Universal Gift Cert

NSC Universal Gift Certificates
New Product Document
© 2003 National Scrip Center, Inc. - All rights reserved.
Universal Gift Certificate Product Document - Version 3.2
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2

Universal Gift Certificates
Background
The National Scrip Center (NSC) is the leading wholesale provider of gift certificates to
nonprofit organizations across the United States. NSC purchases gift certificates in bulk
in order to receive a discount off the face value and resells them at a slight mark-up to
nonprofit organizations—which use them as a fundraising tool. Currently, NSC annually
resells over $350,000,000 in gift certificates from over 300 different merchants to over
8,000 nonprofit organizations.
Since nonprofit organizations order gift certificates directly from NSC, NSC is required to
maintain satisfactory inventory levels to meet demand. Naturally, some gift certificates are
in high demand while others are not, but NSC is stocks all brands and their respective
denominations because it is a competitive necessity in the scrip industry. Since only 30%
of merchants provide terms to NSC, the cash outlay to maintain such a gift certificate
inventory is in the millions of dollars. From the moment that it purchases a gift certificate
until the time that the gift certificate is sold to a nonprofit organization, NSC loses the
chance to make interest income on the amount it paid for the gift certificate. Since NSC is
dealing with millions of dollars of inventory, this interest income opportunity cost is
substantial.
Further complicating the situation is the fact that NSC is entirely at the mercy of both
retailers and third party suppliers to provide gift certificates in a timely manner. When
retailers and third party suppliers fail to provide the gift certificates on time, NSC’s
customers frequently blame NSC, which can create ill will and brand damage for NSC.
Mission
NSC has decided to develop its own universal gift certificate—a unique single brand gift
certificate that is good across a variety of different merchants/retailers. Initially, this
certificate will be targeted to replace gift certificates that NSC is currently purchasing from
low volume retailers and over the long term NSC will transfer as many merchants as
possible to this universal gift certificate. This new currency will provide several key
benefits to NSC:
1. Reduce cash investment in gift certificate inventories and allow NSC more
financial freedom
2. Allow NSC to directly benefit from the certificate float and breakage
3. Remove third party suppliers and pass on more to NPO’s
4. Eliminate backorder issues (for merchants that accept this certificate) through
JIT inventory
5. Improve the overall customer experience
While these certificates may look and feel like traditional gift certificates, they will actually
be MICR encoded for processing through the banking system as checks and will carry the
processing bank’s identification (i.e. Bank of America). This is the same payment
processing mechanism that many of the high volume retailers are using to process their
gift certificates across franchise and corporate-owned stores.
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Goals
In developing the universal gift certificate, NSC is focused on accomplishing the following
goals:
1. Move control of gift certificate production and issuance into the hands of NSC.
2. Integrate past fulfillment learnings to design a certificate that takes fulfillment
requirements into account.
3. Design a highly secure gift certificate that follows industry best practices to
avoid counterfeiting and fraud.
4. Introduce a gift certificate that is highly valued by the end-user because of its
universal merchant acceptance.
5. Replace unfavorable merchant relationships (low volume, poor terms, etc.)
with the new universal gift certificate
6. Provide a higher margin to NPO’s on high use categories (gas, food, etc.)
through the certificate.
7. Design a currency that looks and feels highly professional such that it carries
enough cache and to attract collectors.
8. Use the best thinking that has gone into the design of leading gift certificates,
traveler’s checks, and other currencies to apply toward the NSC currency.
9. Professionally launch the product and do so in a timely fashion.
Product Overview
NSC will offer two versions of its Universal Gift Certificate:
1. The Universal Gift Certificate – a unique gift certificate that is good at a variety
of merchants in a variety of categories
2. The Exclusive Gift Certificate – a “lite” version of the Universal Gift Certificate
that focuses redemption to a variety of merchants in a single business
category or merchant.
(1) Universal Gift Certificate
The Universal Gift Certificate is a multi-merchant, multi-category gift certificate offered by
the National Scrip Center to nonprofit organizations at a discount off the face value.
