Ixaris - Corporate Prepaid for European Banks (November 2014)

Corporate Prepaid
Delivering New Revenue Streams
for European Banks

Contents
1. Introduction to Ixaris
2. Why banks should have prepaid in their service portfolio
3. Solutions for profitable prepaid business
4. Obstacles to adoption, and how to overcome them
Confidential and Proprietary Information | © 2014 Our Prepaid Opportunity Ixaris System Ltd 2

Who we are
Fast facts: 12 years old, 140 staff, 70+ engineers
Multi award-winning payments technology company
with 10+ years experience delivering prepaid
solutions
Pioneered virtual prepaid
cards in 2003
Multiple re-usable applications
that can be configured and
deployed rapidly without IT
effort

• Comprehensive range of off-the-shelf
products / templates
• Customise, configure and deploy
per market or per customer without
the need for an IT project
• Or scale up sales by empowering
clients to manage and customize
themselves
• Create exciting new products without
extensive and expensive IT
What we do
An ‘App Store’ for prepaid programmes

From Technology to Turnkey Solutions
We provide the tools for prepaid but also build & operate solutions
• Ixaris Solutions – Offering corporate payment solutions for purchasing,
disbursement, payroll, and incentives.
• Ixaris Technologies – In-the-cloud technology suite enabling Banks and
Financial Institutions to create and offer their own prepaid payment
applications

Our Solutions
Our turnkey payment solutions are used by multinationals worldwide
• Payment solutions for purchasing,
disbursement, payroll, and incentives, etc
to corporate clients
• Solution includes technology, banking
partners, programme management
• Targets specific verticals like travel,
insurance, marketing incentives, etc

Our Technology
Designed to easily create and run sophisticated prepaid programmes
• Proven over 10+ years with our own and
third-party global programmes
• PCI-compliant, in-the-cloud for rapid
deployment – no IT integration needed
• Ready-to-market, highly configurable
prepaid applications
• Full lifecycle : client configuration, on-boarding,
monitoring and support
• Just bring your own BIN

Why banks should have
prepaid in their service
portfolio

Prepaid for European Banks
Banks need new revenue streams as others go due to balance sheet restructuring
In Western Europe, bank revenues
declined by 1%, and remain 16%
below pre-crisis levels. Costs
meanwhile rose. European banks
on average earned a Return on
Equity of 0%, well below the 10-
12% average cost of equity.
2nd McKinsey Annual Review on the banking industry
Confidential and Proprietary Information | © 2014 Accelerating Prepaid Growth Ixaris System Ltd 10

Prepaid is one of the fastest growing sectors anywhere, including in Europe
Source: Boston Consulting Group 2012
• Prepaid is the fastest growing part of the cards business globally –
significantly higher than credit or debit cards anywhere
• Relevant to wide customer base: corporate, government and consumer,
with opportunity to target existing customers and acquire new ones
• Delivers multiple revenue streams: fees, interchange, forex
• If the banks don’t do it, programme managers will!

Corporate Prepaid in Europe will be worth €29bn by 2020, CAGR of 19%
Source: Boston Consulting Group 2012
• Fast growth market: 27% CAGR for (All) Prepaid in Europe
• Corporate Prepaid in Europe is forecast to be worth €29 billion by 2020 with an
anticipated CAGR of 19%. Corporate reloadable cards, which include employee
expenses, benefits and incentive schemes, together with B2B payments are
predicted to make up the largest segment. (PSE Consulting)
• Corporate Prepaid leverages customer relationships (with business and
government) infrastructure and knowledge that the bank already has with cards
(but banks need to learn new lessons too)

Corporate Prepaid in Europe will be worth €29bn by 2020, CAGR of 19%
$191 B
Corporate
Payroll
59%
Other
Commercial
41%
European Corporate Prepaid
Spend by 2020
Source: PSE Consulting 2013
Total: €29 B 19% CAGR

The Prepaid Opportunity for Banks: Ixaris Case Studies
Many successful programmes can be replicated in other European countries
Purchasing Travel Rewards
• Banks can use Ixaris’ 10+ years of experience to increase success rate
• Many of Ixaris’ programmes are directly relevant to any European country
• The adaptations required both in business model and service elements can
be identified by understanding how the programmes have worked

Case 2: Real-time Payments for Global Assistance
Streamlining global payment processes while lower costs and improving controls
Purchasing Background
AXA makes thousands of international payments daily
supporting travellers who need immediate assistance. It
handles 8.5 million case files annually in over 200 countries,
employing 6,900 people in 34 different countries to do so.
AXA often has to pay suppliers in far-away places and under
circumstances where time for procuring a service (such as
rescue or medical attention) can be critical.
Challenges
• Getting pre-payments to service providers in some countries
requires local agents to handle a lot of cash, involving risk
• Payment on invoice can result in the amounts involved being
under dispute ‘after the event’ creating difficulties for AXA that
needs to keep suppliers in far flung places happy to serve it
• Reconciliation across such a complex organization (with 34
subsidiaries) and its suppliers globally is a constant challenge

