1. An Introduction to Credit Card Processing and Advanced Merchant Group Advanced Merchant Group is a registered ISO / MSP of BancorpSouth Bank, Tupelo, MS. 600 Louis Drive Suite 202-A Warminster, PA 18974 877.99.SWIPE 215.701.4989 fax

2. Why it’s a great time to be in the processing Industry Most rapid time of cost changes since the inception of the industry more than 30 years ago. More merchants than ever before entering the marketplace Niche market programs appeal to a wider audience, especially “developing” markets Older Equipment is being phased out in place of newer, faster and more capable equipment Recent Technologies opening new opportunities such as TCIP and huge potentials for wireless services A younger, more “hip” customer base means electronic transactions are the preferred method of payment Companies are recognizing that an “Un-tapped” market exits for business to business transactions

3. First Data Corporation Western Union Conversions Issuing Acquiring Platforms Previously Independent Processors Retail Wholesale Why build it? Just buy it. Perspective 75% of Domestic Processing 70 % of Card Issuing Omaha CardService International EFS Concord Nashville North Cardnet Paymentech Chase Manhattan

10. Basic Business In a typical business environment a merchant will purchase products / services from different vendors. The vendor sells the product to the merchant. The merchant then marks up the product to sell to the customer. The customer pays the retail price marked up by the merchant. Bat Ball Glove Sports Store Customer Customer

12. Visa / MasterCard Rules, Rates, Regulations ISO/MSP- AMG Record Keeping, Money Moving, Bank Affiliation BancorpSouth Bank, Tupelo, MS. Sales Industry Partner Responsibilities Agent Office/Sales Rep Merchant First Data Merchant Services AMG PRICING MAINTAINED THROUGH TO CUSTOMERS

21. UNQUALIFIED/UNACCEPTABLE BUSINESS All sexually oriented or pornographic merchants Consulting firms or firms operating in the following: Real estate seminars auction houses investment programs/opportunities “ get rich quick schemes” Credit repair or protection mortgage reduction services Telemarketing companies involved with the following products: Personalized gifts Novelty items Custom made items Pseudo-pharmaceuticals Cosmetics Charities (other than nationally based, well known events) Chain letters Pyramid or multi-level marketing distribution Drug paraphernalia Collection agencies or firms involved in recovering/collecting past due receivables Travel clubs / Travel agents or tours Sports forecasting or odds making Check cashing Lotteries Fortune tellers

22. EXPLANATION OF WHOLESALE –VS- RETAIL The cost associated with the Risk of accepting potentially fraudulent merchants can shift from processor on “Retail” or AMG “Wholesale”. Chargeback – A disputed charge. Initiated by the cardholder Processor settles the dispute “ Experience” of chargebacks is a problem at 1% of sales Responsibilities: Underwriting Merchant Processing Agreement Flexible Pricing Programs “ Fraudulent Transaction” Risk

23. Lease - A long term financing option for merchants who do not want to pay for a terminal up front. The leasing company is separate from the processor and leases are approved or declined separately from the Merchant Account. Business Type and expected business longevity. Prior Industry Experience Start-up Business Personal Credit Business Financials Lease Factors and Funding information available by contacting your Agent office. A Lease Funding Calculator is available to you by logging on at www.merchantaccountsources.com . LEASING RISK

26. Visa and MasterCard review the WHO, WHAT, WHEN, WHERE and HOW of every transaction. Typical Risk Factors Include: Type of Card Accepted Corporate SIC Code Batch and Settlement Information on transaction, example: Name or Expiration date Additional Information if requested, example: Zip code, PO Number Special pricing for specific industries. Address Verification TRANSACTIONAL RISK

27. Electronic Processing Evolution Time line from Paper

29. INTERCHANGE “COIN SORTER” Qualified Mid-Qualified Non-Qualified INTERCHANGE CATEGORIES Transaction

30. Swiped 3 Tier Pricing Qualified Mid Qualified Non Qualified MOTO 2 Tier Pricing Qualified MID Qual MOTO Non Qualified What’s a Qualified?

32. What’s the deal with Walmart? Why do we care? Credit Vs Offline Debit And Pin Based Debit Explanation Rewards Cards Update effective 04-01-05 FOR DISCUSSION

36. Pricing Example - Swiped Merchant Current Rates 1.75% & .25 Proposed Rates 1.78% & .20 Volum e = $20,000 Average Ticket = $35.00 Number of Transactions = 571.00 Volume 16,000 3,000 1,000 Number of Transactions 457 85 28 Percentage of Business 80% 15% 5%

37. Pricing Example Qualified: Current Rate ($35.00 X 1.75%) + .25 = .86 Quoted Rate ($35.00 X 1.78%) + .20 = .82 AMG/Agent Cost ($35.00 X 1.70%) + .17 = .77 Profit Per Transaction .82 - .77 = .05 Savings Per Transaction .86 - .82 = .04 Total Profit of Transactions .05 X 457 = $22.85 Total Savings of Transactions .04 X 457 = $18.28

38. Pricing Example Mid - Qualified: Current Rate ($35.00 X 2.52%) + .25 = 1.13 Quoted Rate ($35.00 X 2.35%) + .20 = 1.02 AMG/Agent Cost ($35.00 X 2.28%) + .17 = .97 Profit Per Transaction 1.02 - .97 = .05 Savings Per Transaction 1.13 – 1.02 = .11 Total Profit of Transactions .05 X 86 = $4.30 Total Savings of Transactions .11 X 86 = $9.46

39. Pricing Example Non - Qualified: Current Rate ($35.00 X 3.25%) + .25 = 1.39 Quoted Rate ($35.00 X 3.15%) + .20 = 1.30 AMG/Agent Cost ($35.00 X 3.05%) + .17 = 1.24 Profit Per Transaction 1.30 – 1.24 = .06 Savings Per Transaction 1.39 – 1.30 = .09 Total Profit of Transactions .06 X 28 = $1.68 Total Savings of Transactions .11 X 86 = $2.52

40. Pricing Example Totals Recap Savings Qualified $18.28 Mid Qualified $9.46 Non Qualified $2.52 Total $30.26 Profit Qualified $22.85 Mid Qualified $4.30 Non Qualified $1.68 Total $28.83

51. Contact 600 Louis Drive Suite 202-A Warminster, PA 18974 Phone: 877.99.SWIPE [79473] Fax: 215.701.4989 [email_address]