Following is a summary of the product features and benefits:
Features
 Compact and easy to store (fits in wallet and register drawers)
 High number security features to deter fraud
 Attractive design that appeals to consumers and collectors
 Simple and easy for consumers and merchants to use
 Face values of $5, $10 and $25
 Target 5 - 7% nonprofit discount from face value
 Target initial launch of 30 – 50 regional and national merchants
 Accompanying merchant directory
 100% inventory availability and overnight delivery guarantee
 24/7 customer support and information via phone, internet, fax-back
 Patent pending protection to deter competitors
 Merchant training and POS materials packages
 Offered by NSC and the National Currency Exchange
 Website for National Currency Exchange
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Benefits
Supporter
 High convenience factor due to multi-merchant, multi-category selection
 Increased end-user value due to convenience factor
 Full face value toward purchases
 Easy to use with clear redemption instructions
 Good return to charitable organization
 Collectable currency design
Charity
 Eliminates back order issues
 Reduces handling time for coordinators
 Reduces inventory management requirements/space
 Competitive discount rate provides good return
 Increased flexibility attracts more supporters
 Decreases the inventory requirements for NPO’s
Participating Merchant
 Highly secure gift certificates with backing by 15-year-old company
 Removes risk and gift certificate management issues from merchants
 Incremental earnings potential through membership in merchant pool
 Simple redemption system that utilizes existing check processing system
 Eliminates card program interchange fees
 Professional training and POS training materials
 Toll free support line
 Reduces/eliminates gift certificate costs and can replace internal gift
certificate program for a cost savings
NSC
 Provides direct access to float on gift certificates
 Provides direct access to gift certificate breakage
 Eliminates backorder issues (for participating merchants)
 Reduces inventory management costs through reduced inventory
 Allows access to merchant back-end commissions
 Allows NSC to move away from bad merchant deals & offerings
 Provides significant competitive advantage over competition
 Reduces backorder fulfillment costs
 Allows NSC to begin impacting the gift certificate industry standards
through its own product
(2) Exclusive Gift Certificate
The Exclusive Gift Certificate is a multi-merchant, single-category/merchant gift certificate
offered by the National Scrip Center to nonprofit organizations at a discount off the face
value. Category examples include fuel, food, drug stores, etc. Following is a summary of
the product features and benefits:
Features
 Compact and easy to store (fits in wallet and register drawers)
 High number security features to deter fraud
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 Attractive design that appeals to consumers and collectors
 Simple and easy for consumers and merchants to use
 Face values of $5, $10 and $25
 Target 4 - 6% nonprofit discount from face value
 Specific promotion of merchant brands
 Accompanying merchant directory
 100% inventory availability and overnight delivery guarantee
 24/7 customer support and information via phone, internet, fax-back
 Patent pending protection to deter competitors
 Merchant training and POS materials packages
 Offered by NSC and the National Currency Exchange
 Website for National Currency Exchange
Benefits
Supporter
 High convenience factor due to multi-merchant, multi-category selection
 Increased end-user value due to convenience factor
 Full face value toward purchases
 Easy to use with clear redemption instructions
 Good return to charitable organization
 Collectable currency design
Charity
 Eliminates back order issues
 Reduces handling time for coordinators
 Reduces inventory management requirements/space
 Competitive discount rate provides good return
 Increased flexibility attracts more supporters
 Decreases the inventory requirements for NPO’s
Participating Merchant
 Highly secure gift certificates with backing by 15-year-old company
 Removes risk and gift certificate management issues from merchants
 Incremental earnings potential through membership in merchant pool
 Simple redemption system that utilizes existing check processing system
 Eliminates card program interchange fees
 Professional training and POS training materials
 Toll free support line
 Reduces/eliminates gift certificate costs and can replace internal gift
certificate program for a cost savings
NSC
 Provides direct access to float on gift certificates
 Provides direct access to gift certificate breakage
 Eliminates backorder issues (for participating merchants)
 Reduces inventory management costs through reduced inventory
 Allows access to merchant back-end commissions
 Allows NSC to move away from bad merchant deals & offerings
 Provides significant competitive advantage over competition
 Reduces backorder fulfillment costs
 Allows NSC to begin impacting the gift certificate industry standards
through its own product
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Competitive Offering
There are no competitive offerings like this program in the NPO marketplace. NSC
competitors, who have traditionally followed NSC’s lead, are still offering only traditional
gift certificate products. The introduction of this product under patent pending protection is
expected to catch the competition off guard and attract new NPO customers to NSC.
