Supporting Lunch Voucher “evolution” from Paper to Electronic across Europe

Giuseppe Di Marco

epay Italy Managing Director

Prepaid Cards Summit

Rome, 13th of November 2009

2Euronet Countries of Operation

EFT

CORPORATE

PREPAIDMONEY

TRANSFER

Processing more than one billion transactions annually for customers

in 42 countries.

Euronet WorldwideBusiness Segments and Countries of Operation

3 3

Founded | 1994; listed on U.S. NASDAQ (EEFT) since 1997

Approximately 2,700 employees worldwide

Processed 1.4 billion transactions in 2008 for customers in 41 countries

FY 2008 Revenue: $1,046 million

Noted industry accolades: Ranked #4 on Forbes’ magazine’s 2008 list of the 25 Fastest-Growing Technology

Companies in the U.S.

Awarded ‘Merchant Acquirer of the Year’ at the Cards International Global Awards 2008

Ranked #28 on Forbes’ magazine’s 2007 list of 200 Best Small Companies

3

Euronet Overview

epay Division Overview epay

Is the largest prepaid payment network in the world for mobile top-up

Approximately 232,000 retail locations and 470,000 points of sale

Processed $11 Billion and 713 Million transactions in 2008 for prepaid products

The Euronet Worldwide Group

CARD CONNECTIONS

More than 150 Mobile Operators connected

More than 100 banks and financial institutions connected

OTHER CONNECTIONS

FINANCIAL CONNECTIONS MOBILE CONNECTIONS

RETAIL CONNECTIONS

DATA CENTERSWITH CONNECTIONS

TO 43 COUNTRIES

e-pay Division

Digital Content

220,000 Retailers

$9 Billion Sales

E Voucher

Customer pays retailer the value of the selected voucher.

Customer requests E Voucher.Retailer selects product type

and denomination.

Customer takes voucher.

Customer enters voucher details

via requested method (mobile handset or online).

Credit is applied to customers account.

EPoS terminal prints a voucherwith an active voucher number.

Stored Value Card

Customer selects product.

Customer requests activation of card at the point of sale.

Customer pays Retailer card value.Retailer activates card through EPoS terminal

and voucher number is activated and ready to use.

Customer enters card voucher number via user interface (mobile handset

or online). Credit is applied to customer’s account.

Card can now potentially be used as E Top-up card.

E Top-up / Wallet Load

Customer pays retailer top-up value.

The card is swiped / scanned through EPoS terminal.

Credit is applied to customer’s account. For example, airtime top-up is delivered

to consumer’s handset or their online account / wallet is credited with the amount.

Customer requests E Top-up and hands over their top-up card to retailer and requests amount to be added.E Top-up card is already linked to their account / wallet.

Customer is able to access credit immediately.

Today Lunch Voucher schema

Daily: the Employee pays the lunch with the voucher

4

6The issuer checks the delivery

~45 days later, the Retailer gets the money: the total facial value of the vouchers minus the commission %

7Employer

Employee Employer

3Monthly: delivers the vouchers to the Employees

5

Monthly: delivers the vouchers to the Issuers

1Monthly: requests and receives the Vouchers

2

Retailer

The Lunch Vouchers Business This paper based process can be changed in order to work electronically

It starts electronically: the Employers make the orders to the Issuers and pays

Then it ends electronically: the Retailers (finally) are paid by the Issuers

Vouchers Production Personalization Vouchers Delivery to the Employers

Vouchers distribution to the Employees

Collection & checking Vouchers delivered

to every Issuer

Payment delay due to mistakes and expired Vouchers

Accounting per Issuer

Vouchers acceptance

What is the real cost of a Paper Voucher? If we want to estimate the cost of a single Voucher we have to

consider as follow:

The Production

The Personalization

The Distribution

The Collection

The Balance checking

The Reporting

The Management of the expired Vouchers

How can we improve the efficiency and reduce the costs of the actual system?A simple solution:

Use Prepaid Cards to pay the Retailersinstead of using the Paper Lunch Vouchers

How can everything go digital? We can consider two different approaches:

Under the umbrella of a bank or of an e-Money Company: Create an Open Loop Cards Program where the value of the Vouchers

can be loaded together the rules to use the credit The issuer can use the available POS connected to an acquirers This approach changes completely the actual business schema!

Can be created an “ecosystem” with the following features: The Vouchers can be loaded into a prepaid Closed Loop Cards Program

in a standardized and shared way used by all participant Issuers Use an acceptance Country Wide Network that is able to accept,

recognize and manage the cards issued by all the Issuers This approach doesn’t change the actual business schema but will

eliminates all the hassle we have today

Going with the Closed Loop Cards Schema

The Retailer receives the money from the

Issuers

The Employee uses the Card to pay the

Lunch to the Retailer

The Retailer swipe the Card to complete the

transaction and manage the settlement

The Employer gives the single Card to its Employees

The Issuer gives the Cards and the system to load and control

the Cards to the Employers

The Issuer produces personalized Cards

How this can be done in a competitive market This “ecosystem” needs the foundation of a Trusted Third Party (TTP) in

order to manage the infrastructure and granting same access conditions to all the Issuers with a European network coverage

It is needed to manage a double option: The TTP provides to the Issuers a Closed Loop Management Platform The TTP manages the trx through a link with an existing Issuer Platform

It should be possible to link an existing POS network to the TTP infrastructure with a public protocol

Define a standard way to structure the Cards in order to: load and re-load the Vouchers Manage the rules Make the Cards accepted through the largest number of POS

The “must” of a Trusted Third PartyThe Trusted Third Party must guarantee:

A shared standard Cards Schema

A common interface with the Independent Retailers POS Terminals and with the Large Retailers Cash Registers infrastructures

Provide the highest possible system availability

Be able to reduce the costs of the actual physical system

Manage clearing, reporting and checking for the Issuers, the Employers and the Retailers

The “Chicken and Egg” problem If we want to kick off with this new idea we must solve a Chicken and

Egg problem:

Actual situation: at the moment there are no Cards containing the “Lunch Vouchers”

Are the Issuers going to “share the cost” of the new network infrastructure (25.000 – 50.000 POS)? Quite difficult

It is possible that, a Retailer, just for a service that will take time to be expanded will pay for a POS Terminal? Quite difficult

If we look at this picture we will not find a solution

Will the “Chicken and Egg” problem continue?

Please consider the environment

before continuing to print Lunch Vouchers!

Giuseppe Di Marcogdimarco@epayworldwide.com

Mobile: +39 335 7716461