The document discusses prepaid debit cards as an emerging payment method and opportunity for credit unions. Prepaid debit cards work like debit cards but are pre-funded by the user. They provide benefits like convenience, control, and security compared to traditional checking accounts. The document outlines prepaid card categories and providers, as well as opportunities and options for credit unions to offer prepaid debit cards themselves.

1. Prepaid Debit The Payment Solution For The Future March 2008

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

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

4. 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?

5. 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

6. 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

7. 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!

8. 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

9. 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

10. Benefits of Prepaid Convenience Control Security Privacy

11. PLASTIC IS KING!!

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

13. 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

14. 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

15. 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

16. 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

17. 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

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

19. 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

20. 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.

21. 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

22. 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

23. 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

24. 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

25. 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

26. CU MONEY – 2008 Additions Payroll Card Family Card

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

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