Introducing Electronic Check Service Its Your Money Why

Introducing: Electronic Check Service It’s Your Money. . . Why Wait For It? Presented to:

Agenda § § § Market overview and opportunities Technology advances NOVA’s Electronic Check Service Competitive Comparison ECS Processing Solutions Summary 2

The Era of the Electronic Check § Checks account for approximately half of all consumer expenditures in the U. S. – Estimated 36 billion checks written annually § Retailers search for more efficient means to process checks – Paper handling and fraud § Electronic check conversion offers an incredible opportunity for retailers – Checks remain the largest non-cash form of payment at the POS 3

The Case for Conversion § Extensive handling by financial institutions and retailers makes paper expensive – 6 to 12 touches per check, on average § Check fraud and collected funds are costly for retailers and other businesses § Electronic checks offer reduced handling and risk – Result in big savings to the bottom-line 4

It’s Your Money…. . Why Wait for It? ECS Benefits to Retailers § Faster Access to Funds § Reduced Costs & Labor § Single Depository Bank Relationship § Minimized Risk § Improved Reporting 5

Sample Cost Savings Merchant Profile § Checks/Year § Number of Locations § Average Check Amt § Check Volume (%sales) 1, 091, 175 1, 795 $59 25% ECS Cost Savings § Costs Savings Total § Cost Savings/Check § Cost Savings (%) $2, 376, 872 $2. 18 63. 2% Data taken from actual merchant 6

Powerful Market Drivers § Electronic check market is proven – 1. 3 billion processed in 2003 § Visa estimates 14 billion paper checks still written at POS —enormous opportunity § Check 21 Act provides legal recognition of electronic checks § Opens door for electronic checks 7

Technology Advances Accelerate Move to Electronic Checks § Frequent MICR rejects and poor imaging quality hindered early acceptance of electronic checks § Recent advances in high-quality, image-capture technology have greatly increased the success rate for conversion at the POS § Quality images are essential for collection § Lower-cost storage and faster CPU speeds make it practical for retailers to store and access digital receipts 8

NOVA ECS Solution Offering 9

NOVA’s Electronic Check Service § Innovative product that supports full portfolio of flexible solution and service level options – Not a one-size-fits-all solution § Provided in partnership with leading financial institutions – Extension of services from bank partner, not third-party provider – Retailer gets one-stop solution for debit and credit cards, electronic check, consolidated statements and even online reporting – Can by integrated into Analysis System § Extensive image storage and reporting capabilities 10

Only NOVA ECS…. § Process any type of check – Consumer – Business / Corporate – Convenience § Presented any way – At the point of sale (POP) – Through the mail / drop box (ARC) § Through the appropriate “rail” – Direct DDA Access – ACH conversion – Check Replacement Document § With the proper risk mitigation / protection – Conversion with Guarantee – Conversion with Verification and Collections – Conversion with Verification – Conversion Only 11

Checks Supported with ECS § § Consumer checks Business Checks Corporate Checks Convenience Checks NOT Supported with ECS § Money orders § U. S. treasury checks § Cashier’s checks § Federal Reserve checks § Government Checks § Payroll checks § Third-party checks § Travelers checks 12

Point of Purchase (POP) Solution § Enables merchants to convert consumer check payments received in a face-to-face environment into electronic transactions – Consumer present/Check present – Online real-time or batch delivery § Utilizes combination of Visa’s POS Check network, the ACH network and Check Replacement Documents (CRDs) for presenting and clearing – Real-time access to more than 35 million accounts representing 30% of DDA’s nationwide with a potential for 90% of the DDAs in the U. S. 13

Accounts Receivable Conversion (ARC) Solution § ARC is used for check present/consumer absent transaction environments – receivable payments – mail order receivables – drop-box/lock-box environment § Customers are provided a notice explaining that checks will be processed electronically § Offer Consumer Opt Out Service with PC Solution § Utilizes the ACH network and Check Replacement Documents (CRD’s) presenting and clearing – Online real-time or batch delivery of transactions 14

