Immediate payment schemes Best practices, economic and technological aspects March, 2016

Reference geography & Sales Coverage Country coverage: 20+ countries REFERENCES Additional sales coverage Hungary Georgia Russia Montenegro Croatia Malta Algeria Ethiopia Bulgaria United Kingdom Ukraine Poland Romania Austria Azerbaijan Belarus Moldova Serbia Slovenia Slovakia Czech Republic Kazakhstan 2 3

UK Faster Payments: Majority of banks + Central Infrastructure ACI global presence in the world of instant payments UK UK Faster Payments: Majority of banks + Central Infrastructure USA Other regions In discussions Singapore FAST (G3) Packaged Gateway solution for banks Australia NPP Building packaged solution for banks (Westpac) Italy Central infrastructure for real-time payment initiative Netherlands Discussions with large processor and banks Europe Az ACI rendszerei rengetek piaci szereplőnél vannak jelen és a szabályozó oldalon is aktív szerepet vállal a leghatékonyabb, nemzeti és globális kártyás és azonnali fizetési technológiák kialakításában. Az ACI technológiáit a Capsys évek óta implementálja, támogatja Magyarországon és Közép-Kelet Európa egyéb országaiban. 20022 RTPG Canada, Spain, Saudi Arabia, Portugal, France, Belgium: In discussions 6

Real-time payment systems are present around the globe 47 countries around the world are currently running, deploying or exploring an Immediate Payments scheme RUNNING Japan Switzerland Taiwan Iceland South Korea Brazil Mexico South Africa UK Chile India China Nigeria Poland Sweden Turkey Singapore Denmark PLANNING / BUILDING Australia USA Canada Colombia Finland Indonesia Thailand Netherlands Hong-Kong New-Zealand Turkey Hungary Belarus EXPLORING Eurozone Source: SWIFT, https://ctmfile.com/faster-payments-revolution-is-uk-is-being-driven-by-the-smes.-finance-direc#.Vky5EL_cBAh

Automated Clearing House Real-Time Gross Settlement Payment systems comparison Immediate payment does matter ACH Automated Clearing House for batched low-value high-volume payments RTGS Real-Time Gross Settlement for high-value low-volume payments IMMEDIATE PAYMENTS take the best elements from both SPEED OF FUND MOVEMENT* Typically 1-3 days Real-time Real-time for consumers INFORMATION AND CERTAINTY Limited information for either party Rapid confirmation Immediate notification, risk of returned payments eliminated COST EFFECTIVENESS Low cost or free for the customer Expensive for both customer and bank Customer: cheap or free Bank: cheaper that RTGS, more expensive than ACH *funds to be credited to the beneficiary’s account

public transport applications: What is immediate payments? The industry does not have one a single definition ”The fundamental requirement is the ability to move money from one account to another immediately, with certainty, convenience and at low cost to all stakeholders.” (Accenture) Purely electronic payment infrastructure with 24x7x365 service availability into which 24x7x365 Benchmark based on public transport applications: 400ms accepted maximum to allow a gate flow of 35 people per minute funds are transferred irrevocably from one bank account to another and where FINAL the originator and receiver of payments have immediate confirmation of the status of the transaction in one minute or less and CERTAIN the payee has instant availability of the funds where these parameters are INSTANT neutral to underlying payment instrument and neutral to underlying arrangements for clearing and settlement NEUTRAL ”Speed seems to get all the attention in the emerging interbank payment systems, yet creating end customer value should matter most.” (Warren Gardiner, FIS) Parameters defined by ERPB, Accenture, ACI

Clearing – settlement – confirmation times Posting of funds to the beneficiary’s account so he/she can use the funds Occurs between banks giving the receiving institution irrevocable access to the funds TRANSACTION ACH SYSTEMS authorization 1. settlement 2. clearing confirmation of payer confirmation of payee TRANSACTION REAL-TIME SYSTEMS 1. clearing +confirmation of both parties 2. settlement OR settlement Individual settlement on gross basis Deferred net settlement in settlement cycles during the day

Immediate Payments Scheme CUSTOMER (PAYER) SENDING BANK IP SERVICE PROVIDER RECEIVING BANK CUSTOMER (PAYEE) 1. 2. 3. 4. T + F E W S C O N D Initiates payment instruction Authorization Validates payment Authorises payment 7. 6. 5. Confirms payment Receives notification of successful payment Confirms receipt and credits payee’s account Receives notification Receives notification Transaction cannot be cancelled Settlement based on settlement times

PAYMENTS AND TRANSFERS Payment systems I N O V A T ORS INFRASTRUCTURE IG2 ACH BIR RTGS GIRO VIBER PAYMENTS AND TRANSFERS IMMEDIATE PAYMENTS CARD PAYMENTS

Any-to-any type payments with multiple use cases Immediate settlement of on-the-spot/online purchase Joint bill payment Emergency fund transfer for immediate use Pocket money P 2 P Point-of-sale purchase On-the-spot payment for services POS payment with mobile device Immediate advance payment Online purchase with real-time delivery Urgent/last minute purchase/payment Urgent compensation payout Day-workers’ wage payment Reimbursement of a returned good Payment error correction P 2 B B 2 P 2 B B Just-in-time invoice payments Same-day/short-term transfers Immediate advance payment Immediate shipment following payment receipt On-the-spot payment / pay-on-delivery Invoice/bill, tax, penalty payment

Take-up rates vary depending on regulatory mandate and pricing Adoption (% of credit transfer / direct debit volume vs total) RAPID ADOPTION PATH driven by Central Bank / Regulatory mandate and Low pricing TYPICAL ADOPTION PATH SLOW ADOPTION PATH Poland, South Africa, India, Brazil: low participation of banks India: overly complex user experience Time in existence (years) Source: SWIFT