1. The Sustained Expansion of Commercial Card Based Payments
Neil D. McHugh, CTP VP, Commercial Card Sales Manager TD Bank, America’s Most Convenient Bank January 26, 2011

2. Card Payment Solutions
Gift Cards
Reloadable Debit / Payroll Cards
Corporate Credit Cards
Charge Cards……

3. Card Payment Solutions
Charge Cards
Purchase Cards
Commercial Cards (“One Card”)
Purchasing / T&E / sometimes Fleet
Declining Balance
Ghost
Virtual – Single Use
All are Complementary Payment Solutions…

4. Market Trends Growth! Why? Sustained demand Trickle down effect
Ernst & Young
2010 Projections
Coin & Currency
+ 2%
Check Clearing
- 7%
ACH
+ 2.5%
P-Card
+ 8%
Growth!
Sustained demand
Trickle down effect
Why?
Shared value for all
Technology
Competition
Cost and risk mgt.
Comfort with cards

5. Commercial Card for Purchasing1 Commercial Card for T&E2
Market Trends
Commercial Card for Purchasing1
2005 – 2010
Annual spend in North America grew
from $110 billion to $176 billion
2010 – 2014
Projected annual spend growth of
nearly 10% annually to $255 billion
Commercial Card for T&E2
2004 – 2009
Annual spend in North America grew
from $120 billion to $140 billion
2009 – 2011
Projected annual spend growth of
nearly 7% annually to $159 billion
1 RPMG Research Corporation – 2010 Purchasing Card Benchmark Survey
2 RPMG Research Corporation – 2009 Travel Card Benchmark Survey

6. Leveraging Commercial Cards
Better articulating the business case
Drivers
Improve working capital
Increase DPO
Cost reduction / efficiency
How?
Involve all stakeholders
Incorporate in vendor contracts
Employee education
Enforce strategic usage
Support from senior management

7. Leveraging Commercial Cards
Integration in an overall payments strategy
Reduce / eliminate cash
Convert check / ACH transactions
Distributed vs. centralized/vendor card programs
Target specific vendor payments
Hybrid applications
Small $ Transactions Large $ Savings
Aggregate cost savings of $38 billion annually in North America
Average monthly spend per card of $2,060
Average number of monthly transactions per card is 7
Average Transaction amount of $315
RPMG Research Corporation – 2010 Purchasing Card Benchmark Survey

8. Leveraging Commercial Cards
Traditional Spend Categories
Expanding Spend Categories
MRO – Maintenance, Repair and Operations
Office Supplies
Computer Equipment
T&E
Professional Services
Advertising IT
Insurance
Telecommunications
Utilities
Other?...

9. Macro Environment Fostering Demand
CFO’s View of A/P: High Pressures for 2009
Aberdeen Group: February 2009

10. Macro Environment Fostering Demand
TD Bank – Corporate Finance Executive Survey
Ongoing Concerns
Nearly 70% of respondents said managing cash worries them the most
The most significant risk to cash flow will be non-performing A/R (21% of respondents)
Other financial challenges include interest rates (55%) and access to credit (52%)
Cautious Optimism
Over half (58%) expect sales to increase in 2011
Almost 40% of respondents expect capital investments to increase
Only 7% plan on reducing expenses in 2011
TD Bank: Survey of corporate finance executives of middle market companies - August 2010

11. Substantial Economic Benefits
Shared value
All participants benefit
More equal distribution

12. Substantial Economic Benefits
Buyer (cardholder) perspective
Elimination of the 3-way match
Reduced processing costs
Expedited payment cycle times
Streamlined internal processes
Payment controls
Enhanced reporting and spend visibility
Negotiate mutually beneficial trade terms
Improve working capital
Increased DPO – payment float
Revenue share – rebates

13. Substantial Economic Benefits
Supplier (merchant) perspective
Convenience
Reduce DSO
Receive prompt payment
Improve incoming cash flow
Eliminate costly paper remittances
Conduct a cost/benefit analysis

14. And the survey says… Commercial Card for Purchasing1
Reduce costs by 75% or $71 per purchase
Reduce payment cycle times by 72%
Eliminate PO and other payment/remittance docs
Commercial Card for T&E
Reduce costs by nearly 50% or $10 per purchase2
Improve discounts from travel vendors by 13%3
1 RPMG Research Corporation – 2010 Purchasing Card Benchmark Survey
2 RPMG Research Corporation – 2004 Travel Card Benchmark Survey
3 Visa and Deloitte & Touche T&E Card Study

15. And the consultant says…
Most Expensive
Manual process with check $59 per transaction
Least Expensive
Procurement Card $9 per transaction
Projected Savings
$50 per transaction
The Role of Procurement Cards in the Source-to-Settle Process (Accenture, June 2007)

16. Recent Developments Evolution towards automated payment integration
Single Use / Virtual Cards - “pull pay”
Straight-Through-Processing - “push pay”
EIPP – Electronic Invoice Presentment and Payment
Integrated outsourced payables (check, ACH, wire, card)
Regulatory Changes…

17. Recent Developments
Summary of changes to Federal IRS 1099 Requirements1
2010:
No change to existing reporting requirements
2011:
Relief - No reporting required for payment card transactions
Check transactions subject to the current rules
2012:
Expanded reporting for all transactions for check payments
Revised withholding regulations for federal/state/large local governments
Additional Resources:
Internal or External tax advisors
1 The above is intended to provide a summary of the recent changes. It is not legal or tax advice, or a complete examination of the IRS regulations. TD Bank does not make any warranty or representation as to the completeness or accuracy of this information or assume any responsibility that may result from reliance on such information. Please consult with your independent tax professionals where advice is required.

18. Thank You! Any Questions? Neil D. McHugh, CTP
VP, Commercial Card Sales Manager
Cash Management
TD Bank, America’s Most Convenient Bank
2070 Chain Bridge Road, Suite 135
Vienna, VA 22182
Phone:
Please visit for more information