Program Rollout
NSC is interested in introducing this product to the marketplace as soon as possible.
Early estimates are that the program will follow this development schedule:
Time Action Items
2 – 4 months Denominations
Product Name
Security/Fraud Measures
Corporate Structure
Banking Relationship
Print Design
Transaction Tracking
Merchant Sales
End User Support
Intellectual Property Filing
1 month and on
going
Check printing, marketing material production
1 - 2 months Merchant training
3 – 4 months Target Launch Time Frame
NSC is interested in doing all that is possible to shorten the development time frame
without compromising quality, product security, or program success.
Launch Promotion/Activities
In order for the Universal and Exclusive Gift Card to gain public awareness and
acceptance, NSC will utilize a variety of marketing tools to introduce and promote the
products. These may include:
1. Achieve Dreams Article – feature article in magazine that builds excitement
and highlights key points that resonate with the customer (such as 100%
guaranteed availability, universal acceptance, etc.). The article will include
quotes from NSC, merchants, and NPO’s about the product and highlight
NSC exclusivity with the National Currency Exchange.
2. Scrip Flash – promotional section with additional short term benefits for early
ordering
3. Website – banner ads and listing where available, including listing in NSC
products section
4. Brochure – simple and attractive brochure for inclusion in every order over the
introductory period
5. Press Release – release on the program for public release and calls to NPO
magazines for coverage and future articles
6. Sales Blitz – tap into sales team and customer contact center activity
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Desired Results and Outcomes
The introduction of the Universal and Exclusive Gift Certificates is an NPO industry first
and NSC intends to capitalize on its position. Specifically, NSC is looking achieve the
following outcomes and results through the program:
1. Reduced cash investment in inventories by 25%
2. Improved gift certificate margin through direct access to float, breakage, and
discounts by 12%
3. Reduce/eliminate third party supplier dependencies (specifically in the gas
and other problem segments) by 25%
4. Reduce/eliminate backorder issues by 40%
Through aggressive promotion, strong merchant partnerships, and increasing certificate
acceptance among merchants, NSC will see this program prove to be a great success
among NPO’s.
Appendix 1
Product Details
Following is a list of the product specifics:
Denominations: immediately available in $5, $10, and $25 denominations. Each
denomination will have a specific color and distinguishing characteristics.
Printing Production: NSC will use American Bank Note to produce the checks. ABN has
been in business for over 200 years and has a highly secure production facility with the
ability to provide a wide variety of security features in the gift certificate. Estimated
printing production is 70 - 100,000 of each type of certificate (Universal Gift Certificate and
Exclusive Gift Certificate).
Product Design: NSC will design the certificate checks to look and feel like a unique
valuable currency so as to increase the perceived value and increase cache with
collectors. The checks will be the size of a traditional check.
Security: NSC will enable as much security as necessary to effectively prevent
professional counterfeiting. The checks will include the following security features:
1. Intaglio Border – fine-line detail with 3D raised coarse feel that is created steel
engraved plates and can’t be reproduced through even the best copiers/laser
printers
2. Latent Image – image created out of microscopic ridges and grooves through
the intaglio process; image becomes visible when viewed at 45 degree angle
3. Microprint Line – a fine line made out of words printed with super high
resolution so that they appear as a solid line without a magnifying glass
4. Watermark – image is imbedded into paper during manufacturing; visible
when held up to a light source
5. Prismatic Printing – offset printing technique with a single plate that creates
gradual color change across document; appears washed out when copied
6. Fluorescent Ink – inks that fluoresce when you use a black light
7. Theromochromatic ink – heat-sensitive inks that change color when touched
or rubbed; can have a variety of color change options
8. Holograms – 3D laser images that are hot-stamped on paper for permanent
adherence; impossible to duplicate
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Expiration: The certificate checks will have a 12-month expiration date.
