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

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

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…

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

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

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

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

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?...

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

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

Substantial Economic Benefits Shared value All participants benefit More equal distribution

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

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

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 -2002 T&E Card Study

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)

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…

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 www.irs.gov www.napcp.org 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.

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: 703-663-4389 Email: neil.mchugh@yesbank.com Please visit www.tdbank.com for more information