CHECK CLEARING “RAILS” § Direct DDA (VISA POS Check): § § Consumer checks drawn on Visa POS participating banks are routed to their bank, ensuring that the funds are available. This reduces the risk typically associated with check acceptance. Real-time access to more than 35 million consumer accounts nationwide with access to over 30% of the DDAs in the U. S. ACH Network: Consumer checks drawn on non-participating banks are processed via ACH. The ACH network is a safe reliable system used by hundreds of thousands of companies for Direct Deposit of payroll and by the Federal government for benefits payments, such as Social Security. The ACH system is a closed, private network that is not accessible to the general public. Check Replacement Documents: Business, corporate and convenience checks are electronically captured and recreated as Check Replacement Documents. These CRD’s run through the traditional banking system in accordance with the Check Clearing Act for the 21 st Century, also known as “Check 21” legislation. 15

Direct DDA Market Share – August 05 Participating DDAs: g Up to 10% g 10% to 19% g 20% to 29% g ≥ 30% WA ME MT ND MN OR ID VT SD MI IL UT CO KS IN DC MD SC MS AK DE NC TN AR TX VA CT KY OK NM NJ OH WV MO HI AZ RI PA IA NE CA NY WI WY NV NH MA AL GA LA FL Source: Visa Member DDA Market Share Data 16

Direct DDA Access Banks Source: Visa U. S. A. POS Check Service Production Data – August 2005 17

ECS Service Level Options § Conversion with Guarantee – Checks are converted into electronic transactions and all funds are guaranteed – All paperwork is eliminated – no follow-up needed from merchants – The retailer assumes no risk for all qualified and approved transactions § Conversion with Verification – Checks are imaged and converted into electronic transactions – Routed for verification either through the participating Visa bank or through En. Circle for ACH submission – Retailer retains the risk of returned items for all transactions § Conversion with Verification and Collections – Offers all the advantages of conversion and verification, while eliminating the need for businesses to perform their own collection activity – Retailers retains the risk on returned items, but will have all monetary returned items automatically handled by En. Circle Collections after the first resubmission. 18

ECS Service Level Options (cont’d) § Conversion only – Checks are imaged and converted into electronic transactions, retailer performs own authorization – Retailer retains the risk of returned items for all transactions § ECS Custom Combination – “Custom-designed” risk programs are available, consisting of any combination of the above services, triggered by a predetermined dollar threshold. – Retailers retain the risk of loss on returned checks, depending upon the specific combination and dollar thresholds selected § NSF Service Fee Processing – All service levels except Conversion with Guarantee support the ability to electronically resubmit transactions that have been returned for nonsufficient funds, electronically collect an NSF service fee from the consumer’s account, and automatically fund the business’s account with these fees—eliminating the labor and lengthy time-to-collection of manual systems. – NSF Service fee not available with ARC. 19

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Competitive Comparison 21

NOVA ECS: The ONLY Flexible Solution Provider Service NOVA ECS with Guarantee ECS with Verification and Collections All in one processing check/credit/debit Funding in 24 -48 hours Consolidated reporting Business check acceptance and conversion ü ü ü Certegy ü Telecheck ü ü ü All at a Competitive Price! 22

NOVA ECS Tele. Check Paper Offers Guarantee Y Y Offers Verification Y On-line access to DDA account Electronic settlement Competitive Review Tele. Check ECA Certegy Paper Certegy Elec. Check Y Y N Y N Y Direct electronic collection placement Y N N Centralized proprietary Image Archive Y N N Merchant in-house Image Archive Y N N Offers consolidated reporting Y N N Provides detail transaction reporting Y Y Y Consolidated merchant card and check support Y N N One phone number to call for card and checks Y N N N N Service Levels Other Services Reporting Customer Service On-site merchant training option 23

ECS Processing Solutions 24

ECS Solution Options § Terminal/imaging solutions – – – Veri. Fone Omni 3730 LE, 3750 & 3750 IP Veri. Fone Omni 3200, 3210, 3200 SE & 3210 SE Hypercom T 7 Plus, T 7 PT & T 77 T Nurit 2085, 8320 & 8320 IP RDM 6000 i Imager § PC-based software solutions – via. WARP with Magtek Imager/MSR § Integrated POS solutions – IBM imager & IBM ACE software – Epson imager – VAR interface solutions 25

ECS Image Management Solutions § POS Image Capture § Image Batch Archival, Retrieval and Reporting – – Remote batch submission timing Local batch capture option Participating and Non-Participating Items Retrieval with reported transaction data 26

En. Quire - Items Reporting Return Detail: Store, MICR data, lane, status, ACH date, tracking, ACH history Return Queries: Look for patterns of specific checks, export to spreadsheet or database and get data ready for collections Images: Stored securely on Payment Archive 27

Questions & Answers Thank You! 28