1. Donna Embry WSAA September 27, 2012 The Future of Acquiring…. Will you Wipeout or Catch the Big One

2. The Future of Acquiring “Best of Times/Worst of Times” “Evolution……Revolution” “Catching the WAVE”

3. “Best of Times/Worst of Times” Best of Times: EMV New Disruptive Market Players The New Consumer (Social and Mobile) Worst of Times: Economy Legislative Changes Commoditized Acquiring

4. 4 EMV - PCI AND LIABILITY SHIFT – U.S. NETWORKS 10/1/2012 Waive Annual PCI Compliance for Dual EMV/NFC Terminals (AMEX 10/1/13) 10/3/2013 50% Data Compromise Relief 10/1/2015 Card Present, Counterfeit Card Liability Shift (except Petro) 10/1/2015 100% Data Compromise Relief (MC only) & Payments Hierarchy Begins (MC & AMEX) 10/1/2017 Counterfeit Card Liability Shift For Petro Merchants 4/13/2013 Processor Compliance For EMV Data ATM liability shift 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 Key Milestones – PCI/Liability Shift Statements: October 2012 – Annual PCI Compliance Waiver Eliminate requirement to annually validate PCI Compliance if 75% of the merchant’s transactions originate from a terminal that supports contact and contactless chip technologies. Note: Transaction can be mag-stripe based. April 2013 – Processor Compliance for EMV Data Merchant processors must certify in their April release that they can process EMV transactions at the POS. Cross Border Maestro Liability shift to non-EMV ATMs October 2015 – Liability Shift The entity that leverages the highest level of available payments security receives the benefit of the liability shift. Chip and PIN is the highest level of security. Mag-stripe and a signature is the lowest level. ©2012 DISCOVER FINANCIAL SERVICES

5. Disruptive innovators and game changers… 5 Total transaction volume in 2011 was $118B with $4B in mobile payments volume vs $750MM in 2010 Projects $7B in mobile payments volume in 2012 Processing $5B in payments annually More than 1 million use Square to accept credit

6. Consumers Shopping/Payment Trends 6

7. Ease of Self Service / Consumer Shopping 7

8. Reaching Buyers via New Mediums 8

9. Technology has changed the shopping experience – creating trends like “showrooming” 9 More than 50% of U.S. smartphone users performed retail research while in store 38% of smartphone owners have used their phone to make a purchase 33% of smarphone users have shared their location via check- in service

10. Consumers embracing mobile coupons & offers Source: Juniper Research, 11/2011 ScanLife, 2012 Source: Microsoft Tag, 2011

11. 11 “Evolution/Revolution”

12. 12 Impact and Opportunity

13. 13 Evolution of ATM Products (2010 – 2013 )

14. “Catching the WAVE”  Big Data  Enable all of your clients with Social Marketing  Rollout Couponing/Text Marketing programs  Introduce new payment options (Prepaid, Bill pay)  Dynamic Data  Pilots with Big players  Implement EMV early and often  Cloud  Replace POS systems  Align with players that have Cloud periphery products  Mobile  Implement Mobile agility (apps, statements)  Integrate Mobility at every retailer

15. The Future of Acquiring  There is a strong future  Consumers will drive change  Winners will align products with consumer trends  Retailers will align with consumer trends  “Ubiquity” is key to success of Wallets

16. “Your” Future in Acquiring  Keep in touch with consumer trends  Don’t worry about “Square” if you are not in the RISK game  Play in the sandbox when it makes sense and revenue  Expand and evolve your retail products

17. Thank you Contact: DonnaE@gopai.com The Future of Acquiring…. Will you Wipeout or Catch the Big One?

18. NEW COMMERCE. NEW PAYMENTS. February, 2012

19. Buyer Merchant Buyer Funding Choices Credit card Debit card Bank account PayPal balance Rewards balances Other local payment methods Use of Funds Spend as balance Withdraw to bank ATM/Debit card Buyer transfers PayPal funds to merchant instantly 1 Merchant ships goods to buyer 2 Buyer Account PayPal’s digital wallet connects buyers & sellers conveniently & securely Merchant Account 19

20. * Active accounts are those that have had activity in the past 12 months. Network effects >113 million active accounts * > 9 million merchants >$118 billion total payment volume >15,000 bank partners globally Global footprint 190 markets 25 currencies Localized websites in 21 markets 15% of global e-commerce Online fraud prevention expertise 12+ years experience fighting online fraud Lowest industry loss rate, < 12 bps in 2011 Paypal is a truly global payments network 20

21. CONSUMERS NOW HAVE DRAMATICALLY MORE CHOICE IN HOW THEY SHOP AND PAY Today it’s all about consumer convenience: buying what they want, when they want, where and how they want. 21

22. SOURCE: Milo.com, Forrester Report (“US Online Sales Forecast: 2008-2013”, Feb 2, 2009) *Except travel 22 MULTI-CHANNEL EXCEEDS ECOMM IN SIZE; SAME GROWTH TRAJECTORY AT 12% MULTI-CHANNEL Multi-channel will be 6x that of online shopping $2.9t $2.4t$2.5t$2.6t$2.7t $2.8t$2.7t OFFLINE RETAIL -3% CAGR 12% CAGR ONLINE RETAIL 12% CAGR All Retail: 3% CAGR TOTAL US RETAIL REVENUES *

23. ONLINE & MULTI-CHANNEL SHOPPING IS NOW THE NORM 23 6%6% of mobile users perform shopping activities on their phone 4 MILLION smartphones in US 3 0 1 5. Source: Comcast, Dec 2011

24. MOBILE IS THE RIGHT PLACE TO START 9%9% of smartphone owners have used or are interested in using mobile coupons 7 5%5% of smartphone owners prefer mobile to paper coupons 7 24 Source: Comscore, Dec 2011