Merchant Discount: NSC will negotiate transaction discount rates with merchants, which
will allow NSC to receive a post-transaction commission. The goal is to establish a
system that allows NSC to automatically receive the merchant discount as close to the
time of the transaction as possible.
Target Markets: NSC will target the gift certificates for use in traditional and non-foot
traffic markets, business-to-business marketing and consumer promotions.
Processing: The product will operate as a check and move through the banking system
as a standard check.
Tracking: NSC would like to include a bar coding system that allows for NSC to track the
check certificates with a bar code reader:
1. While they are in inventory (bundled in packages of commonly purchased
amounts)
2. When they are pulled from inventory for shipping
3. When they are assembled for shipping to scrip coordinators.
The goal is to use a bar code system that will double as a tracking mechanism at the
banking partner if it helps improve tracking for merchant use.
Merchant List: NSC is exploring options for listing participating merchants in a quarterly
booklet, website, and/or when the checks are shipped.
Corporate Entity: NSC expects to form a separate corporate entity in Virginia to benefit
from that state’s escheat laws and to protect NSC from any unforeseen issues. NSC is
looking to purchase a corporate shell or an older defunct company to give the new entity a
sense of history in the marketplace. NSC will name the new entity the National Currency
Exchange.
Banking Relationship: NSC wants to establish a banking relationship with a bank that
(1) has operations out of Virginia (2) has great technology for tracking and reporting check
usage, (3) can allow NSC to get the merchant discount tracked and settled as fast as
possible, and (4) has national acceptance. Currently NSC has a relationship with Far East
National Bank in Los Angeles, CA and is looking at other banking relationships to fit these
product requirements. Far East will continue to be NSC’s corporate banking partner.
Merchant Relationships: NSC estimates that the initial number of merchants
participating in the program will be between 30 and 50, each with multiple locations. As
the program grows more merchants will be added to the program. NSC will use its
merchant sales team to work with the merchants and establish them on this program.
Target merchants will include:
Universal Gift Certificate
• Current merchants that are in the bottom 50% of purchasing in NSC offering
• Current merchants that offer no terms
• Current merchants that are part of other such national programs
• New regional and smaller merchants
• New national merchants
• Larger national merchants (over time)
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Exclusive Gift Certificate
• Arco
• Safeway and/or a grocery
• Fast food
Retail Training and Point-Of-Purchase Materials: NSC will develop a training program
to train retailers on check acceptance and how to recognize the program certificates.
NSC will also conduct the retailer training.
End User Support: NSC will provide support to both the end user and the merchant
through its existing customer support system. If there is a need to increase support NSC
will look at outside service options.
Collectible Currency: NSC is looking into features that would promote currency
collection and thereby increase value among collectors. This will also include special
editions and commemorative editions of the certificate.
Patent: NSC will file for a patent around the new universal currency program in order to
protect the intellectual property from competitors who would attempt to offer a competing
program.
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Appendix 2
Key Task Areas
Denominations
Owner
NBD
Finance
Marketing (incorporate in design)
Goal
Determine the appropriate denominations for the scrip check while considering both (1)
overall usefulness to the customer and (2) the effect of currency decision on breakage and
float
Time Estimate - Consecutive
1 – 3 days
Critical Path Items
None
Ideas/Points for Consideration
 Start with limited denominations and increase if necessary
 5, 10, 25 are estimated best denominations
Product Name
Owners
NBD
Marketing
Merchant Partnerships
Goal
Select a name that conveys the sense that this financial instrument is all about helping
raise money for nonprofit companies while avoiding the “scrip” term. Register trademark
when name is selected
Time Estimate – Consecutive
1 week or less - depending on trademark situation
Critical Path Items
None
 Run the names by the advisory board or other outside scrip users to get
external feedback from scrip users on the final list of names
 Needs to be less “cutesy” and more “trusted and national” in nature
 Some possible names:
Fundraising Cash
Good Money
Money for Good
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Helping Funds
Charity Checks
Community Cash
Improving America Funds/Cash/Checks
Universal Gift Certificate, by National Currency Exchange
Security/Fraud Prevention
Owners
NBD in conjunction with Marketing (incorporating design)
Goal
Create a highly secure document that is designed to avoid professional counterfeiting
Since this product can be used across many merchants at all their locations, it will
probably be high on the target list for counterfeiters.
