2. | 02/06/2015 | 1 © worldpay limited www.worldpay.com Company Confidential Secure Payment Systems Jose Saavedra Senior Partner Development Manager

3. | 02/06/2015 | 2 © worldpay limited www.worldpay.com Company Confidential Objectives  To raise awareness of the online payment industry  To look at barriers to online trading  To obtain a better understanding of WorldPay  To explore the issue of ‘Fraud’

4. | 02/06/2015 | 3 © worldpay limited www.worldpay.com Company Confidential The Card Industry Explained

5. | 02/06/2015 | 4 © worldpay limited www.worldpay.com Company Confidential The Card Industry Explained The Key Players Cardholder – consumer / shopper Card Schemes – Visa, MasterCard, American Express… Card Issuers – Barclaycard, MBNA Merchant – retailer, e-tailer or service provider Acquirer provider of Merchant Account and terminal / card authorisation & settlement to the retailer

6. | 02/06/2015 | 5 © worldpay limited www.worldpay.com Company Confidential The Card Industry Explained In the online world: Acquirers provide Internet Merchant Accounts PSP – Payment Service Provider, they interface between the merchant to the bank acquirers / card schemes WorldPay is unique as it offers both the Bank Acquired and PSP function ……and lots more

7. | 02/06/2015 | 6 © worldpay limited www.worldpay.com Company Confidential Internet CARDHOLDER PSP - Payment Gateway MERCHANT VisaNet Internet MCNet Cardholder (shopper) Retailer (merchant) Settlement

8. | 02/06/2015 | 7 © worldpay limited www.worldpay.com Company Confidential Who Charges What? The Card Scheme will charge the Acquirers for using their network / system. The Card Issuers will charge the Card Acquirers each time one of their cards is used. The above fees are know as INTERCHANGE and Internet Based Transaction typically carry a higher premium than POS and Mail Order Telephone Order The Acquirer charges the Merchant a processing fee – typically a % for credit card and fixed fee for debit cards The PSP will charge an additional processing fee

9. | 02/06/2015 | 8 © worldpay limited www.worldpay.com Company Confidential Who Is Liable? Whilst an transaction is authorised it does not guarantee payment Today the merchant is ultimately liable if there is a fraudulent transaction However this is changing - more on fraud later!

10. | 02/06/2015 | 9 © worldpay limited www.worldpay.com Company Confidential Any questions?

11. | 02/06/2015 | 10 © worldpay limited www.worldpay.com Company Confidential WorldPay Overview

12. | 02/06/2015 | 11 © worldpay limited www.worldpay.com Company Confidential  Both the Acquirer and PSP……and much more  Global payment aggregator  Originally established in 1993  Wholly owned Subsidiary of RBoS  Global Presence - Offices in Cambridge, Virginia (USA), Singapore, South Africa & Germany  Over 18,000 customers in over 100 countries  1300 partners in over 50 countries  ~250 employees  Leading EMEA online payment provider Who are we?

13. | 02/06/2015 | 12 © worldpay limited www.worldpay.com Company Confidential Jon Prideaux, Executive Vice President, Visa said: “The benefits 3-D Secure offers our cardholders and e-businesses will drive adoption and increase e-commerce revenues. Visa is delighted to be working together with WorldPay, the largest multi-currency payment aggregator in the world, to secure e-commerce globally for our cardholders” Quote from recent Visa Press Release

14. | 02/06/2015 | 13 © worldpay limited www.worldpay.com Company Confidential WorldPay Customers & Partners

15. | 02/06/2015 | 14 © worldpay limited www.worldpay.com Company Confidential How The WorldPay System Works WorldPay (Payment Gateway) Bank / Card Schemes WWW Shopper Storefront Confirmation E-mail Receipt

16. | 02/06/2015 | 15 © worldpay limited www.worldpay.com Company Confidential What payment types can we process:  Visa, including Visa Purchasing Card  Visa Delta  MasterCard / Europay  American Express  Diners  Switch / Solo  Electron  Laser  ELV  Discover – Q4 2002  JCB - Q4 2002  Maestro – 400m debit cards – Q4 2002

17. | 02/06/2015 | 16 © worldpay limited www.worldpay.com Company Confidential Any questions?

18. | 02/06/2015 | 17 © worldpay limited www.worldpay.com Company Confidential The Perceived Barriers to trading online

19. | 02/06/2015 | 18 © worldpay limited www.worldpay.com Company Confidential Businesses have websites, what is holding them back from trading online?

20. | 02/06/2015 | 19 © worldpay limited www.worldpay.com Company Confidential Dot com gloom

21. | 02/06/2015 | 20 © worldpay limited www.worldpay.com Company Confidential  A few people got lucky, I wasn’t one of them or I wouldn’t be here today Dot com gloom  Businesses are taking a more commercial view  Confidence !!