25. DRIVE THE CONSUMER INTO THE STORE All coupons and offers saved in one place Opportunity to surface related messages or offers Engage with consumer in-store OFFER FINANCIAL FLEXIBILITY All funding sources saved in wallet (credit, debit, gift cards) Deferred payment/credit Split tender INTERACT WITH RETAILER LOYALTY PROGRAMS Save loyalty card to the wallet Surface loyalty club specials in the “deals” tab THE INTELLIGENT DIGITAL WALLET 25

26. 26 DELIVERING THE END-TO-END VALUE CHAIN Confidential and Proprietary DEMAND GENERATION IN-STORE ENGAGEMENT LOCAL SEARCH PURCHASE FACILITATION PAYMENT + LOYALTY ACQUISITION CONVERSIONRETENTION Geo-targeted mobile advertising Barcode scanning Real-time inventory availability Mobile and P.O.S. payments Virtual Wallet powered by

27. 27 All-in-one payment processing Use PayPal to accept and process credit cards and PayPal payments Payment gateways Use PayPal’s gateway and the business’s own merchant account to process credit cards and PayPal payment methods. Accept alternate payment methods Add PayPal as a payment method PAYPAL PAYMENT PRODUCTS Business needs PayPal products that meet these needs PayPal PAYMENTS STANDARD ADVANCED PRO PAYFLOW LINK PAYFLOW PRO EXPRESS CHECKOUT BILL ME LATER ®

28. 28 Payflow Payment Gateways let businesses connect their online business to their Internet Merchant Account using any major processor. PayPal offers two payment gateway choices: Payflow Link Payflow Pro MERCHANT ACCOUNT PAYFLOW PAYMENT GATEWAY

29. 29 Payflow Link: Embedded i-frame or full redirect I-FRAME TEMPLATE AVAILABLE WITHIN NEWEST VERSION OF PAYFLOW LINK Benefits Enables greater design customization of the checkout page within a hosted environment Simplifies PCI compliance for the merchant Provides both PayPal and Bill Me Later ® as payment options, improving conversions and increasing sales for merchants.

30. Payflow Link: MoBile-Optimized Checkout PayPal is developing a mobile-optimized checkout experience for Payflow Link. Mobile optimization will go live within the newest version of Payflow Link in late September. Mobile-optimized checkouts are proven to increase mobile conversion rates, improving merchant sales. 30

31. Bill Me Later ® is now available to any merchant utilizing hosted checkout templates, including the i- frame, within the Payflow gateway “Always On” Promotional Financing Marketing a single, consistent promotional financing offer to consumers The offer: No payments + No interest if paid in full in 6 months on purchases of $99 or more No credit risk for the merchant Merchants have experienced double-digit increases in repeat sales after implementing Bill Me Later ® Average order value increases can grow 100-250% for higher-ticket items and 15-135% for lower-ticket items 31 BILL ME LATER GIVES BUYERS CHOICE & FLEXIBILITY

32. 32 All-in-one payment processing Use PayPal to accept and process credit cards and PayPal payments Payment gateways Use PayPal’s gateway and the business’s own merchant account to process credit cards and PayPal payment methods. Accept alternate payment methods Add PayPal and Bill Me Later as a payment method PAYPAL PAYMENT PRODUCTS Business needs PayPal products that meet these needs PayPal PAYMENTS STANDARD ADVANCED PRO PAYFLOW LINK PAYFLOW PRO EXPRESS CHECKOUT BILL ME LATER ®

33. * Study conducted in 2011 by comScore on 15 IR100 retailers. ** There are 113 million active PayPal accounts. Active accounts are those that have had activity in the past 12 months. Express Checkout shortens the distance to purchase Process payment Confirm basket Add shipping costs Input payment data Input delivery address data Input buyer address data Input ID info Complete Typically six or more data fields and lots of keystrokes One or two data fields and two clicks Standard Checkout vs. Express Checkout Flow STANDARD CHECKOUT EXPRESS CHECKOUT Review payment Log in to PayPal Complete PayPal has over 113 million buyers who look for the PayPal way to pay. ** comScore found that PayPal Express Checkout conversion was 115% higher than standard checkout conversion on the cart page. *

34. Step 1 A customer selects an item on your mobile-optimized website. Step 1 A customer selects an item on your mobile-optimized website. Mobile Express Checkout 34 Step 2 The customer decides to check out with PayPal and logs in. Step 2 The customer decides to check out with PayPal and logs in. Step 3 The customer confirms her shipping address and payment method and completes the order. Step 3 The customer confirms her shipping address and payment method and completes the order. Step 4 You get paid. (The fun part.) Step 4 You get paid. (The fun part.) Mobile Express Checkout: Functions on a smartphone just like it does when paying for items on a business’s website Leverages existing Express Checkout API to simplify integration Improves conversions by offering mobile payments and expanding sales of digital goods

35. INTRODUCING: PAYPAL HERE Free merchant app & card reader Easy set up & quick access to funds Simple 2.7% rate per transaction Accept multiple forms of payments (credit, debit, checks, paypal and invoicing) Encrypted, secure card reader 35

36. 36 Deal announced in August enabling PayPal as a payment option anywhere Discover is accepted. Discover’s 7 million brick and mortar merchants will have the option of accepting PayPal beginning in 2013. Merchants can open their business to 50 million active U.S. PayPal users. PayPal & Discover: Delivering the Omni-channel wallet The PayPal payment method will work with existing terminals, utilizing a traditional mag stripe card. Buy rates will be available to the acquiring community.

37. Thank you MATT WATTS MWATTS@PAYPAL.COM http://www.paypal.com/partnerprogram