CONFIDENTIAL AND PROPRIETARY ©2014 DISCOVER FINANCIAL SERVICES 2014 Discover ® Dealer Incentive Program & EMV Update

Key Points - For Dealers 1)Discover Acceptance is INCLUDED with Every Acquirer Merchant ID that is issued – by contract 2)Discover rates MUST be competitive with other payment brands – for similar card types – by contract 3)Discover Transactions are INCLUDED in Dealer revenue share from Acquirers 4)Validating Discover Acceptance with a test transaction ensures your merchants can use Discover connectivity to settle PayPal in-store transactions – with other opportunities in development 2 What You Should Know About Discover ®

3 Limited Supply of Gift Cards for Qualifying Engaged Dealers Engage With Discover ®

4 What Discover wants from Dealers in Engagement Agreement:  Agree to Install Discover with 100% of clients on go forward basis  Register at Discoversignage.com - deploy signage with new installs  Register at DiscoverRewardsProgram.com - Validate installs with test card swipe  Agree to fix non-acceptors we identify for a flat fix fee of $150 within 30 days What Dealers get from our Engagement Agreement:  $200 gift card as signing bonus  $150 per fix for each non-accepting merchant identified by Discover  Access to Discover sponsored hardware and software discounts (Pending)  Opportunity to voluntarily provide list of non-accepting merchants and sales volume for consideration of additional incentives $200 gift card Review Dealer Engagement Agreement

Additional Revenue Opportunities If you voluntarily provide list of merchants and sales volume that do not accept Discover, we will submit to marketing for consideration of additional incentives using the following schedule: If approved, we will return a summary of your Revenue Opportunity: TierMerchant Volume$ to Dealer 1$5M+$2K 2$1M - $5M$1K 3$250k - $1M$150

Promote – So You Can Offer More Opportunities for Merchants 6 Store Hours Decal Check Presenters Window Decals Web Banners  Post FREE merchant signage and offer FREE Custom Check Presenters so that cardholders have confidence to use their favorite cards and your merchants can capture additional spend Keys to Help You Maximize This Opportunity

Validate – Free test cards and incentives for testing terminals 7  Sales Reps get FREE Test Cards and earn rewards for validating terminal connectivity. Register on-line at DiscoverRewardsProgram.com and receive a unique user ID, password and Discover test card number Keys to Help You Maximize This Opportunity

Discover Network EMV Update

Why EMV? …Because it works! Networks Drive Change via Compliance Guidelines / “Liability Shift” Counterfeit fraud in UK: 96M > 43M GBP

Mercury Confidential and Proprietary - For Recipient's Internal Use Only 4/1/2013 Processor Compliance for EMV Data North America EMV Migration Discover Card Employee Pilot Kick-Off: Sept Discover Network North America EMV Acquiring Mandate 1/1/2012 1/1/2013 1/1/20141/1/2015 1/1/2016 1/1/ /1/ % Data Compromise Relief (MC only) & 2.Payments Hierarchy Begins (MC & AMEX) 10/1/2017 Counterfeit Card Liability Shift for Petro Merchants 10/1/2012 Waive Annual PCI Compliance for Dual EMV/NFC Terminals 10/1/ % Data Compromise Relief (MC only) & 2.AMEX Waives Annual PCI Compliance 10/1/2015 Card Present, Counterfeit Card Liability Shift (except Petro) 10/1/2016 MasterCard extends liability shift for all U.S. ATM transactions

US Issuers Expand Issuing EMV cards - EMV migration Forum

 An EMV card is inserted into a terminal  The chip embedded in the card contains an issuer key  Using input from the card, the terminal creates and sends a unique piece of data, or “cryptogram” to the issuer’s host during the transaction, validating the card  The card is removed when the transaction is completed How Does EMV Work?

How Does EMV Align with Mobile/NFC?  An EMV chip can be on a “contactless” card where the chip is “tapped” or “held” near the terminal …..or…..  A chip can be inside your smart phone and the phone is “waived” near the terminal…  Mobile wallets (eWallets) are rapidly growing in number, which multiplies the opportunity for incremental sales for merchants and new revenue options for ISOs

Call to Action: Get Your Merchants Ready  Your Acquirer is your best resource for Information  Sell an EMV contactless enabled terminal. EMV is also a contactless technology and this is the perfect time to upgrade your merchants.  Sell IP. EMV dial response times may double, merchants should strongly consider IP and/or wireless technology over dial.  Call on your acquirer/processor for education. Learn the brand requirements for ISV/Software merchants. The time to start preparing your merchant is now.  Smart Card Alliance EMV Forum (EMF) offers tons of guidance New WG just formed to focus on streamlining ISV/Merchant Certification process  Stand By for offers from Discover & BlueStar Only Contracted Dealers Can Participate

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