1 ©2007 TSYS. All Rights Reserved. Payment Systems Istanbul 3 rd March 2009 Presentation of Mr.Simon Jarvis to Bilgi University Students

8 May, Card Payment Cycle Merchant Settles Terminal Purchase Credit Cash Advance Acquirer Merchant Processor Association Vendor Payment Issuer Cardholder

8 May, TSYS – Across The Payments Spectrum

8 May, Supported card product types Credit Revolving Charge Debit Corporate Pre-paid Instalments Affinity Cards Proxy / Virtual Cards (e-Card) Private label (profiled cards) Co-Branded Cards Payroll Cards Health Cards Remittance Cards Travel Cards Gift Cards Custom Electronic Purse Support issuance of Magnetic stripe and Chip (VSDC/M/Chip) cards:

8 May, Turkish Market Dynamics Bank Consolidation –Number of banks has nearly halved in last ten years –Over 60% of credit cards issued by top 4 issuers Foreign Ownership –Increase in assets owned by foreign banks looking to benefit from fast growing market and gateway to the Region Regulation –Increasing regulatory supervision –Eye to European harmonisation High Growth –3 rd largest credit card market in Europe by cards issued –Credit card loans have quadrupled since 2002 –Activation lagging issuance Highly innovative products, especially around loyalty and co- branding –Sophisticated products and segmentation strategies –Technology maximised to deliver innovations quickly –Largely in-house processing Turkey is an exciting and dynamic credit card market

8 May, Financial Commentary Global Cards Markets Markets Typically Follow An “Issuance First” Lifecycle … Transaction Volumes Grow As Infrastructure Matures Issuance Volumes Of BRIC Markets Take Longer To Translate Into Card Usage Reflecting Investment In POS/Consumer Propensity to Migrate From Cash Turkey is forecast to be the 11 th largest market for card based transaction by 2011 Millions Of Cards In Market Billions Of Transactions In Market

8 May, Creating scale: comparable growth markets Comparable markets in Brazil and Turkey have been showing average growth of 20-24%, compared to India’s growth of 17% p.a. Both the Brazilian and Turkish markets have shown periods of accelerated growth over the period of , reaching growth rates over 30%, albeit at the expense of growth in neighbouring years Turkish market continues to exhibit growth, even given current size, reflecting market potential. Datamonitor forecasts Turkey will be 11 th largest card market by transactions in 2011 Comparable transaction volume growth Turkey represents sizeable market today, but also one with considerable growth potential Source: Financial Cards in India 2008 paper; Lafferty Comment India Brazil Turkey

8 May, Turkey is the fastest-growing card market in Europe –An underdeveloped cheque clearing system has enabled banks to leapfrog from cash directly to card payments –Debit cards are used almost exclusively for cash withdrawals –The vast majority of banks are dual issuers of Visa and MasterCard –Turkey is one of the leading markets for affinity and co-branding Very high inflation has helped drive preference for Credit cards by consumers (due to cost of carrying cash, and advantage of delayed payment) and banks (who have been averse to providing longer term loans) –Credit cards dominate the sector and multiple credit card holding is commonplace with 2 cards per cardholder on average –All Credit cards offer a revolving facility and are the most popular form of consumer borrowing –Charge cards are virtually non-existent –Banks are the almost exclusive issuers of Credit cards and Retailer cards have not had been successful (unlike in most other European markets) High foreign ownership of the Turkish banking sector Processing, acquiring and card issuing is in most cases undertaken in-house by banks (or bank-owned subsidiaries) Turkey has a single central switch, BKM, which provides very comprehensive and publicly available data on card payments Growth estimates for credit cards vary between sources from 10.3% ( , Euromonitor 2006) to 12.3% ( , Datamonitor 2007) Overview of the Turkish card market CAGR 13.2%25.4%Total 15.3%20.7% Pay now 12.3%27.8% Credit Card Turkish card transactions by card type ( e) Source: Datamonitor 2007 The Turkish market is the fastest growing in Europe (over 20% p.a. historically); this is forecast to continue, albeit at a reduced rate

8 May, The ‘Big 4’ of Garanti, Kocbank, Akbank and IsBank make up 57% of credit card issuing The top 8 make up over 80% of credit card issuing All the banks issue both credit and debit/ATM cards, however some are more heavily weighted towards one than the other –66.8% of Granati’s cards are credit –Isbank is only half this (38.1%) BKM is local domestic switch, and offers the gateway to the international schemes Major banks are incorporated in an international banking group Major loyalty brands (World / Bonus) have licensed their loyalty programme to smaller banks Overview of Turkish credit card issuing Turkish credit card issuance by issuer, total = 32m (Credit cards as % of all cards issued) Source: Datamonitor (2007) N/A Over 80% of issuing is controlled by the Top 8 banks; the largest 4 control nearly 60% of the market

8 May, Acquiring and issuing are closely linked, driven by the sophisticated PoS loyalty systems in place The ‘Big 4’ acquired 88% of all transactions (2004), and issued 57% of credit cards (2006) Profitability is poor in the Acquiring market, but crucial for banks to the success of multi-brand loyalty schemes Acquiring is very competitive in Turkey and is mostly carried out in-house by the banks (approximately 20) or their acquiring/processing subsidiaries Competition is increasing due to the increased level of ‘on-us’ transactions due to loyalty/instalment programmes The market is dominated by 4 of the leading banks: YKB, Akbank, Isbank and Garanti bank; they are looking to leverage their control of the main loyalty schemes to take further acquiring market share, particularly from the smaller players Akbank is the exclusive acquirer of American Express (and issuer) Garanti (Turkiye Garanti Bankasi) represents JCB in merchant acquiring operations and processing. It also claims to have a 70% share of e-commerce transactions Overview of the Turkish acquiring market Turkish credit card issuance by issuer (Credit cards as % of all cards issued) Source: RBR (2004), Datamonitor (2007) HSBC Finansbank Is Bankasi Akbank Kocbank/Yapi ve Kredi Garanti Bankasi Other Self-acquiring is typical is the Turkish Market, particularly amongst the Big 4

8 May, Purchase  Customer makes purchase  TSYS authorizes using anti-fraud systems Update  TSYS updates account and provides merchant clearing and settlement Billing  At end of billing cycle, TSYS produces and mails statement Account Creation  Customer applies  TSYS analyzes, creates account and issues plastic What TSYS Does

8 May, Purchasing Behavior  Customers have unique buying patterns  TSYS analyzes using data analytic tools and informs the issuer Loyalty  Customer uses card  TSYS provides processing, marketing, consulting and fulfillment services Customer Service  Customer needs assistance  TSYS provides a workflow management system that profiles all the relationships issuers have with their cardholders Collection  TSYS offers collections, debt, skip-tracing and bankruptcy management services What TSYS Does

8 May, Future of Payments Further erosion into cash and other non card payments Need to ensure balance between parties to foster growth Risk will continue to be major concern Regulators will continue to oversee New technologies and channels –Mobile –Voice –Contactless –E-payment –Maximisation of the chip on the card

14 ©2007 TSYS. All Rights Reserved. Open Forum Thank you