1. 1 By: The Benefits of PayCards in the Payroll Department 100% DIRECT DEPOSIT:

2. 2 Market Growth and Size- Underserved Segment Regulatory changes 2009, 2010, and 2011 Environmental Impact of Electronic Payroll Paycards Reasons Why PayCards Don’t Achieve Company Goals Agenda

3. 3 PREPAID MARKET SIZE

4. 4 The US maintains dominance through 2017

5. 5 Prepaid market segmented by macro-verticals with highlighted applications and 2017 projected GDV Prepaid categorized into four macro-verticals $84B $162B$196B Source: “BCG Prepaid Market Sizing Study”, May 2010. Research commissioned by MasterCard.

6. 6 Corporate payroll adoption to reduce paper check processing costs is a key growth driver Many federal and state government programs are pursuing conversion to electronic payments and are expected to phase out paper altogether High unbanked and underbanked population expected to drive general purpose prepaid growth 2017 projected volumes show significant growth over current GDV Source: “BCG Prepaid Market Sizing Study”, May 2010. Research commissioned by MasterCard. 2009 – 2017 Estimated Open Loop Volume (Billions)

7. 7 Payroll dominates the commercial segment General use is expected to have the largest potential in the consumer vertical US Prepaid open loop expected to reach $442B Source: “BCG Prepaid Market Sizing Study”, May 2010. Research commissioned by MasterCard. 2017 Projected US Prepaid Open Loop by Vertical ($Billions)

8. 8 Underserved Segment There are 106 million underbanked people in the United States 40 million under banked households 106 million underbanked in the U.S. 50 million people lack a credit score

9. 9 REGULATION

10. 10 The Impact of the Dodd-Frank Financial Overhaul Law Banks Banks are expected to lose more than $6 billion in annual revenue as a result of the new rules, according to industry estimates. You/Consumer 1.Banks are loading fees onto customer accounts in an attempt to recover billions of dollars in revenue that will be lost from new restrictions on debit cards, credit cards and overdrafts. Most big banks have already eliminated free checking for customers who don't meet certain criteria on their accounts, such as minimum balances or a certain number of direct deposit transactions. 2.Bank of America has begun laying plans to charge millions of customers $5 a month if they use their debit cards to make purchases. SunTrust Banks Inc. Atlanta, is also tacking a $5 monthly fee on some debit-card users, while Regions Financial Corp. of Birmingham, Ala. is charging $4 a month on some accounts. Wells Fargo & Co. is testing a $3 monthly debit-card fee in five states. a.A person familiar with the matter has said the bank, which announced it will charge customers a monthly $5 debit card fee for purchases next year, said customers could avoid the fee if they maintain minimum balances, deposit paychecks directly, or use Bank of America credit cards, reported Reuters.

11. 11 3.The debit-card fees stem from a provision in last year's Dodd-Frank financial-overhaul law that reduced by roughly half the amount that banks are permitted to charge merchants for debit-card transactions. Merchants had long complained that they were being charged too much to accept debit cards, which are typically used instead of cash and checks. 4.Many banks will likely increase charges in other areas to make up the lost revenue but some banks said they will focus on winning over more customers and convincing them to sign up for more financial products. The Impact of the Dodd-Frank Financial Overhaul Law (cont.) Big Banks Blink on New Card Fees – The Wall Street Journal

12. 12 The days of free checking have ended. You may experience employees dropping direct deposit.

13. 13 On October 9, 2011, California Governor Jerry Brown vetoed S.B. 931, a bill that would have discouraged employers from offering paycards to employees because of the unnecessary and cost- prohibitive requirements it would have imposed on employers and paycard issuers. S.B. 931 would have required employers to provide free banking services to employees being paid by paycard – such as multiple free ATM transactions and multiple free calls to a live service agent – which is far beyond the requirements associated with any other payment method. The increased costs and administrative burdens would have discouraged the use of paycards because they would have outweighed the benefits the cards provide to employers, thereby denying the benefits to employees as well. Opposition to S.B. 931 from the APA and others went into high gear after the California legislature passed the bill on September 9. The Paycard Subcommittee of the APA's Government Affairs Task Force, working closely with paycard providers, credit agencies, and banks, urged the governor to veto the bill and continued to educate the public about the benefits of paycards and how S.B. 931 would discourage their use. American Payroll Association Victory! California Governor Vetoes Burdensome Paycard Bill CALIFORNIA VICTORY!!!!!

