + $.10 .89 23 Visa Interchange02 Categories1,812.75 –DISC At Host COMM Merchant ELEC @ 2.30% Services, + $.10 we price everything as “Interchange Plus”41.89 which is 28also know as “Cost Plus”.BATCH ThisCLOSE section FEE details the “cost” side of the transaction for Visa cards5.60 777 TRANSACTION/NETWORK ACCESS FEE 77.70 accepted. Some important2,186.95 andDISC frequently ASSESSMENTS seen Interchange categories for card-present (swiped) merchants2.30 include 109CPS/Retail 2,640.94(1.51% + 0.10),MC ASSESSMENTS CPS/Restaurant (1.54% + 0.10), and US Reg Debit (0.05% + .22).2.91 US Regulated Debit fees16,529.65 are chargedVISA for ASSESSMENTS many debit transactions under the rate relief provided by the Durbin18.18 720 21,357.54 V/MC/DS KILOBYTE/BASEII FEES 18.66 Amendment (link to Durbin article). However, some smaller banks are notTo taregulatedl Fees Due under this law458.60 and therefore some cards from smaller issuers are charged at rates such as CPS/Restaurant Debit (1.19% + 0.10).

24 MasterCard Interchange Categories – These are Interchange pass-through fees from MasterCard. Although MasterCard uses a slightly different schedule, these fees are similar overall to Visa Interchange. Fees Number Amount Description Total ACCOUNT ON FILE FEE 10.00 VISA ACQUIRER NETWORK FEE (FANF)-AUG 2.00 613 VISA ASSOC APF FEE 11.95 09 VISA MISUSE OF AUTHORIZATION SYSTEM FEE .41 33 352.26 VISA CPS/SML TKT DB @ 1.55% + $.04 6.78 07 257.45 VISA CPS/RESTRNT CR @ 1.54% + $.10 4.66 153 4,988.50 VISA CPS/RESTRNT DB @ 1.19% + $.10 74.66 Fees - continued Number Amount Description Total 10 227.15 VISA CPS REWARDS 2 @ 1.95% + $.10 5.43 08 142.50 VISA SIG PREF ELEC TRVL @ 2.40% + $.10 4.22 01 14.50 VISA BUS ENH ELTRVL @ 2.75% + $.15 .55 01 8.00 VISA SML TKT PP @ 1.60% + $.05 .18 76 852.30 VISA SMLTKT REG @ .05% + $.22 17.15 263 8,335.29 VISA US REG @ .05% + $.22 62.03 04 145.00 VISA RESTRNT PP @ 1.15% + $.15 2.27 05 132.50 VISA DEBIT INTEGRITY FEE .50 03 169.75 VISA BUS CP DB @ 1.70% + $.10 3.19 01 22.60 VISA DOMESTIC SALES @ 2.70% + $.10 .71 29 898.10 VISA EIRF @ 2.30% + $.10 23.56 01 7.50 VISA EIRF-US DB @ 1.75% + $.20 .33 10 108.75 VISA CPS/SML TKT @ 1.65% + $.04 2.19 34 647.41 MC WRLD RESTRNT @ 1.73% + $.10 14.60 04 109.25 MC ELITERESTRNT @ 2.20% + $.10 2.80 23 605.75 MC ENH MERIT3 @ 1.73% + $.10 12.78 01 20.00 MC COMM TE1 MWB @ 2.67% .53 04 54.50 MC HV RESTRNT @ 2.20% + $.10 1.60 109 2,640.94 MC ASSOC NABU/LICENSE FEE 2.56 01 18.75 MC REG DB @ .05% + $.21 .22 21 583.95PARTMC REG THREE DB FA @ .05% + $.22CONTINUED 4.91 13 329.33 MC MERIT III @ 1.58% + $.10 6.50 03 158.00 MC MERIT III DB @ 1.05% + $.15 2.11 05 114.00 MC REST DB @ 1.19% + $.10 1.86 08 338.20 DISC RESTAURANT RW @ 1.90% + $.10 7.23 25 01 36.00 DISC RESTAURANT PR @ 2.20% + $.10 .89 02 1,812.75 DISC COMM ELEC @ 2.30% + $.10 41.89 26 28 BATCH CLOSE FEE 5.60 777 TRANSACTION/NETWORK ACCESS FEE 77.70 27 28 2,186.95 DISC ASSESSMENTS 2.30 109 2,640.94 MC ASSESSMENTS 2.91 29 30 16,529.65 VISA ASSESSMENTS 18.18 720 31 21,357.54 V/MC/DS KILOBYTE/BASEII FEES 18.66 Total Fees Due 458.60

