payfair – Innovation in Payments Stephan Becker CEO – Chief Executive Officer 2

 A highly visible initiative: –Supported by the Central Banks –Supported by the European Commission –Supported by National Competitive Authorities  A well funded initiative: –Investor: Janivo Holding (NL), known as long term founding investor of TeleAtlas (sold to TomTom in 2008)  A clear company structure:  An experienced multidisciplinary European team: –Coming from banks, schemes, ICT, Telco, processors, networks, public affairs, retail, … Who is payfair? 3

4 4  payfair is a NEW Payment Scheme first European scheme that is fully SEPA compliant 4 party model and 3 party model (depending on required solution) Independently owned and operated  payfair is offering card based and virtual card based solutions EMV card based products (both contact and contactless) Mobile based solution to enable secure solutions on the internet, the POS environment, ATMs and attract new businesses What is payfair?

 Key differentiators: –Enhanced consumer convenience: Example: –Reduced entry barriers for merchants and banks: Example: PayFair Mobile: low cost terminals Example: low implementation costs –Improved security and trust: payfair PAN number is worth 0 EUR for hackers ! No charge-backs on internet (unless service not rendered imposed by law – not the case in continental Europe) –Transparency on pricing, interchange, open governance: Merchants do like payfair for that reason while price is in line with current market practices How is payfair different? 5

Why payfair? or a new scheme that brings:  Banks are calling for secured income and transparency: –An open four party model, without national barriers –A transparent business model : a fair price accepted by all stakeholders  Merchants are calling for stability and a fair cost sharing: –A balanced governance: a scheme that addresses the interests on one side the financial world (banks) and on the other side the merchants –A value proposition extending the efficiency of the national schemes  Consumers are calling for convenience and safety –A consumer experience that is consistent across the globe in Security Convenience Innovation 6

 State of the Art technology Easy to implement, lower costs, introducing new features and products  Innovative products and solutions Enhanced consumer convenience  Reduced entry barriers for merchants and banks Using Standard Interfaces Using mobile - low cost terminals  Improved security and trust payfair PAN number is worth 0 EUR for hackers !  Transparency on pricing, interchange, open governance: Merchants like payfairbecause they understand the pricing and the services they receive! A transparent model – not seen as “bank driven and owned” What makes payfair so unique? 7

8 payfair – the true alternative  payfair as a scheme is offering a solution for a new Global Scheme with none US governance introducing a new national scheme replacement of existing national schemes extension and upgrade of national schemes Mobile operators inter connectivity in payments resolving legacy issues serving niche market and niche products closed loop solutions launching of new technologies and products

Why a new Payment Scheme in EMEA? 9 The New transparent and “FAIR” Solution for the World Where is EMEA ?

Why a New Payment Scheme?  Who will drive the future world of payments? –Mobile operators (Vodaphone, Orange….) –Phone and Hardware producers (Apple, Microsoft, Nokia…) –E-Commerce shops (Amazon, eBay,….PayPal) –Social Networks (Facebook….) –Where are the Banks?  In certain emerging markets –already up to 80% of the monthly salaries are paid to mobile accounts –80% of the populations have a mobile phone, but only 20% a bank account Globally the “Young Generation” is early and more often used to Mobile Phones than Bank Accounts. Banks: Still insisting of owning and protecting “the last mile” (before having access to the bank account) in place of being concerned about the first customer contact ! 10

Innovation in the Payment World  Since 2001 the global schemes work on contactless  Since 2003 different “pilots” on mobile payments initiated by banks and international payment schemes –The reality is that most of the successful projects are run by Mobile companies  e-Commerce is growing with the fastest pace –Banks missed the opportunity and left the field to PSPs, now starting to try to recover ground –New schemes are getting large market share (PayPal…..) “Are ATMs the last “bank driven” innovation in Payments World?” “Will the established actors drive the future of payments ?” Innovation will not come from established actors but from innovative and flexible entrepreneurs !! 11

Drivers for a new Payment Scheme in EMEA  Regulatory requirements (SEPA, PSD,….)  Governance and Legacy issues  Dependency on “American” (Visa, MasterCard, Amex, Diners, …) or other “international” schemes (JCB, CUP, …)  Competition issues in certain markets  Flexibility of systems  Transparency in costs, governance, decision making ….  Innovation! 12

Legacy: just a comparison… Is it reasonable to upgrade this original but only local ‘veteran’ version with today’s new ‘standard’ features and characteristics ? At what final cost ? Image reputation ? Uncertainty about final performances and investments and about future developments : normal & ‘mandatory’ features & characteristics (= « SEPA standards »): Consumption 3,7 l/100km CO² 99 gr/km ABS-EPS-DCS-Airbags ***** EuroNCap (anti collision test) GPS-MP3-Electronics... (VW Golf I, 1977) (VW Golf VI, 2010) 1977: Start of Most European Domestic Schemes Better to opt straight for the new and better one with cost reductions & latest new technologies: the global payment scheme Payfair ! veteran car !