Purchasing
The Solution

Approach taken
We created a solution based on our standard Corporate
Purchasing application configured to deliver a single-use
virtual card via secure web terminals so that deployment
would not require integration. Each card number created
was tagged by additional data such as the claim number,
customer id, supplier reference, cost centre. This enables
perfect reconciliation once settlement records are received.
Results
• Reduced costs v bank transfer or cheques – particularly
cross border, smaller and fragmented payment, e.g.
• €4 per SEPA payment
• €20+ per cross regional payment
• Improved controls due to better reconciliation and reporting
• Faster payment process – payments issued and received
globally in real time 24/7
Purchasing

Ixaris enable to us to
drastically improve the
disbursement of
payments from all our
32 operating centres
around the world
Nicolas Barsky,
Group CFO
Purchasing

Case 3: Payment Optimization for European Online Travel Group
Direct contribution to the bottom line and improved controls
Background
International online travel agent (OTA) Logitravel purchases
thousands of hotel rooms, flights and other holiday
components across the world daily through automated
purchasing processes. As an intermediary between travel
services providers Logitravel’s margin are slim, and
surcharges and forex exposure takes a huge toll on profit.
Challenges
• Losing 10-20% of margin as a result of payment costs for
common types of bookings such as Low Cost Carriers
• “Surcharges and forex fees a significant threat.”
• “Facing a reconciliation nightmare.”
• Unclaimed hotel booking commission fees running at about
20% as a result of incomplete reconciliation
Travel

Travel
The Solution

Travel Approach taken
Created a solution based on our standard Corporate
Purchasing application configured to deliver a single-use
virtual card via API i.e. a unique card number for each
transaction. Via the API, each card number created was
tagged by additional data such as the internal and external
booking reference and order id. This enables perfect
reconciliation once settlement records are received.
Results
• Surcharge avoidance at popular low cost carriers through an
appropriate choice of debit card type
• FOREX optimization achieved by smart matching of currency
of merchant and of consumer payment
• 3-way reconciliation achieved enabling full identification of
hotel booking resulting in calculation of commission due

Working with Ixaris has
helped boost our
margins by 10-20% on
each transaction
Yago Casasnovas,
Collection & Payment Manager
Travel

Case 4: Stella Artois Mystery Shopper Rewards
Achieving the desired brand experience through control over look & feel
Background
Client wanted to incentivise a large number of bar staff
employed by third-party resellers of their product. The
incentive programme had to be flexible enough to fully
render the brand from end-to-end – a ‘one size fits all’
standard card programme would not be satisfactory.
Challenges
• User experience must live-up to expectations of the
brand
• Must compete economically with non-cash rewards such
as gift vouchers which cost less than their face value
• ATM cash withdrawal capability to be suppressed due to
tax implications of cash payments
• Business intelligence essential to confirm how used
Rewards

Pour the perfect pint Rewards

Rewards
Branded account web interface provides direct channel
from Stella Artois to bar staff independent of employer

Rewards Results
A solution tailored to fit Stella’s needs at a fraction of the time
and cost it would take using their own IT resource. A solution
just not available with standard card programmes
Comments
• Visa card program blocked for gambling and ATM
• Cards were delivered to participants address in an
inactive state with online activation needed to receive
the reward and use
• Comprehensive intelligence on which cards were
activated, funds claimed, which cards were used once
/ multiple time, most popular types of use, etc

Sample Business Case: Small Corporate Purchasing Programme
The business case from the bank’s perspective with typical values for this programme
• Monthly issuing volume of £180k by a single medium-sized
corporate (yearly £2.16m)
• ATV : £150
• No fees charged by bank to corporate client
• Assumed blended interchange of 1.8%
• Revenue of £41k
• Highly profitable even for small programmes: Gross Profit of £32k (78%
gross margin) net of card scheme, processor & Ixaris Payments Server fees

Solutions for a profitable
prepaid business

Banks are ideally placed to sell prepaid solutions to their clients
Relationship managers can identify needs and initiate the sales process
Bank
Purchasing Disbursement T & E Incentives

Banks face real obstacles in creating successful prepaid business
They are used to address broad segments (retail, corporate) with one-size-fits-all
Corporate clients demand flexibility
with features and pricing
Corporate customers expect solutions
tailored to their needs rather than
discrete payment services, and expect
pricing to match the value-add to the
business models
Agile non-bank competitors
New ‘non bank’ entrants are delivering a
lot of the innovative corporate prepaid
solutions today, unhindered by legacy
systems, and motivated to push
aggressively new payment services to
monetize their recently acquired licences
Systems and experience with
corporate prepaid business
Do not understand the risks specific to
prepaid, and do not have the tools they
need to deploy and support the solutions
that corporates expect
Limited IT Resources
IT resources are limited not only by capital
expenditure, but also because of regulatory
changes requiring IT support, security
updates etc.