25 Discover Interchange Categories – these are Interchange pass-through fees from Discover. Although there is some perception that Discover cards are more expensive to accept, you will find that the rates are very similar to MasterCard and Visa. Most categories are within a few basis points (hundredths of a percentage point) (link to bps article) of their Visa and MasterCard counterparts.

26 Batch Close Fee – a small fee from Host Merchant Services that is charged each time you settle the batch on your terminal, point-of-sale, or virtual terminal. With some virtual terminals (TXP, TC, Authorize.net), your batch will settle automatically each day.

27 Per Transaction Fee – this is the other component of your fee to Host Merchant Services. We generally charge a discount percentage (item #15) and a transaction fee in addition to our cost. The transaction fee portion of your charges is reflected here. The first column shows your total number of transactions on the left side of the statement, which when multiplied by your transaction fee equals the number in the right column. While the actual cost per transaction is not shown on the statement, you can easily compute it by dividing the total charge on the right by the number of transactions on the left.

28 Discover Assessments – Discover charges an assessment of 0.105% on gross transaction volume

29 MasterCard Assessments - MasterCard charges an assessment of 0.11% on gross transaction volume on transactions less than $1,000.

30 Visa Assessments - Visa charges an assessment of 0.11% on gross transaction volume.

31 Kilobyte/BaseII Fees – these are pass-through costs relating to miscellaneous fee items we are assessed from the various networks. Some of the fees include: Visa Base I Auth, Visa Base II Clearing/Settlement Fees – per file, File Transmission Fees, MCBS - Gateway Access Fees, MCBS – ISS Cross Border Net- work License Fee, MCBS – ACQ Cross Border Network License Fee, Visa PANF Fees, and Association Adj. Costs PART FOUR OF YOUR STATEMENT

32 Discount Due 53.47 Fees Due 458.60 33 Amount Deducted 512.07 34

VISA, MASTERCARD, AND DISCOVER ASSOCIATIONS HAVE ANNOUNCED MODIFICATIONS 35 TO THEIR CURRENT INTERCHANGE RATES AND HAVE INTRODUCED SEVERAL NEW INTERCHANGE PROGRAMS. WE ARE VERY PLEASED TO ANNOUNCE NO INCREASE TO BASE DISCOUNT RATES. ASSOCIATION CARD PROGRAM CHANGES WILL BE INCLUDED IN YOUR CURRENT RATES OR ADDED TO NON-QUALIFIED CATEGORIES AS APPLICABLE EFFECTIVE OCTOBER 1ST, 2012. WE THANK YOU FOR YOUR BUSINESS AND WE WILL CONTINUE TO WORK HARD TO MINIMIZE THE IMPACT OF THESE CHANGES TO YOUR MERCHANT ACCOUNT.

32 Total discount due – the same number from #16 above.

33 Total fees from the section beginning with #18.

34 The total amount of all fees (from Host Merchant Services and all card associations) deducted from your account. This number is the same as #6 above and is also the sum of #32 and #33.

35 Please review this section for important announcements related to your account each month. GLOSSARY

Key Card Processing Terms in Plain Language

Total Amount You Submitted – The total dollar amount of card transactions submitted and processed during the Statement Period.

Third-Party Transactions – These are transactions that are passed directly to third party service providers for processing and/or funding. Common third-parties include American Express® and Discover®.

