Get connected to the future 1Payments in the Americas Conference Payments in Americas European experiences Henrik Parl Managing Director

Payments in the Americas Conference2 History of payments in Europe and Eurogiro 70’s: Swift started with bilateral agreements Swift closed for Postal organisations 90’s EBA adding Step2 in new millennium 1999: Euro intro : EU directive - Regulation 2003: SwiftNet 2003: SEPA, EPC and PEACH 2004: New legal framework in EU Giro payments electronic/paper based 1989: Eurogiro initiated 2000: EURO Single settlement provider 2004: FED IACH connected to Eurogiro 2004: SWIFTNet CUG by Eurogiro 2004: Visa Gateway 2004: Eurogiro positioned strongly within EU and as gateway to/from EU General market development Eurogiro development

Payments in the Americas Conference3 * Shareholder 45 connections in 41 countries AFAfghanistan International Bank AT *P.S.K./BAWAG BE *Financial Post BREmpresa Brasileira de Correios e Telégrafos - ECT CANational Bank of Canada CH *PostFinance/Swiss Post CVCape Verde Post CNChina Post CSPostal Savings Bank CZCSOB DE *Deutsche Postbank DKSydbank EGCIB (Egypt) S.A.E. ESBBVA ESCorreos y Telegrafos FIING/Postbank (EUR transfers) FR *La Poste GB *Alliance & Leicester Commercial Bank plc GBVisa GRHellenic Post HRCroatia Post HUMagyar Posta IE *An Post ILIsrael Postal Authorities IS *Póstgíró IT *Poste Italiane JPJapan Post, Postal Savings Business Headquarters LU *P & T Luxembourg LVLatvia Post MABarid Al Maghrib NL *ING/Postbank NOING/Postbank (EUR & NOK transfers) PLING/Bank Sląski PT *CTT Correios de Portugal ROBanc Post ROPosta Romana SEING/Postbank (EUR & SEK transfers) SIPostna Banka Slovenije SKPostova Banka SNLa Poste, Senegal TGSociete des Postes du Togo TRTurkish Post TNLa Poste Tunisienne USADeutsche Bank USAFederal Reserve Bank

Payments in the Americas Conference4 Geographical Overview

Payments in the Americas Conference5 Monthly transactions

Payments in the Americas Conference6 Eurogiro products Payment transfers – standard (max. 3 days) and urgent to accounts with members to accounts with 3rd banks Money orders – standard – TMO, semi urgent cash – Western Union urgent cash Bulk and pension payments Gateways & alliances

Payments in the Americas Conference7 The Eurogiro strategy THE WORLD EUROPE Post /ELS Members/ Multiple BIC Bank/CUG members SEPA Sub Clubs SWIFT New IT- Solutions UPU/TMO Western Union New Products Card Solutions New Gateways FED Visa

Payments in the Americas Conference8 Eurogiro – providing connectivity Gateway of business opportunities for Eurogiro Members and partners: The Eurogiro SWIFTNet Closed User Group -Only one IT platform needed; -Exchange transactions in FileAct format with any SWIFTNet member and any Eurogiro member on the same system; -Access from SWIFT system to (postal) members with ELS systems and access from ELS system to (banking) members with SWIFT system The Eurogiro/Visa Direct solution -Receive payments from Visa card holders; additional volume and revenue to the Eurogiro members

Payments in the Americas Conference9 Eurogiro – providing connectivity (cont.) The FED-Eurogiro Partnership -Incoming traffic (from potentially any US bank) with fee and foreign exchange income -Only one bilateral agreement required (with FED) Eurogiro/UPU – The Tele Money Order (TMO) -New revised two-day cash product based on the traditional Money Order, mixing Track & Trace techniques and Eurogiro bulking principles -Can be exchanged electronically between the UPU/IFS network and the Eurogiro network Eurogiro/Western Union – Urgent Cash -Eligibility for a special Eurogiro/Western Union performance bonus (bonus based on growth in transactions) -Option to connect to Western Union through the Eurogiro ELS interface

Payments in the Americas Conference10 Why is Eurogiro relevant for you? Eurogiro was started as a pan- European (Postal) initiative to create cross border connectivity Could a similar initiative be relevant for Americas? Can something be learned from the Eurogiro ’experiment’?

Payments in the Americas Conference11 Some potential solutions for cross border payment solutions in Americas A1) Many-to-many solutions A2) Many-to-one solution B1) Own solution B2) Share with existing solution C2) Low value C2) High value

Payments in the Americas Conference12 Example 1: Many-to-one solution Transatlantic gateway FED ACH Eurogiro Network FED/ Eurogiro Format- converter

Payments in the Americas Conference13 Value Proposition to U.S. Banks Value Proposition to U.S. Banks Gateway between Europe and USA giving access to all account holders in participating countries Enable US Banks to access US ACH with international payments as if they were domestic payments (including non-Fed customers) Full transparency and low cost for STP transactions Three value day transfer in USD

Payments in the Americas Conference14 Value Proposition to U.S. Banks (cont.) Fixed to variable currency option Guaranteed maximum spread on FX Certainty of payment Limited production covering Austria, Germany, Netherlands, Switzerland and United Kingdom Blended fee of $2.00 to U.S. originator to send payment to any of the five countries (not including FX)

Payments in the Americas Conference15 Example 2: Swift Eurogiro Closed User Group Eurogiro SWIFT Gateway SWIFTNet Eurogiro CUG Eurogiro Network

Payments in the Americas Conference16 Lessons to be learned from forming payment co-operations Do not try to solve all things for everyone Run projects in small groups with clear decision authority Select limited number of pilot countries preferably with largest volumes Use standard technology, procedures and formats Pool investment, volumes, contract to get critical mass and low costs Secure global connectivity Secure commitment beforehand