1. Overview Of Card Industry Technology To Loyalty

4. A Little Laugh

13. Card Industry Landscape The Why! The Players! The Program Specifics! The How!

16. Card Industry Landscape The Why! The Players The Programs Specifics The How! Psychology of a card program Cardholder Corporate Sponsor Merchant / POI Access Device (Card, Transponder, Terminals ….) Rewards (Points, coupons…) Program (Loyalty supplier, database, rules) Collateral (setup, statements, printed materials) Technology (Systems, processing, hardware, firmware, Issuing) Banks Issuing and Acquiring Processor

17. Transaction Breakdown * Represents e-coins/e payment services, direct deposit 0% 70% 30% 0% Catalog/ Phone 5% 95% 0% 0% Web 0% 30% 10% 60% In Store eCurrencies* Card Check Cash

27. Credit/Debit Online Transaction Processing Legacy Hosts Visa or MC systems Processor -Merchant accepts card -Validates card by signature check or PIN -Processes transaction -Consumer’s bank approves transaction, sends back to merchant -Settlement will post to statement. -Merchant’s bank initiates transaction -Routes to locations determined by card ids for approval and processing -Collects card ID/number, Merchant ID, Amount. Request Auth Settlement Request Auth Settlement

29. Purchase/Procurement Card Transaction Processing SIC Filtering Visa or MC systems Processor -Merchant accepts card -Validates card by signature check or PIN -Processes transaction -Merchant;s bank initiates transaction -Processes against SIC filter -Routes to appropriate locations -Processes transaction -Approves or Declines transaction -Posts to statements on settlement Request Auth Settlement Request Auth Settlement

31. Debit Offline Transaction Processing Legacy Hosts Visa or MC systems Processor Batch Request Auth and Settlement Settlement Request Settlement -Merchant accepts card -Validates card with PIN -Processes transaction -Collects batch data and formats clearing transaction -Approves or Declines transaction -Routes to appropriate locations -Processes transaction -Posts to statements Auth and Settlement

33. Stored Value Transaction Processing -Cards are preloaded with points. -Merchant requests transaction -Verifies Card Legacy Hosts/filters Visa or MC systems Processor Request Auth Settlement Request Auth Settlement -Transaction processes like Debit -Card is validated against stored value hosts or filtering -Processes transaction -Posts to statements

35. Membership Card Transaction Processing -Card is accepted -Checked against internal database -Can be routed to third-party database through processor. Internal Database Processor 3 rd party Database Example: Blockbuster Example: Dining Ala Carte

37. Smart Card Transaction Processing -Card and Terminals authenticated with cryptograms -Obtain PIN, if needed -Verifies static data on chip -Processes static programs offline -Sends transaction online -Routes to any internal legacies -Verifies risk parameters on card Legacy Hosts Visa or MC systems Processor Online Request Auth Settlement Online Request Auth Settlement -Validates card and transaction data -Routes to hosts systems -Processes settlement -Posts to statements -Formats the crypto authentication request -Routes and initiate online transactions.

41. Smart Card at a Glance! 1234 5678 9012 3456 Joe Smith Silicon Operating System (MULTOS, JAVA, Windows) Applications EMV Loyalty Wallet Misc. Appl. Contact Plate

65. Universal Mile + Network + Card The Network as a Catalyst for Increased Spend and Activation Miles Earned Through Partners: 2,125 Miles from Card: 1,325 + Total Earning that Month: 3,450 + $ XYZ BANK $1,325 300 Miles 800 Miles 250 Miles 100 Miles 375 Miles 300 Miles $ 300 $ 300 $250 $ 100 $ 75 $ 300 Gas & Oil Grocery Electronics Trip TeleCom Retail (online & offline) + + + + + PLUS all other card purchases outside the partner network Purchases on card at partner retail locations

66. Universal Mile + Network + Card Increase in Monthly Charge Volume (in $Millions) * Revenue figure based on 2.9% of gross charge volume in interchange and miscellaneous fees, plus 60% revolving balances at 13.9% annual interest. Average Monthly Spend Incremental monthly revenue volume increases 400%+ & revenues increase $100 Million + a year. EXAMPLE* Incremental monthly charge volume goes from $72M to $314.2M—an increase of 430% Sample Card Issuer with 200,000 cards Increased Spend Increased Activation Increased Acquisition TOTAL $ 4.0 M $ 2.7 M $ 1.9 M $ 8.6M $ 48.0 M $ 32.8 M $22.3 M $ 103.1M Monthly Revenue Increase Annual Revenue Increase