14 See following link for a short movie on the payfair internet solution Or go to the payfair web side and see the movie

 Solution payfair can be used on the Internet for payment at E-commerce shops for products and services payfair is offering two different ways of payment  Card based As in all other payment schemes the card holder will type in his card number and other information and payment is generated on the Internet  Mobile phone based Mobile Sound Identification used No card data used - No Mass fraud Solutions -

16  What? –Consumers pay purchases at POS Terminals with their mobile phone without providing their physical card.  Bank: –New trendy convenient service for its young and less young population –NO NEED to issue cards first ! Can be linked to a prepaid or normal account –Highly secure internet module: no longer mass fraud risks with their high costs –Unique differentiation  Consumer: –Convenience: mobile always in the pocket (and no new NFC devices required) –No need to have a card (at least in the short term) –Security: no card number or other sensitive financial details displayed on internet –Easy to use and “trendy”: works with all current mobiles (Telco independent)  E-Commerce merchant: –Secure process leading to minimal charge backs (only service not rendered) –Robust process ensuring all transactions get to completion –Competitive cost and pricing

- benefits  Reducing fraud on existing schemes and therefore losses by the issuer  Allowing merchants and acquirers to accept strongly secured transactions in the E-commerce  Allowing Internet transactions for card-less users  Allowing mobile phones holders either to pay on internet or to withdraw on ATM or to purchase on POS with the same mobile device, and the same virtual (or real) card associated to the mobile  Introducing new technology and being state-of-the art

18  DEMO Available as seperate file  or go to

 Remittance solution With anyone with a cell phone can conveniently send and receive remitted funds. Typically funds can be sent instantly on the web via the payfair web portal or by sms. Anyone with a mobile phone can receive money transfer. The recipient may withdraw cash on ATM or at a local agent. Solutions-

 For senders: added value because “simple, fast & safe” Dual authentication (Secret Code + Mobile Call) Anytime, anyone, anywhere  For receivers: Any phone can receive funds; if authorized, even without prior enrollment in the service Extremely Secure—the phone must be present to cash-out funds No paper, no plastic, no Western Union!  For issuers: No skimming  drastical reduction of fraud damages No need of issuing plastic cards  Target: Migrant workers Unbanked and/or cardless beneficiaries Youth market Emerging countries - Benefits

Solutions- 21 PORTAL Enter your Mobile : Your Secret Code: XXXX Beneficiary’s Mobile: Amount to transfer: Currency: TND The system will be calling you for sound authentication… PF Web Portal ATM Money4you Enter TransUID : Secret Code : YYYY The system will be calling you for sound authentication… P2P Remittance RECIPIENT (Cash-Out) SENDER (Cash-in) Local Agent e-Commerce

 What? –It’s P2P remittance via Payfair Web Portal –The sender uses PF Web portal to send money to a recipient mobile. The beneficiary could cash out the amount at mobile-enabled ATMs or at a local agent.  For senders: –added value because “simple, fast & safe and MUCH CHEAPER than traditional money transfers (Western Union, MoneyGram, bank transfers, etc…) –Dual authentication (PIN + Mobile) –Anytime, anyone, anywhere  For recipients: –No need to be enrolled –A payment solution that promotes highest convenience for consumers… just a mobile device and a secret code, and cash can be taken from ATMs  For banks: –Standard ISO 8583* transaction (no impact on core systems) –Drastically reduction of fraud damages –Additional revenue stream 22 * ISO to be implemented when becoming the new standard Solution -

23  DEMO Video is available separately  or go to

 A new innovative way to pay goods at shops without any skimming risk nor forgotten cards issues. Using TagAttitude’s NSDT TM sound authentication technology, consumers can shop by simply using their mobile phones.  Anyone with a cell phone can securely and conveniently use their phone to pay goods at POS terminals. This revolutionizes mobile money by attaining “SIM card-present” security level and opening POS services to the billions of un-banked mobile phone owners. Solutions –

 What? –Consumers pay purchases at POS Terminals with their mobile phone without provide their physical card. They are authenticated by PIN code and/or sound recognition.  New disruptive technology to equip small shops (with or without ‘normal’ terminal)  Compatible with 100% of the existing mobile park in the field (no NFC needed)  Convenient to reduce use of cash  Support for Low Value Payments  Sound Identification at POS is in production since April

