1. Visa Confidential1 QPCA Update NSAA/NASC Joint Middle Management Conference Linda McGee Vice President Visa Commercial Solutions April 16-18 2007

2. Visa Confidential IRS Reporting and QPCA Briefing 2 Agenda Parameters of QPCA Program QPCA Timeline QPCA Benefits

3. Visa Confidential IRS Reporting and QPCA Briefing 3 Fundamentals of the QPCA Program QPCA relieves cardholders of certain IRS burdens and opens card programs to full benefits. –QPCA authorizes card brand companies to obtain and validate TIN on behalf of p-card customers. –QPCA assists cardholders in compiling other required IRS data –Provides a back-up withholding waiver when transacting with validated merchants. Only a Card Brand Company (Visa, MasterCard, American Express) can become a QPCA, NOT the Bank/Issuer. QPCA is still evolving. Awaiting IRS clarifications and release of the revised regulations. Currently, you should be doing exactly what you have always been doing to comply with 1099…until IRS approves QPCA applications.

4. Visa Confidential IRS Reporting and QPCA Briefing 4 What QPCA is Not QPCA does not create more Form 1099-MISC requirements or hurdles for purchasing card customers –Provides resources, clarity, and a framework to comply Nothing changes until a QPCA exists –The reporting requirements are the same –P-Card customers should currently do the same thing they have been to comply QPCA is NOT mandatory for either cardholders or the Card Associations

5. Visa Confidential IRS Reporting and QPCA Briefing 5 QPCA Definition Qualified Payment Card Agent (QPCA) is an IRS designation granted to payment card organizations which meet IRS Standards surrounding: Data Collection Validation Maintenance Distribution Affiliates, members, licensees (including Acquirers, Issuers, and Processors) assist the QPCA in meeting IRS requirements but are not the QPCA No timeframe for IRS to make determinations

6. Visa Confidential IRS Reporting and QPCA Briefing 6 Basic QPCA Duties Apply to IRS Notify Merchants about QPCA program Notify cardholder entities about QPCA program Process opt-out responses Do TIN Matching Send cardholder entitys Merchant data reports indicating qualified vs. non-qualified merchants Provide telephone number for merchant and cardholder entitys questions Respond to IRS audit requests

7. Visa Confidential IRS Reporting and QPCA Briefing 7 Basic Issuer & Acquirer Duties Issuer –QPCA on delivery of cardholder entitys notifications and merchant data reports –Notify new cardholder entities customers about QPCA program Acquirer –Coordinate with QPCA to notify merchants about QPCA program –Obtain merchant TINs and other required data elements –Notify new enrollees about QPCA program –Assign Merchant Category Codes (MCCs)

8. Visa Confidential IRS Reporting and QPCA Briefing 8 Basic Cardholder Entity Duties Opt out if so desire If participating / monitor merchant status through reports delivered by QPCA If notified of a non qualified merchant, solicit name/TIN within 2 months If unsuccessful in solicitation, either B/W on future transactions or stop doing business with that merchant You may choose to stop doing business with non qualified merchants. If continued to use a non-qualified merchant must B/W, take own money and deposit with IRS File Information returns annually (no change)

9. Visa Confidential IRS Reporting and QPCA Briefing 9 Basic Merchant Duties Provide name/TIN to Acquirer Opt out if unwilling to have QPCA validate TIN info

10. Visa Confidential IRS Reporting and QPCA Briefing 10 Backup Withholding Under QPCA Simplest way to state this rule is: –Companies under QPCA never have to B/W on P-Card transactions unless notified by QPCA that merchant is non qualified and two month solicitation period expires unsuccessfully.

11. Visa Confidential IRS Reporting and QPCA Briefing 11 QPCA Process & Timeline Submit Application Send out Merchant and Cardholder Entity notices (after release of revised IRS regulations) –Language prescribed by IRS –May be sent in annual agreement update or other mailing Wait 60 days (opt out period) TIN Matching until demonstrate sufficient reliabilitystandard not defined Receive Determination Letterno IRS timetable for approval – (QPCA Approval) Send Reports to Cardholder Entities (monthly or quarterly)

12. Visa Confidential IRS Reporting and QPCA Briefing 12 Cardholder Entity Reports QPCA must send reports to cardholder entities about merchant data including non-qualified merchant list Reports required no later than 4 months after transactions occur Visa will report on quarterly basis – quarterly report due one month after end of quarter

13. Visa Confidential IRS Reporting and QPCA Briefing 13 Cardholder Entity Receipt of Merchant Data Cardholder entity will receive and process merchant qualification reports Records data provided to use for year-end filing Solicit Non Qualified Merchants –Must do within 2 months of being notified –Solicitation must be done in accordance with current procedures If get TIN within 2 monthsgreat, continue to use merchant, no B/W needed If not, must either B/W or stop doing business with that merchant

14. Visa Confidential IRS Reporting and QPCA Briefing 14 QPCA – Cardholder Entity Benefits Provides grace period before any backup withholding required Most merchants not subject to B/W TIN matching will be done by Visa TIN solicitation requirements – minimal Receives status of merchants TIN qualification on Form 1099- MISC report Expanded penalty protection by relying on QPCAs data

15. Visa Confidential IRS Reporting and QPCA Briefing 15 Questions?