Time Estimate
1 week – selection
8 weeks - plate production
Critical Path Items
None
 Available printing security features:
Intaglio Border – fine-line detail with 3D raised coarse feel that is created steel
engraved plates and can’t be reproduced through even the best copiers/laser
printers
Latent Image – image created out of microscopic ridges and grooves through the
intaglio process; image becomes visible when viewed at 45-degree angle
Microprint Line – a fine line made out of words printed with super high resolution
so that they appear as a solid line without a magnifying glass
Watermark – image is imbedded into paper during manufacturing; visible when
held up to a light source
Prismatic Printing – offset printing technique with a single plate that creates
gradual color change across document; appears washed out when copied
Fluorescent Ink – inks that fluoresce when you use a black light
Theromochromatic ink – heat-sensitive inks that change color when touched or
rubbed; can have a variety of color change options
Holograms – 3D laser images that are hot-stamped on paper for permanent
adherence; impossible to duplicate
 Other security options:
Check digit(s) on unique check numbers
Improved training for retail associates to decrease fraud
 Use Steve M. at Marriott as outside advisor
 Dave C. has other contacts for security features, etc.
 External fraud insurance
 Self-insurance for fraud
 Complete site visit to ABN
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New Corporate Structure
Owners
NBD
Finance/Legal
Goal
Set up a new company that produces these certificates in one of the escheatment-friendly
states
Time Estimate
1 – 3 weeks
Critical Path Items
None
Ideas
 Company that licenses product to NSC
 Escheat laws – find out from Steve M. and George (lawyer for gift certificate
counsel) on that and others;
 Need to make sure that this is issued out of a state that is safe for us;
 Make this a company that can give out stock
Owner
NBD
Finance
Goal
Establish a relationship with a bank that (1) is in the required escheatment law state, (2)
has fast reporting technology for tracking and reporting check usage, and (3) can allow us
to settle net of merchant discount.
Time Estimate
2 – 6 weeks depending on available banks, bank legal requirements,
Critical Path Items
Corporate Structure (know what state company will be in)
 The bank needs to be on the front edge of technology
 We want a bank with a good reputation
Print Design
Owner
NBD
Marketing
Merchant Partnerships
Goal
Create a unique check certificate that looks and feels like a high-end gift
certificate/currency but is actually a check; has a list of merchants where check is good
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Time Estimate
2 – 4 weeks depending on design complexity and ABN turnaround ability on proofs
Critical Path Items
Denominations
Product Name
Security features (only selection, not production)
Banking Relationship (only before going to press)
Merchant Sales (only for merchant list)
 Make it look and feel like money so that it has a high “presence” and appeal
 The higher the cool factor the higher the chance that the consumer will collect it
and not redeem it (more breakage)
 Unique colors for each denomination
 No UV coating
 Figure out where to have merchant list
 Slim Jim booklet
 Attach merchant list to the check?
Transaction Processing & Tracking
Owner
NBD
Marketing
IT
Operations
Goal
Find a tracking solution that allows NSC to track the check usage back to the retailer so
that we can get our merchant discount back at settlement or thereafter
Time Estimate
3 – 4 weeks depending on what technology is available
Critical Path Items
 See if the settlement system can be designed to settle net of the retailer discount
back to NSC or through ACH at transaction time so that we don’t have to try and
collect from the retailer long after the sale
 Dave C. contact on scanning system
Merchant Sales
Owner
Merchant Sales Team
Legal
Goal
Get as many merchants as possible on this program through a great sales effort, along
with some level of commission from the merchants.
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Time Estimate
4– 8 weeks and on-going weeks depending on response
Critical Path Items
Print Design
Transaction Tracking (know capabilities and if we want commissions)
Ideas
 Get Dave B to do the dry run for us
 Dave B has to check
 Have to create merchant terms
 Need to get anchor merchants early, sets the tone and pace for the rest.
