2. Confidential and Proprietary
AGENDA
• Background & How PayPal Works
• Solutions To Enable Cross Border Commerce
• Concept Of Bank Managed Withdrawal (BMW)
• Existing Partners Of BMW
• Future Opportunities For Additional Collaboration
• Partnering With PayPal
2
3. Confidential and Proprietary
BACKGROUND ON PAYPAL
PayPal was founded in 1998
Currently offering services in 190 countries, 20 localised sites
Settling payments in 23 local currencies
~$3 Billion in balance turnover every 2 weeks
$2,641 processed per second in Total Payment Volume in Q1 2010
Headquarters in San Jose, California, USA
International headquarters based in Singapore (PayPal Pte. Ltd.)
Offices UK, Europe, Luxembourg, Australia, Japan, Brasil, Mexico
3
PAYPAL IS A GLOBAL ONLINE PAYMENTS COMPANY
4. Confidential and Proprietary
GROWTH IN CUSTOMER ACQUISITION AND
PAYMENT VOLUME
23
64
96
135 141
175
210
12
19
75
94
111
133
139
2003 2004 2005 2006 2007 2008 2009
PayPal User Accounts (Millions) PayPal TPV (in Billions)
4
Account Cleanup
84++ million active accounts
with 210 million in total
2009 revenues of USD $2.8 Billion
2009 total transaction volume of
USD $71 billion
(Excludes gateway TPV)
5. Confidential and Proprietary
BACKGROUND: WHAT IS PAYPAL?
5
• PayPal is not a bank
• No deposits, no direct cash deposits, no credit/lending
• Takes no "risks" in the method of a bank or financial institution .
• All transactions including registration and verification occur
online
• Self serviced tools on PayPal.com to enable online selling
• Merchants / sellers can receive payments from any PayPal
account holder in 190 countries
• Global brand accepted by thousands of merchants around the
world
• PayPal has world-class fraud and risk protections including
proprietary technology designed to detect and prevent fraud.
PayPal is a payment system that utilizes existing financial systems
to enable online payments for sellers
6. Confidential and Proprietary
THE ONLY GLOBAL PAYMENTS NETWORK
#2
#1
#3
#2
#1
Strong stated preference
across online shoppers
Network effects
• >100M active accounts*
• >234M+ total accounts
• >8M small merchants
• 18% of global ecommerce
Global footprint
• 190 markets
• 25 currencies
• localized websites in 21 markets
Network of networks
• 27 financial networks
• 15k+ bank partners globally
• Universal payment system “adapter”
Online fraud
prevention expertise
• 10+ years experience fighting fraud
• Fraud Sciences technology
PayPal Financial Innovations 6
Architected and built from the ground up for the Internet
* active accounts are those that have had activity in the past 12 months
7. Confidential and Proprietary
PAYPAL LETS PEOPLE PAY ANYONE
ANYWHERE SAFELY AND SIMPLY
7
Woman’s shoes
Online Travel Services
Bikes and Accessories
email payments
Outdoor Apparel
9. Confidential and Proprietary 9
*Offering Varies by Country
HOW DOES PAYPAL WORK?
Buyer makes e-payment with PayPal
PayPal completes electronic payment from
buyer to seller’s PayPal account
Seller provides goods/services to buyer
Local bank withdrawal
is not offered in many
countries today
Provide users to access
funds to local bank in
local currency
10. Confidential and Proprietary
Mobile
Social
Networks
Financial
Services
Govt.
MediaRetail
3rd Party
Market
places
Gaming
Others…
•Send Money
(P2P)
• Rewards
Redemption
• Small
Business
Payments
• Funding
New Bank
Accounts
• Share of
eCommerce
• Others….
10
OPEN PAYMENT PLATFORMS – NEW OPPORTUNITIES
Open APIs
Financial
Services
HOW THE OPEN PAYPAL
PLATFORM BENEFITS
FINANCIAL INSTITUTIONS
PayPal Financial Innovations 10
12. Confidential and Proprietary
AGENDA
12
• Background & How PayPal Works
• Solutions To Enable Cross Border Commerce
• Concept Of Bank Managed Withdrawal (BMW)
• Existing Partners Of BMW
• Future Opportunities For Additional Collaboration
• Partnering With PayPal
13. Confidential and Proprietary
• Underwriting for smallest businesses
• Credit cards, eChecks, PayPal
• Cash flow help
• Receivables: instant payments
• Payables: last minute payments,
Mass payments
• Security and fraud protection
• Reduction in paperwork
• Reporting
• Reconciliation
• Electronic Invoicing
9/11/2011 13
PAYPAL SERVES THE SMALLEST
BUSINESSES, PROVIDING
SERVICES WHERE NO ONE ELSE
WILL
$0-$25K $25K-$100K
$100K-$500K $500K-$1M
> $1M
95% of all PayPal merchants generate less than $50K/yr in sales volume
These merchants generate millions of payment transactions which,
without PayPal, would be cash, check, or would not occur at all
About 60% of volume is via FI issued cards, and trending upward
PayPal Merchant Distribution
by Annual Sales Volume
14. Confidential and Proprietary
EMPOWERING COMPLETE END TO END
COMMERCE SOLUTION
ECommerce
Platforms
Global
Online
Payments
Access to
Funds
Total XB
ECommerce
Solution
14
Offer best of class
ecommerce platforms
from our existing
partners
Online payments
managed by PayPal
payment solutions
Allow merchants to
withdraw PayPal funds
into local bank account
through local bank
partnerships
Complete end to end
services for merchants to
easily sell cross border
online, receive payments
& access funds
Bank Managed Withdrawal
15. Confidential and Proprietary
WHAT IS BANK MANAGED WITHDRAWAL?