The Ixaris Approach: Mass Customization in Prepaid
An ‘App Store’ of payment applications that are easily configured for each client
• Comprehensive range of off-the-shelf
products / templates
• Customise, configure and deploy per
market or per customer without the need
for an IT project
• Or scale up sales by empowering clients
to manage and customize themselves
• Create exciting new products without
extensive and expensive IT
• Low investment way to new revenues

Under the Hood: Introducing Ixaris Payments Server
Providing all the functional modules for a diversified and profitable prepaid business
Delivery channels
Web UI SMS Smartphone API
Prepaid applications
Purchasing Incentives Disbursement Payroll E-commerce Gifting Remittance Others….
Corporate funds
management
Platform user
management
Programme Management
Accounting and
Support and
Support Systems
billing
eCRM
Card Processing
Delivery
Channels
Prepaid
Applications
Programme
Management
Support
Systems
Card
Processing
Deployment
workflow
Anti-fraud
Reporting and
Authorisation /
Settlement
Chargeback
processing
Card lifecycle
End-to-end
monitoring
AML (KYC, PEP
& Sanctions AML
events)
Production,
packaging,
delivery
Dispute
management
business
intelligence

Under the Hood: Consumer e-Commerce using Virtual Prepaid Cards
Branded multi channel, multi instrument
Consumer payment account solution

Under the Hood: Real-time Payments for Global Assistance
Purchasing
Virtual cards for purchasing delivered through
a web terminal

Under the Hood: Payment Optimization for European Travel Group
Travel
API-driven solution with no human cardholders

Under the Hood: Stella Artois Mystery Shopper Rewards
Rewards
Incentive application configured for web-only
access

The Ixaris Approach: Deploying Ixaris Payments Server
A range of deployment options for banks with or without existing card processing
Payments Server
In-built e.g. switch ACI e.g. BASE SIA
(Postilion)
24
Option 3: Third-party Switch
Option Option 2: Your 1: In-Existing the-cloud
Switch
• PCI-compliant, in-the-cloud for rapid
deployment
• OPTION 1: Full turnkey solution –
no IT integration needed
• OPTION 2: Integrated with bank’s
internal processor
• OPTION 3: Integrated with third-party
processor
• Ready-to-market, highly
configurable prepaid applications
• Full lifecycle: client configuration,
on-boarding, reporting & support
• Bring your own BIN

Pro-forma plan and project timeline for deployment of complete turnkey
solution (including processing) within 20 months from contract
New BIN Setup Live
IPS Staging
and Live
Instance
Internal Sign
Off
Product Setup Form
Sign Off
Card Products Setup -
Sign Off
Sign off
specificati
on
documents
Contract
Signed
Client
Applies
for New
BIN
Month 1 Month 2 Month 3 Month 4 Month 5
UAT Sign
Off
GO
LIVE
Business Requirements
Analysis (IXARIS)
Setup of new BIN
Setup of IPS Staging Instance (IXARIS)
Training (IXARIS /
Client)
Setup IPS Live Instance (IXARIS)
Testing - Staging and Live (Client)
Sign Off - Staging and
Live
Contingency
NOTE: IPS stands for IXARIS Payments Server

Pro-forma plan and project timeline for deployment of Ixaris Payments
Server over the bank’s own processor or third-party processor
IPS Staging and Live
Instance Internal Sign
Off
UAT Sign
Off
GO
LIVE
New BIN Setup Live
New
processor
Integratio
n Live
IXARIS Starts
integration with new
Processor
Sign off
specificati
on
documents
Contract
Signed
Client Applies
for New BIN
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8
Business Requirements
Analysis (IXARIS)
IXARIS Integrates with new
Processor (PIK)
Setup of new BIN (ISSUER)
Setup of Platform Staging Instance (IXARIS)
Training (IXARIS /
Client)
Setup Platform Live Instance (IXARIS)
Testing - Staging and Live (Client)
Sign Off - Staging and Live Instances (IXARIS /
Client)
Contingency
NOTE: PIK stands for Provider Integration Kit

Obstacles to action, and how
to overcome them
40

Why not? Key obstacles to moving forward with Prepaid
Below are some of the common objections which prevent banks from
committing investment on prepaid.
• Expertise objection: The bank does not have expertise in selling and
running prepaid programmes so this is a major risk for the bank
• Capital Expenditure objection: The bank is spending so much on essential
IT for its existing services that it cannot justify opening new lines of business
that will require major additional capital investment
• IT Resource objection: Our IT resources are completely taken up in
supporting the bank’s existing services, compliance mandates and strategic
initiatives like digital transformation

Ixaris Proposition: Lower barriers to banks’ adoption of prepaid
Ixaris is proposing the following offering to European banks:
• Deliver A Complete Solution: Provide a complete technology solution as
create and support corporate prepaid programmes with confidence
• Provide Expertise: Provide know-how to enable the bank to market, sell and
implement corporate prepaid programmes with a deep understanding of key
drivers of profitability and management of risk
• Greatly Reduce the Upfront Cost of Starting: Employ cloud-based delivery
to radically reduce the effort and investment required to get started

Alex Mifsud
Founder & CEO
M: +44 774 865 7792
E: alex.mifsud@ixaris.com

Ixaris - Corporate Prepaid for European Banks (November 2014)

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