14. 14 In his veto message, Governor Brown said that he agrees with the bill's goal of containing costs for employees who receive their wages via paycards. "Unfortunately, this bill goes too far. It would impose numerous and costly new requirements on pay card providers. A likely result of these mandates is that banks and employers may simply stop offering this service, injuring the very workers this bill aims to protect." William Dunn, APA's Senior Manager of Government Relations, said "We're pleased with Governor Brown's stance on the bill, and we agree whole-heartedly with it. Consumer protections are an important aspect of all financial instruments, but those imposed by S.B. 931 would have made paycards virtually unusable. We look forward to working with the Governor and the California legislature on provisions that will protect consumers and allow employers and employees to enjoy the benefits of this pay method." American Payroll Association CALIFORNIA VICTORY!!!!!

15. 15 If SB 931 had been enacted it would have imposed a number of costly requirements and restrictions on payroll card programs. As the chart below illustrates, these requirements and restrictions go well beyond those imposed on any other permissible method of wage payment. SB 931 Would have Unnecessarily Encumbered the Use of Payroll Cards in California Restrictions imposed on Payment Methods

16. 16 In a recent study by the San Francisco Office of Financial Empowerment and the Corporation for Enterprise Development (CFED), low-income workers reported that their financial options improved as a result of electronic payment. Participates stated that payroll cards helped them prioritize their spending, allowed them to shop online, and helped them to save money.4 Accordingly to the report: Employees saw their financial options improve as a result of having electronic pay. … One older employee spoke strongly about his ability now to shop online and how this has opened up his life’s options, enabling him to take advantage of online savings, rent a car and book airline travel. He had such a positive experience with his payroll card that he had followed up with the issuing bank to open up a bank account and is accruing savings. Another participant spoke about spending less now as she doesn’t carry as much cash on her and keeps a balance on her paycard. There is no Justification for the Increased Payroll Card Restrictions

17. 17

18. 18 Corporate Sustainability Taking the paper out of payroll will contribute to corporate initiatives Exercise Corporate Responsibility with 100% Direct Deposit. Most major employers have corporate sustainability initiatives to: Reduce Energy Consumption Reduce Waste Reduce Paper Production Improve Environment Sustain Natural Resources

19. 19 1 Employee = Huge Savings By switching to Direct Deposit, an individual employee, paid every two weeks, can: Save a pound of paper per year Avoid the release of 4 gallons of wastewater into the environment Avoid the release of 1 pound of greenhouse gases into the atmosphere. This amount of greenhouse gases is the equivalent of: – 4 miles not driven in your car – ½ square foot of forest preserved

20. 20 What method do you use to deliver paychecks to your employees who are not in the same location where the payroll is processed? 2010 American Payroll Association Trendline Survey

21. 21 Consumer Electronics and Services that are a Necessity, by Age, May 2010

22. 22

23. 23 Cardholders can use everywhere debit cards are accepted including  Purchases  Bank branches for cash  ATM Cardholders are not required to be “Banked” customers A payroll card is a pre-paid debt card which employers can have their payroll directly deposited onto. It is not a credit card; it is a pre-paid debit card and requires no credit check or checking account. PayCard Definition

24. 24 Number of Employees 2010 American Payroll Association Trendline Survey

25. 25 States 2010 American Payroll Association Trendline Survey

26. 26 When do you plan to evaluate or implement paperless payroll? 2010 American Payroll Association Trendline Survey