Merchant POS Materials & Training
Owners
Merchant Sales
Marketing
Goal
Ensure that merchants and their employees are well trained so that the program operates
smoothly, consumers are able to redeem their checks, and alert cashiers reduce fraud.
Time Estimate
4 weeks – training materials production and printing
4 weeks – recommended training time (per Steve M.)
Critical Path Items
Denominations
Product Name
Security Features
Print Design
Merchant Sales
 Produce a training packet that can be sent to stores for training
 Conduct training for store managers
 Do we need a training video?
 The better the training the lower our exposure to fraud
 Web-based training for retailers/employees
End User Support
Owners
Customer Support
Marketing
Merchant Sales
Goal
Ensure that the product is sufficiently consumer-friendly and that consumers are able to
find out what retailers/stores are participating in the program.
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Time Estimate
1 – 3 weeks depending on website requirements
Critical Path Items
Print Design
Merchant Sales
 Website merchant list
 Printed merchant list
 Train NSC customer service employees on program
Intellectual Property
Owners
NBD
Legal
DCC
IT
Goal
Complete legal filing for patent, trademarks, domain names, and any other intellectual
property that can protect the program from outside competition.
Time Estimate
1 – 4 weeks
Critical Path Items
None
Ideas
 File broad patent that covers NSC processes and includes the Universal Gift
Certificate process
 Domain name/Trademark areas of interest:
• Universal Gift Certificate
• Universal Gift Card
• Exclusive Gift Certificate
• Exclusive Gift Card
• National Currency Exchange
• National Currency Board
• National Currency Bank
• National Currency System
• NCExchange
• NCE
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Appendix 3
Potential Issues/Solutions
Merchant Acceptance
The key to program success is acceptance of the Universal Gift Certificate among a broad
range of merchants. The greater the number of merchants that accept the certificate, the
greater the value will be to the end-user. Factors that will affect the ability to sell the
program to merchants include:
1. Quality of sales presentation
2. Quality/Attractiveness of Universal Gift Certificate design
3. Success of current gift certificate offering by merchant
4. Number and brand recognition of other merchants in the pool
5. Comfort with NSC’s ability to pay
6. Number of decision makers in the company
7. Value placed on supporting charity and NPO’s
To address the factors within NSC’s control, it is putting its best resources toward the
sales process and design of the presentation/gift certificate. Additionally, NSC will
allocate funds to a specific account to act as a reserve against the outstanding certificates.
The selling position to the merchants will be that they are accessing a private currency—a
pool of available incremental dollars.
NSC’s Financial Stability
One of the key factors that mid-size to larger merchants will consider prior to partnering
with NSC is its overall financial stability (both current and historical) and its long-term
viability. The scrip business is highly dependent upon successful inventory management
—an issue with which NSC has struggled with at times. For this reason, NSC has
historically experienced periodical strain with its ability to stay 100% current on its bills,
which created a less-than-favorable D&B rating.
NSC has focused on staying current with its bills and has recently received a favorable
D&B rating. New management has helped the company improve its image in the
marketplace and a new focus on inventory management (such as deferred ordering and a
new focus on JIT inventories) will help reduce cash flow issues in the future. Additionally,
NSC will prepare a book of merchant endorsements and positive references.
Program Testing
The offering of a product of this magnitude would normally require a good deal of in-
market testing to work out any bugs in the product and processing system. However,
NSC is faced with a situation where it needs immediate relief from inventory issues as well
as relief from third party vendors that are not providing a dependable supply of gift
certificates.
NSC has elected to speed up development and product launch with the intention of
conducting a short-term product test and thereafter rolling the program out more broadly.
Additionally, the company is utilizing both internal and external expertise to increase the
learning curve and reduce the normal development timeframe.
17

Certificate Counterfeiting
With the issuance of a Universal Gift Certificate, NSC will invariably attract the attention of
both amateur and professional counterfeiting operations. The greater the number of
merchants in the program, the more attractive the program will be for criminal activity.