22. | 02/06/2015 | 21 © worldpay limited www.worldpay.com Company Confidential Security

23. | 02/06/2015 | 22 © worldpay limited www.worldpay.com Company Confidential  There is still a perception that shoppers will have their card details captured from the Internet  The liability exposure  Complications of setting up secure servers However…. Security

24. | 02/06/2015 | 23 © worldpay limited www.worldpay.com Company Confidential  Credit card details are captured on our server  Trusting a brand  WorldPay is owned by the 2 nd Largest bank in Europe, with servers designed for running financial transactions  WorldPay uses a range of encryption techniques to keep transaction data secure Security

25. | 02/06/2015 | 24 © worldpay limited www.worldpay.com Company Confidential Internet Trading Accounts

26. | 02/06/2015 | 25 © worldpay limited www.worldpay.com Company Confidential Internet Trading Accounts  To trade online, you will need an Internet Trading Account.  Large established companies can go directly to their bank  Banks typically require 2 years trading history, audited accounts etc..  It can be a long, daunting process  Not good news for SME’s However…

27. | 02/06/2015 | 26 © worldpay limited www.worldpay.com Company Confidential WorldDirect WorldPay has developed an alternative model - WorldDirect  WorldPay can take on businesses with no trading history or audited accounts  Customers get an instant decision via an online application form - customer can have an account in as little as 48 hours  Once the customers are ready to go live, they complete an online form  Bank tests and QA take a day then the site goes live  WorldPay accepts over 90% of applications

28. | 02/06/2015 | 27 © worldpay limited www.worldpay.com Company Confidential Complication Is the invention more complex than the problem merits?

29. | 02/06/2015 | 28 © worldpay limited www.worldpay.com Company Confidential  Setting up an online store used to require a high level of technical ability and tools were not readily available to help  eCommerce sites were written from scratch and the customer would find it difficult to make changes to the site  As an SME with a small budget, £30,000 to test eCommerce was simply not viable However… Complication

30. | 02/06/2015 | 29 © worldpay limited www.worldpay.com Company Confidential  This changed as storebuilding software came into the market  WorldPay has plug-ins for most of the leading storefronts  WorldPay also has a range of integration tools Complication

31. | 02/06/2015 | 30 © worldpay limited www.worldpay.com Company Confidential Knowledge Base

32. | 02/06/2015 | 31 © worldpay limited www.worldpay.com Company Confidential Customer Management System

33. | 02/06/2015 | 32 © worldpay limited www.worldpay.com Company Confidential Online Statement

34. | 02/06/2015 | 33 © worldpay limited www.worldpay.com Company Confidential Online Statement – Refunds Refunds

35. | 02/06/2015 | 34 © worldpay limited www.worldpay.com Company Confidential Offline orders

36. | 02/06/2015 | 35 © worldpay limited www.worldpay.com Company Confidential What do I do with offline orders?  WorldPay developed a Virtual Terminal (WorldAccess) to save the merchant from having to run a swipe machine in parallel.  Allows your customers to take offline orders and process through a single account through WorldPay  Ideal for fax / telephone orders  All that is needed is a browser and a username and password  Gives the customer a complete credit / debit card processing facility

37. | 02/06/2015 | 36 © worldpay limited www.worldpay.com Company Confidential

38. | 02/06/2015 | 37 © worldpay limited www.worldpay.com Company Confidential

39. | 02/06/2015 | 38 © worldpay limited www.worldpay.com Company Confidential Ongoing payments / Subscriptions

40. | 02/06/2015 | 39 © worldpay limited www.worldpay.com Company Confidential How can I process ongoing transactions? FuturePay  For customers that require regular subscription services.  Facilitates online Standing Orders and Direct Debits  Useful for billing customers for ‘bundled’ services

41. | 02/06/2015 | 40 © worldpay limited www.worldpay.com Company Confidential

42. | 02/06/2015 | 41 © worldpay limited www.worldpay.com Company Confidential Pricing  Opportunity cost of not offering eCommerce  The costs of setting up online have reduced dramatically over the last 5 years  People think taking online payments is expensive  More expensive to pay somebody to take sales over the phone!!

43. | 02/06/2015 | 42 © worldpay limited www.worldpay.com Company Confidential Pricing WorldDirect Customers  £75 setup fee + £150 annual fee  4.5% service transaction charge. (Includes bank charges)  50p UK debit card charge Bank Acquired Customers  Max of 1.6% service transaction charge (+ Bank charges)  25p UK debit card charge (+ Bank charges)  Other flexible pricing models available dependent on turnover WorldAccess- £75 setup fee FuturePay- £100 setup fee

44. | 02/06/2015 | 43 © worldpay limited www.worldpay.com Company Confidential Promotion

45. | 02/06/2015 | 44 © worldpay limited www.worldpay.com Company Confidential Promotion  The build it and they will come syndrome  Reality is very different….  How can merchants promote themselves?