- benefits  Reducing fraud on existing schemes and therefore losses by the issuer  Allowing merchants and acquirers to accept strongly secured transactions without EMV technology on POS terminals  Allowing POS transactions for card-less users  Allowing mobile phones holders either to pay on internet or to withdraw on ATM or to purchase on POS with the same mobile device, and the same virtual (or real) card associated to the mobile  Introducing new technology and being state-of-the art  could also be run on simple cash registers

27  DEMO Video is available separately  or go to

Solutions -  is the new innovative way to withdraw money at ATM without any skimming risk nor forgotten cards issues. Using TagAttitude’s NSDT TM sound authentication technology, consumers can withdraw money by simply using their mobile phones.  Anyone with a cell phone can securely and conveniently use their phone to withdraw cash from an ATM. This revolutionizes mobile money by attaining “SIM card-present” security level and opening ATM services to the billions of un- banked mobile phone owners.

Solutions -  What? –Consumers withdraw cash at ATM with their mobile phone without providing their physical card. Consumers are authenticated by PIN and/or sound identification. Usable by card less or unbanked people to cash out or remittance.  New disruptive technology to equip ATMs with Sound identification  Compatible with 100% of existing ATMs  Only software update needed  Convenient and save  Alternative to Remittance/Money transfer 29

- benefits  Reducing fraud on existing schemes and therefore losses by the issuer  Allowing banks and ATM providers to accept strongly secured transactions without EMV technology at ATMs  Allowing ATM transactions for card-less users  Allowing mobile phones holders either to pay on internet or to withdraw on ATM or to purchase on POS with the same mobile device, and the same virtual (or real) card associated to the mobile  Introducing new technology and being state-of-the art  Remittance access for None banked customers

31  DEMO Video is available separately  or go to

 Customers can pay with their phone in a point of sale This changes the rules of mobile payment by offering retail-appropriate proximity payments and offering electronic payments to billions of un-banked phone owners All existing cell phones can be used  New types of merchants can accept electronic payment transactions Low cost acceptance terminals (Mobile devices) No physical/Land line connections needed

 Contactless and cardless payment Customers: o customers can make purchases in participating stores using their cell phone to sign for the transaction. o The customer’s payfair card is debited upon the approval of the transaction by the issuing bank Merchants: o Merchants can accept payments using a low cost “Mobile Payment Terminal” (MPT) or their own mobile phone. o The MPTs are designed to provide quick and user friendly point of sale transactions with similar ergonomics to card payment terminals.

- benefits  Retail payments can be made using any mobile phone in the world  Extremely Secure—the phone must be physically present to sign the transaction  Simple to use—just answer a phone call and bring it towards the chirp  Designed for retail environments where quick and simple payment is a must  Low cost and rapid time-to-market  No cash, no cards, no SMS, no hassle  No “Land Line” needed to connect merchant terminals

 Logical extension to with order and pre-authorisation The customer will contact the delivery center to order the goods / services he wants to receive. The delivery center will associate a purchase ID to the order of the customer The delivery center requests a pre-authorization for the transaction amount at Payfair Portal The issuing bank approves the pre-auth request and generates a pre- authorization number The pre-auth number is assigned to the Order Id and the customer phone number

Payfair Contactless  payfair contactless offered on mobiles: –Compatible on existing contactless network in the market –Product will also be on-line  no specific risk management for banks –Contactless can be in the card or on a mobile 36

 payfair solutions enables –Cardless payments –Sound autentication –Dual factor authentication –Acces to new markets o Mobile phone is always nearby as payment device as payment acceptance device –A payment solution that promotes highest convenience for consumers… just a mobile device and a secret code, and payments can be initiated at POS, ATMs, e-Commerce, Money Transfer, Remittance cash-out,…! Innovating with payfair

Q Payfair - Product Road Map Q2 2010Q3 2010Q Internet Q1 2011Q ATM Q Innovation for : unbanked/card less customers more customer convenience more electronic transactions new and increased revenues reduced risk and costs Web Portal Money4you PrePaid PrePaid Q Q Q Payfair Contactless

Conclusions 39 No important investments required SEPA card solution within short delay (fast deal with Payfair possible) Revenue streams preserved, growth potential & mass fraud reduction Reasonable timing to set up a non disruptive and acceptable migration plan Less resources need to implement new solution No risk of potential competition issues No dependency towards Visa/MasterCard and towards dominant operators Great support from (European &) national authorities and from retailers & merchants Access to innovative products in short time frame Increased number of electronic transactions

® Questions & Answers Europa Schuman ABCD EFGH IJKLM EXP: Any questions? Interest in further discussion? Feel free contacting us! Stephan Becker