27. 27 How many employees do you pay by paper check every pay period? 2010 American Payroll Association Trendline Survey

28. 28 What critical factors have prevented your company from implementing a paperless payroll system in the past? 2010 American Payroll Association Trendline Survey

29. 29 In your professional opinion, why do you believe your company’s employees may have stopped using traditional banking services? 2010 American Payroll Association Trendline Survey

30. 30 What concerns you the most about implementing a paperless payroll system? 2010 American Payroll Association Trendline Survey

31. 31 For the state(s) where your company pays employees, what are the laws governing electronic wage payment (i.e., direct deposit and paycards)? 2010 American Payroll Association Trendline Survey

32. 32 Visa PayChoice* Strategy Map

33. 33

34. 34 If you had the ability to utilize an Instant Fund Load, what would you use it for? 2010 American Payroll Association Trendline Survey

35. 35

36. 36 Hurdles to Successful Payroll Card Adoption and Enrollment Payroll Card

37. 37 Inadequate Employee Training A PayCard company without a STRONG client education and training system is WEAK. PayCard Providers must offer…  PayCard Education  Training on Use  An Employee Satisfaction guide PayCard programs with inadequate client training will have LOW satisfaction and program success will be MINIMAL. Client training is Critical!

38. 38 Overdrafts: What to look for? Some payroll debit cards can be overdrawn and the card programs charge “Overlimit or NSF fees” The primary reason the unbanked are unbanked is largely due to past exposure to and their desire to a void overdraft fees. Why put your employees back in the same position. If overdraft is possible – what is the opt-in process? Look for Instant Issue Branded-Visa, MasterCard, Discover: Be aware that some paycards offer an upgraded, embossed VISA or MasterCard branded card for a fee. The unbranded instant issue Card is simply an ATM card. This ATM only card brings into question an employee’s ability to gain access to their “pay to the penny”. Access to “pay to the penny” is a requirement in many states for a paycard to be legally compliant to the “letter” of the law. Reasons Why Paycards Don’t Achieve Company Goals

39. 39 Evaluate the Issuing Bank: The issuing bank is IMPORTANT!, You should evaluate if the relationship is new to the paycard provider. If it is new, why? Is it due to a Bank Failure? With the environment today, it is important to ask the question. Take Caution with a bank that has been through FDIC acquisition due to the FDIC Acquiring Bank being new to the prepaid business. This represents future risk to your cardholders and additional work for your company. Prepaid issuing banks are specialized and require depth of knowledge for BSA and AML program underwriting. Without experience or understanding the NEW bank may simply discontinue their participation in the card program. Don’t assume that a major bank houses the accounts and system – most outsource the entire system. Reasons Why Paycards Don’t Achieve Company Goals

40. 40 What is Card linking?: Historically lost and stolen cards can be a huge issue for a company with unbanked workers. o Not all paycard providers handle the process of lost or stolen card replacement the same way and they may inevitably lead to a negative cardholder experience. o Be aware that employees may not have access to all features of program with a PIN only replacement card, there may be a period of time without account access and transfer fees to bring over balances. Reasons Why Paycards Don’t Achieve Company Goals

41. 41 You want reports! Lots and lots of reports! Beware – the requested report may be a violation of the Gramm- Leach-Bliley Act. While there are many reports available to paycard clients, you don’t want to access to information on employee spend. o This is for one very important reason… The Account is Private and Owned by the Employee. Having access to this “spend” information puts your company and employees at risk. Select a paycard team that stays current with this dynamic area of regulation through participation in the Visa-sponsored Paycard Roundtable, which is a group focused on creating a legislative environment favorable to paycards and The Network Branded Prepaid Card Association’s (NBPCA) Government Relations Committee. Reasons Why Paycards Don’t Achieve Company Goals

42. 42 If you have any questions please contact rapid! PayCard: Brian Slowik Tampa FL 727.828.1635 Brian_Slowik@wrightexpress.com