NSC is acutely aware of the need to incorporate a high degree of security measures in the
gift certificate and train the participating merchants well so that they can recognize
counterfeit certificates. To this end, NSC has researched and discussed the gift certificate
security with qualified professionals and will implement above-average security features
within the certificate to deter counterfeiting. In addition, NSC will provide merchants with
good training, a quick reference chart for POS terminals, and access to a 24/7 toll free
number for merchant support and questions on the certificate.
NSC Protection
It is important that NSC look at this new product as a potential $100 million currency. It
requires NSC looking at creative ways to protect the NSC brand and institution. That is
why NSC must establish a separate company, owned by NSC, chartered in a state with
the right escheatment laws (strong laws around supporting banks and gift certificates,
allowing float, breakage to flow to the issuing company).
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Appendix 4
Process Flow
NSC
Merchant
Scrip Coordinator/
NPO
Supporter
Merchant BankNSC's Bank
Check Supplier
Sells Gift
Certificate
stock
Sells Universal
Gift Certificates
at Discount
Sells Universal
Gift Certificates
at Face Value
Cashes Universal
Gift Certifcate at
Face Value
Deposits Universal
Gift Certificate
Settles for UGC
Check Amount
(Federal Reserve)
Decriments
Bank Account
for Check Amount
Deposits Funds
From UGC Sales
To Coordinators
Sends Monthly
Reconciliation for
Transaction Commission
Deposits
Transaction
Commission
(Federal Reserve)
Provides Data on
Where UGC was
Cashed
Sends ACH
Request for
Transaction
Commission
Sells Direct to
Supporter Via
Inernet Site
Reimburses Direct-to-
Supporter margin
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Appendix 5
NSC Sales/Margins
Sales Level
Average Float & Breakage Margin
4% 6% 8% 10%
$ 2,000,000 $ 80,000 $ 120,000 $ 160,000 $ 200,000
$ 5,000,000 $ 200,000 $ 300,000 $ 400,000 $ 500,000
$ 10,000,000 $ 400,000 $ 600,000 $ 800,000 $ 1,000,000
$ 25,000,000 $ 1,000,000 $ 1,500,000 $ 2,000,000 $ 2,500,000
$ 50,000,000 $ 2,000,000 $ 3,000,000 $ 4,000,000 $ 5,000,000
$ 75,000,000 $ 3,000,000 $ 4,500,000 $ 6,000,000 $ 7,500,000
$ 100,000,000 $ 4,000,000 $ 6,000,000 $ 8,000,000 $ 10,000,000
Sales Level
Average Merchant Discount
3% 5% 7% 9%
$ 2,000,000 $ 60,000 $ 100,000 $ 140,000 $ 180,000
$ 5,000,000 $ 150,000 $ 250,000 $ 350,000 $ 450,000
$ 10,000,000 $ 300,000 $ 500,000 $ 700,000 $ 900,000
$ 25,000,000 $ 750,000 $ 1,250,000 $ 1,750,000 $ 2,250,000
$ 50,000,000 $ 1,500,000 $ 2,500,000 $ 3,500,000 $ 4,500,000
$ 75,000,000 $ 2,250,000 $ 3,750,000 $ 5,250,000 $ 6,750,000
$ 100,000,000 $ 3,000,000 $ 5,000,000 $ 7,000,000 $ 9,000,000
Conservative Sales/Margin Estimate
Annual Sales
Float &
Breakage
Margin - 4%
Merchant
Discount - 3% Net Margin
Year 1 $ 2,000,000 $ 80,000 $ 60,000 $ 140,000
Year 2 $ 10,000,000 $ 400,000 $ 300,000 $ 700,000
Year 3 $ 25,000,000 $ 1,000,000 $ 750,000 $ 1,750,000
Optimistic Sales/Margin Estimate
Annual Sales
Float &
Breakage
Margin - 8%
Merchant
Discount - 9% Net Margin
Year 1 $ 10,000,000 $ 800,000 $ 900,000 $ 1,700,000
Year 2 $ 50,000,000 $ 4,000,000 $ 4,500,000 $ 8,500,000
Year 3 $ 80,000,000 $ 6,400,000 $ 7,200,000 $ 13,600,000
20

Appendix 6
Early Concept Designs
21

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