Iculsys Pre Paid Debit The Payment Solution For The Future

Prepaid Debit The Payment Solution For The Future March 2008

Topics of Discussion
What is a Prepaid Debit Card?
How does it work?
Why would your members want one?
Who is offering them?

Topics of Discussion
Why should you care?
What’s available to you?
What do you need to know to offer them?

Prepaid is a Debit CATEGORY
Account or Card is PRE Funded
Transactions are authorized and posted
against the Card Balance, NOT a DDA or Checking Account
*Stored Value – Europe – Rest of the world VALUE is on PLASTIC not Card Account
What is a Prepaid Debit Card?

Non Reloadable - Typically Instant Issued
Gift – One Time Usage
Closed Loop and Open Loop – Branded
Reloadable – Typically Personalized
Multiple Use – Ongoing Relationship
Open Loop – Branded
Card Categories

Reloadable: Segment Market
General Purpose Cards
Everyday Spending
Travel Cards
Alternative to Travel Cheques
Payroll Cards
Provides alternative to traditional payroll
Set up and managed by company’s FI
Saves money over traditional means
Family / TEEN Cards
Parental Control and Monitoring

Prepaid Debit Overall
The 3 rd Evolution of the Card Payment Business:
Credit - Pay Later
Debit - Pay Now
Prepaid - Pay Before
The fastest growing payment form in 20yrs!

Prepaid Debit - Mainstream
2007 Year End Estimates
Greater than 7 Billion Transactions
Over $175 Billion Dollars Spent
Prepaid revenues for Visa/MasterCard will exceed $1.35 billion by 2010 – largest payment segment
Overall Awareness of Product – 75% with a greater than 90% satisfaction ratio.
* Network Branded Prepaid Card Association
* Edgar, Dunn & Company 9/07

Easy to understand and use for Consumers
Accepted and works like a reg Debit Card
Funds can be accessed via ATM, PIN POS
and Signature Channels – VISA / MC
Cardholder determines spending limits
How much to put on and when
Cards can be re-loaded as needed
Improved Budgeting and Control
Benefits of Prepaid

Benefits of Prepaid
Convenience
Control
Security
Privacy

PLASTIC IS KING!!

Marketplace – Who is offering?
Green Dot
H&R Block
Retailers:
Wal-Mart
Target
Credit Card Issuers – Capital One

GREEN DOT
First ever Prepaid cards sold at neighborhood retailers with worldwide MasterCard ® Debit or Visa ® Debit and ATM acceptance
Green Dot - Everyday
Green Dot - Uso Diaro (customized for Spanish-speaking customers)
Green Dot - Student

GREEN DOT
Costly for Consumers
$9.95 avg Retail
$2.50 - $4.95 avg Load Fee
$2.50 ATM w/d
$4.95 Monthly Maintenance
Avg Annual Cost to Cardholder: $210 per Card
* Initial cost NOT included – Estimated 2 loads per month @ $2.50 + 3 ATM w/d a month

H&R Block - Emerald Savings TM
Prepaid MasterCard
Available to tax clients only
Tax Refund automatically loaded onto card
Can accept direct deposits
Can be re-loaded via Money Gram, Green Dot, Western Union
Fees Vary
Additional Savings & IRA Accounts offered

Wal-Mart and Target
2 of the 5 largest Retailers on the band wagon!
Collectively : $150 Billion in Annual Revenues
Prepaid “Debit” Cards Cross Sold at check out
Immediate discounts apply
Additional Savings for future purchases
Accepts Direct Deposits
NO NEED TO OPEN NEW CHECKING
Moving toward - Decoupled: Transactions ACHed to FI

Capital One – Decoupled Cards
No need to open NEW checking or move Direct Deposit
Debit Transactions are ACHed to Cardholder’s checking account daily
Typically Pre-Approved
Automatic offers to Credit Cardholders

IMPACT TO CREDIT UNIONS
Loss of Debit Interchange Income
Loss of Deposits - Deposit Income
Loss and Erosion of Checking Account Base and PFI Relationships

Ignoring Prepaid Debit:
The biggest threat our Industry has seen to date:
18.8% of CU’s Non-Interest Income comes from Debit Interchange
Total Non Interest Income 2 nd qtr 2007
$4.8 Billion
*Callahan’s 2007 Non-Interest Income Survey

John F Kennedy, April 12, 1959
The Chinese use two brush strokes to write the word “CRISIS”. One brush stroke stands for DANGER; the other OPPORTUNITY.
In a crisis, be aware of the danger – but recognize the opportunity.

Deciding WHAT to offer
Convenience Services: Not a Main Product
Gift Cards
Travel Cards
General Purpose: Main Product
New Markets – Unbanked, Niche Markets
Growth in current products
Supports Credit and Debit
Maintains current DDS Base and Direct Deposits

Deciding WHAT to offer
CUSTOM Programs
CU Manages Program- Plastics, load sites, CS
CU Assumes All Risk – Fraud, Overages, etc..
CU Earns All Income – purchase, loads, breakage
Agency Programs
CU Partners with Proven Provider
No Risk – No Liability
CU Earns Partial Income – purchase, monthly fees,etc

CU MONEY – Everyday Money
$500 Implementation Fee – Waived thru 3/31
Price to CU: $2.00
CU Sets Price to Member - $3.95 to $5.95 avg
CU Monthly Support Fee: $50 – Waived 1 st 6 months
CU Earns $.50 per active card
FREE Internet Site
4 FREE Monthly Customer Service Calls
Unlimited Loads
Loads and Monthly Fees to Members significantly lower than competition
CU can customize with their LOGO

CU MONEY – VISA Travel Money
$500 Implementation Fee – Waiver Extended thru 3/31
Price to CU: $2.00
CU Sets Price to Member - $3.95 to $7.95 avg
No Monthly Fees for CU
No inactivity fee for 1 st 11 months for member
FREE Travel Enhancements
FREE Internet Site
4 FREE Monthly Customer Service Calls
Loads and Foreign Currency Exchange Rate to Members significantly lower than competition
CU can customize with their LOGO

CU MONEY – Gift Cards
NO START UP COST
Price to CU: $1.25
CU Sets Price to Member - $2.50 - $3.50 avg
Unlimited Website and VRU access
One Time Use – NO RELOADs
NO ATM Access

CU MONEY – 2008 Additions
Payroll Card
Family Card

CU MONEY Prepaid Debits
For Convenience
For Service
For Growth
For your Future………………….

Prepaid Debit A Cost Affordable, RISK FREE Solution For Credit Unions!!

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Iculsys Pre Paid Debit The Payment Solution For The Future

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