1. Retail Payment Solutions Prepaid Payroll Cards Rick Pileggi August 17, 2008

2. R E T A I L P A Y M E N T S O L U T I O N SAgenda  Payroll Card Landscape  Prepaid Cards and the Underserved  Keys to Successful Programs  Case Studies  Appendix of Materials 2

3. R E T A I L P A Y M E N T S O L U T I O N S Payroll Card Landscape  In an effort to cut costs, an increasing number of companies are giving employees the option of collecting their pay in "plastic paychecks," or payroll cards. Wall Street Journal, June 2006  More than four million workers at over 3,000 companies nationwide use payroll cards, up from about 800,000 people in 2002, according to Celent, a Boston research firm.  Many companies want employees to choose getting paid with either these cards or direct deposit to a bank account because a paperless payroll can lower costs by as much as 75%, according to a 2002 study by Celent.  Last year, 71% of employees got their pay without paper checks, mostly through direct deposit, according to a survey by the American Payroll Association.

4. R E T A I L P A Y M E N T S O L U T I O N S What is a Payroll Card?  Designed to replace costly paper paychecks  It is not a credit card  No credit check, virtually anyone is eligible  Employees access only the funds they have earned  Funds are deposited to the card each pay period in the same manner as direct deposit to a checking account  For the employee the payroll card acts just like a bank debit card that can be used wherever Visa Debit is accepted Payroll cards are an alternative to direct deposit to a bank account

5. R E T A I L P A Y M E N T S O L U T I O N S 1)Company chooses to offer a Visa Payroll card program as a payroll option; establishes program with provider 2)Employees choose EFT to a payroll card or a DDA 3)Employer transmits payroll card file each pay period 4)Card is funded automatically and Cardholder has immediate access to wages on payday 5)Cardholder uses the card for online, phone and retail purchases and to access cash at ATMs worldwide 6)Cardholder can check balance on website, VRU, or receive text messages on cell phone 6 1 2 3 4 5 Company Provider/ Issuer How Does the Payroll Card Work?

6. R E T A I L P A Y M E N T S O L U T I O N S Prepaid Cards and the Underserved 6

7. R E T A I L P A Y M E N T S O L U T I O N S Prepaid Cards - Meeting the Needs of the Underserved  Almost 80 million people in the U.S. without a traditional deposit account or with limited access to credit  Receive almost $1 trillion in payments annually from employers, states, government entities, insurance companies and others 80 Million Underserved…. …with almost $1 Trillion in income 45 million people $541 billion 27 million people $282 billion 9 million people $131 billion 7 Source: Visa USA: Analysis based on data from the Federal Reserve Bank; U.S. Census; Transunion, SEC filings and the Urban Institute 9.0 44.8 27.1 $131.4 $282.3 $541.3 Unbanked (no banking relationship) Underbanked (low/no credit score) Recent Immigrants

8. R E T A I L P A Y M E N T S O L U T I O N S The Underserved Segment  35% of U.S. households have no banking relationship or credit history  Pay over $11 billion in fees for financial services –Check cashing –Money orders 8

9. R E T A I L P A Y M E N T S O L U T I O N S The Costs of being Underserved INTANGIBLE COSTS Source: Visa Research TANGIBLE COSTS  Check cashing fees  Money orders, postage fees and cost of associated lead time  Transportation costs to pick up check(s), get to a check cashing store and pay bills in person  Late fees that could be avoided paying online, via phone or through recurring bill payment  Fees to reconnect services when disconnected due to late payment  Time spent in transit and waiting in line to cash checks and pay bills  Inability to conduct basic payment transactions like AFDs, bill- payments and travel reservations  No access to consumer protections associated with a Visa payment card  Risk of carrying large amounts of cash  Disruptions in services due to late payments that could have been made by phone or online Check cashing and other payment-related fees are only part of the story

10. R E T A I L P A Y M E N T S O L U T I O N S Employer Benefits INTANGIBLE COSTS TANGIBLE COSTS  Reduces cost of issuing paper payroll checks  Check Printing  Processing  Reconciliation  Distribution cost to remote employees  Replacement of lost/stolen payroll checks  Fraudulent check costs  No cost to implement payroll card program  Increases employee electronic payment participation  Escheatment liability shifts to card Issuer  No holiday / vacation pick-up problems  Employees do not have to ask for time off to cash their paycheck  Achieve 100% electronic payroll participation

11. R E T A I L P A Y M E N T S O L U T I O N S Keys to a Successful Prepaid Payroll Card Program 11

12. R E T A I L P A Y M E N T S O L U T I O N S Keys to Success  Employer endorsement  Top down & bottom up management buy-in  Communication Clear communication is the key to acceptance  Benefits of electronic payments  Options for receiving payments electronically  Explanation of the card and how it works  Communication should be coming from employer, not partner Multiple channel approach is recommended  Letters and/or pay check inserts  Information and FAQs on company intranet  Break room posters Enrollment Marketing 12

13. R E T A I L P A Y M E N T S O L U T I O N S Case Studies 13

14. R E T A I L P A Y M E N T S O L U T I O N S Los Angeles County Metropolitan Transportation Authority  Employees – Approx. 10,000 – Over 2,500 on payroll check at program inception  Situation – LA Metro was looking for a Payroll solution to serve their un-banked and under- banked employees while at the same time, going to mandating direct deposit and reducing costs by eliminating issuing Payroll checks for the agency  Implementation – The Payroll Card program was voluntary to start and has remained as such. The intent is to go 100% direct deposit once Union negotiations are complete  Results – Currently less than 1,000 employees receive a payroll check. If a new employee starts and does not have a bank account, they get a Payroll Card. Many employees that have a direct deposit to a bank account, also have signed up for the Payroll card and have funds deposited on it for lunch money, spending money, etc.  Satisfaction – LA Metro is very satisfied with their Payroll card program and they look forward to going to 100% direct deposit – They feel they have saved tens of thousands of dollars by reducing the number of payroll checks they distribute

15. R E T A I L P A Y M E N T S O L U T I O N S State of Oregon  Employees – Approx. 36,000. 1,400 receiving checks at start of program  Situation – The Controller’s Division was looking for ways to gain staff efficiencies statewide and to reduce the cost of printing, distributing, and banking for payroll checks. The methods found provided enhanced services to state employees. In addition, the methods found would further the state’s strategic plan, e-government goals, and SCD goals and objectives.  Implementation – The Payroll Card program is voluntary  Results – Currently the vast majority of state employees are on direct deposit including approx. 400 that are on the Payroll card. (29% penetration)  Satisfaction – OR is very satisfied with their Payroll card program – They feel they have saved an enormous amount of money reducing the number of payroll checks they distribute from elimination or reducing the following: – Escheatment process – Lost/Stolen/Forged payroll checks (Research & Replacement) – Printing, Processing, and Distributing payroll checks – Banking Fees

16. R E T A I L P A Y M E N T S O L U T I O N S Questions 16

17. R E T A I L P A Y M E N T S O L U T I O N S Appendix of Materials 17

18. R E T A I L P A Y M E N T S O L U T I O N S 18 LA Metro Brochure

19. R E T A I L P A Y M E N T S O L U T I O N S 19 LA Metro Payroll Card Authorization Form

20. R E T A I L P A Y M E N T S O L U T I O N S 20 LA Metro Poster

21. R E T A I L P A Y M E N T S O L U T I O N S 21 Oregon Flyer

22. R E T A I L P A Y M E N T S O L U T I O N S 22 Oregon Flyer

23. R E T A I L P A Y M E N T S O L U T I O N S 23 Oregon Poster