Basis Points - A unit of measurement with a value equaling one one-hundredth of a percent

Chargebacks/Reversals – Those transactions that are challenged or disputed by a cardholder or card-issuing bank. A Chargeback equals the transaction amount that is disputed by the cardholder or card-issuing bank. A Reversal is the amount that was initially resolved against the merchant, but has subsequently been resolved in favor of the merchant.

Adjustments – The amounts added to or deducted from your account to resolve processing and billing discrep- ancies.

Fees Charged – Transaction-based and/or fixed amounts charged for specific card processing services.

Interchange Charges – These are the variable fees charged by card payment networks for processing transactions. Factors that affect Interchange Charges include card type, information contained in the transaction, and how/ when the transaction was processed.

Total Amount Processed – The total amount processed is the dollar amount that Wells Fargo Merchant Services deposits into your bank account for the statement period, net of third party transactions, adjustments, fees, and chargebacks/reversals. Please note that some fees shown on this statement may not be deducted from your account until several business days after receipt of this statement.

Merchant Number – The unique account number assigned to every merchant and merchant location. You’ll find it at the top of your statement.

Durbin Amendment - An addition to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The reform drastically lowers swipe fees on debit cards issued by big banks. INTERCHANGE PLUS PRICING

Interchange fees are set by the credit card networks, and are the largest component of the various fees that most merchants pay for the privilege of accepting credit cards. Visa, Mastercard, and Discover are each known as card associations. And each card association has their own rate sheets known as Interchange Reimbursement Fees. These fees make up the majority of what you pay to your processor and they vary greatly depending on the card type accepted.

Interchange Plus pricing means that the acquirer charges you a variable merchant service charge (or MSC) con- sisting of the cost price plus a fixed markup. Interchange Plus Pricing is exclusively how we quote at Host Mer- chant Services. Interchange Plus, also known as Cost Plus, pricing gives the customer a fixed rate over published Interchange Fees. This pricing format is normally quoted as a discount rate (percentage fee) along with a per item or authorization fee. The great thing about Interchange Plus pricing is that you always know exactly what you are paying to your processor for your merchant account with no hidden fees or surcharges.

Think of Interchange, and all the associated fees, as an unavoidable cost. No matter who you process with, you have to pay these fees. They may be labeled differently, or wrapped up in a confusing pricing tier, but one way or the other, you are paying Interchange fees. By understanding the markup you pay over Interchange, you know exactly what you pay to your processor and exactly what is going to the card associations. That allows you to make a decision on whether or not the markup seems reasonable for the service you get and choose your processing partner accordingly.

A CLOSER LOOK AT INTERCHANGE PLUS PRICING Interchange plus is the most transparent form of pricing for Merchant Account services. The formula is simple, Merchant Services Providers add a flat markup rate to the interchange fees that are listed by Visa and MasterCard. INTERCHANGE MARKUP Rates established by Visa and Rates established by the MasterCard Merchant Services Provider

Here’s a quick rundown on how Interchange Plus quotes may sound from a potential Merchant Services Provider:

A quote using Interchange Plus pricing will typically sound like: “interchange PLUS 0.25% PLUS $0.10.” That’s why its called interchange plus. The PLUS part is the markup that the processor is making on top of interchange. It will usually be less than 0.50% of your volume and $0.30 per transaction. Anything more than that is probably too high. What is being quoted is the markup. Average interchange rates are about 1.77%, but it does vary depending on what kind of cards your customers use, your average ticket size and the type of business you are. For example, the average rate for ecommerce interchange rate is higher at around 2.06%.

And here’s how Interchange Plus saves a merchant money:

Just using the average rate of 1.77% as an example, the initial base fee might be higher than the standard “qualified” rate bucket of a tiered plan. But the rate for Interchange Plus stays at 1.77%. And the markup rate from the Merchant Services Provider stays at the price that is quoted. There are no hidden fees or surcharges. So at the end of the month, it is clearly shown on the merchant’s statements what was charged. And that ends up being cheaper than tiered pricing.

Source: Wikipedia