46. | 02/06/2015 | 45 © worldpay limited www.worldpay.com Company Confidential

47. | 02/06/2015 | 46 © worldpay limited www.worldpay.com Company Confidential WorldPay Shopping Mall

48. | 02/06/2015 | 47 © worldpay limited www.worldpay.com Company Confidential Questions?

49. | 02/06/2015 | 48 © worldpay limited www.worldpay.com Company Confidential Fraud

50. | 02/06/2015 | 49 © worldpay limited www.worldpay.com Company Confidential The impact of fraud Financial loss – ‘Chargebacks’ The Shopper disputes a transaction on their statement with their Card issuer Issuer asks the Merchant to prove they fulfilled the transaction If the merchant can’t do this, the amount is returned – “Charged back”- to the Shopper’s account Chargebacks occur for several months after a transaction (up to 6 months) The fraudster’s got the goods, the shopper has their money back… The merchant is left out of pocket! What can be done?

51. | 02/06/2015 | 50 © worldpay limited www.worldpay.com Company Confidential Card Issuers Checks Funds – check that there are funds in the account to cover the transaction Expiry Date – check that the Card hasn’t expired Hot Card – check that the Card isn’t reported lost or stolen

52. | 02/06/2015 | 51 © worldpay limited www.worldpay.com Company Confidential Card Issuers Checks – Security Code Checks the Security Code number entered by the shopper, with the number held by the Issuer The 3 or 4 digit number is usually printed either on the white signature strip, or on the front face of the card or both Not embossed on the card Not encoded in the magnetic strip Helps ensure physical possession of the card Support is mandated in the UK

53. | 02/06/2015 | 52 © worldpay limited www.worldpay.com Company Confidential Card Issuers Checks – Address Verification Compares the billing address with Issuers records Support mandated in the UK Simple but powerful

54. | 02/06/2015 | 53 © worldpay limited www.worldpay.com Company Confidential Card Issuers Checks Authorisation result, AVS and Security Code results returned in real time “An authorisation is not a guarantee of a good transaction and/or subsequent payment to the Merchant”

55. | 02/06/2015 | 54 © worldpay limited www.worldpay.com Company Confidential WorldPay Automated Checks LUHN Check – check the format of the Card number is valid Billing / Issue Country mismatch – Checks the country of the billing address entered by the shopper, with the Card issue country WorldPay’s Hot Card list – check that the Card is not reported lost or stolen Security code and AVS – data supplied to the Issuer

56. | 02/06/2015 | 55 © worldpay limited www.worldpay.com Company Confidential WorldPay WorldAlert Developed by WorldPay Automatically scans all transactions Checks for one off indicators and patterns of shopper activity Issues automatic real-time Alerts to Merchants Caution indicates increased risk Warning indicates high likelihood of fraud Includes the Merchant “Configurator” interface to control blocking of Email addresses & Domains IP Addresses and ranges Shopper names

57. | 02/06/2015 | 56 © worldpay limited www.worldpay.com Company Confidential WorldPay WorldAlert

58. | 02/06/2015 | 57 © worldpay limited www.worldpay.com Company Confidential WorldPay Transaction Engine Acquirer WorldAlert Auth RespAuth Req Issuer LUHN Check? Trans DataAuth Req Funds?AVS/Sec Code Auth Resp Merchant Site Hot Card? WorldAlert Warning? Auth Resp Blocks? Expired ? Country? Security Flow

59. | 02/06/2015 | 58 © worldpay limited www.worldpay.com Company Confidential Verified by Visa (3D Secure) Cardholder identity authentication process Shopper asked to enter a pin on payment page Merchant will then not be liable for fraudulent transactions Liability Shift Available Q1 2003 Mastercard and Amex to follow

60. | 02/06/2015 | 59 © worldpay limited www.worldpay.com Company Confidential WorldPay Deferred Processing Set-up for Merchants on request Defers processing the transaction for up to 5 days following the Authorisation Transactions accepted manually using the Customer Management System or allowed to lapse Allows time for additional checks Prevents unnecessary refunds

61. | 02/06/2015 | 60 © worldpay limited www.worldpay.com Company Confidential Issuer’s Anti-fraud Systems Issuers, Banks, Building Societies etc. operate their own systems They will often check with their customers if they see unusual activity

62. | 02/06/2015 | 61 © worldpay limited www.worldpay.com Company Confidential WorldPay Anti-fraud Team Monitors regular output from WorldAlert Employs search features of WorldAlert to investigate in more detail Fine-tunes WorldAlert Parameters and thresholds Provides information to law enforcement agencies

63. | 02/06/2015 | 62 © worldpay limited www.worldpay.com Company Confidential WorldPay Guarantee WorldAlert 3D Secure SPA Pre Auth AVS Security Code Real Time Auth, Issuers Systems The Onion The Layered Approach

64. | 02/06/2015 | 63 © worldpay limited www.worldpay.com Company Confidential Questions? jose.saavedra@worldpay.com 0870 742 7000