Concept:
• Bank Managed Withdrawal is a cost-effective PayPal-to-local bank
funds out solution for PayPal account holders
• Account holders link and withdraw funds from PayPal to local bank
All transactions initiated on bank website
PayPal transmits all monies directly to PayPal account own by local bank
Secure and Convenient:
Only available to partner bank customers, who have gone through
bank’s AML/KYC checks.
User needs to log into local bank internet banking site and PayPal to
access feature. (Double authentication for every withdrawal
transaction.)
Bank validates Name and Email of user supplied by PayPal with their
Bank account information to ensure proper account linkage
15
16. Confidential and Proprietary
PROVIDE SOLUTION FOR LOCAL SELLERS
TO ACCESS FUNDS FROM PAYPAL
16
FUNDS OUT METHODS
LOCAL COUNTRY BANK
USA BANK ACCOUNT CREDIT CARD
GOOD BETTER
$USD
$USD
Local
Currency
“ENABLE LOCAL CROSS BORDER SELLERS
TO WITHDRAW ELECTRONIC FUNDS
FROM PAYPAL ACCOUNTS TO THEIR
LOCAL COUNTRY BANK ACCOUNTS”
FUNDS OUT METHODS
Local Seller
17. Confidential and Proprietary
SOLUTION THAT BENEFITS ALL PARTIES
Choice of complete end to end
ecommerce payment solution
CONVENIENCE:
• Funds from PayPal deposited to local
bank account
• Funds deposited in local currency
instead of USD
• Quicker access to funds to improve
cash flow
• No complicated process to open US
bank account
SECURE:
• Seller initiated from local bank
website
• Funds transfers are secure between
PayPal and local bank
17
Innovation to drive competitive
brand differentiation of services
ENGAGEMENT:
• New opportunities for value added
services to bank customers
• Enable account holders to increase
time on site and usage of services
• Increase deposits
• Increase exports by enabling
merchants to sell cross border
• Access to PayPal account holders
ACQUISITION:
• Brand differentiation to other local
banks
• Acquire and monetize new to file
account deposits of PayPal sellers
VALUE TO SELLER/MERCHANTVALUE TO BANK PARTNER
18. Confidential and Proprietary
AGENDA
18
• Background & How PayPal Works
• Solutions To Enable Cross Border Commerce
• Concept Of Bank Managed Withdrawal (BMW)
• Existing Partners Of BMW
• Future Opportunities For Additional Collaboration
• Partnering With PayPal
19. Confidential and Proprietary
SCENARIO: USER INITIATED EXPERIENCE
ON LOCAL BANK WEBSITE
Proposed experience of solution
1. Seller creates PayPal account (and local bank account)
2. Seller links PayPal account with local bank account on bank
website – one time event unless account on either side is closed
or new
3. Seller initiates funds withdrawal from PayPal to their local bank
account via the bank website
19
Seller
Seller
USA BANK ACCOUNT
Local Bank
$USD
Local Currency
Local Bank
Local Bank Website
A
B
20. Confidential and Proprietary
JOINT COLLABORATION TO LAUNCH SOLUTION
• APIs for bank partner to
integrate
• Technical documentation
• Technical integration support
until live to site
• On going account
management & technical
support services
• Consultation on user
experience and flow
• Assistance in providing PayPal
marketing material
• Assistance in PayPal risk and
compliance approvals
20
• Integration of PayPal
APIs/services
• Developer and enable PayPal
services on internet banking
portal
• Creation & ownership of bank’s
PayPal accounts
• Reporting
• Communication and promotion
of PayPal services to account
holders
• Determination of fees for
services
PAYPAL LOCAL BANK PARTNER
21. Confidential and Proprietary
AGENDA
21
• Background & How PayPal Works
• Solutions To Enable Cross Border Commerce
• Concept Of Bank Managed Withdrawal (BMW)
• Existing Partners Of BMW
• Future Opportunities For Additional Collaboration
• Partnering With PayPal
22. Confidential and Proprietary
FIRST NATIONAL BANK OF SOUTH AFRICA
22
FNB South Africa
One of top 4
banks in South
Africa
Ranks top in
innovation
Launched with
PayPal in March
2010
Heavily promoted
by FNB during
2010 World Cup
23. Confidential and Proprietary
LINKING SELLER’S BANK ACCOUNT WITH SELLER’S
PAYPAL ACCOUNT
4
5
User
User links the Bank a/c to PayPal a/c – One Time activityA
3
1
2
6
25. Confidential and Proprietary
AGENDA
25
• Background & How PayPal Works
• Solutions To Enable Cross Border Commerce
• Concept Of Bank Managed Withdrawal (BMW)
• Existing Partners Of BMW
• Future Opportunities For Additional Collaboration
• Partnering With PayPal
28. Confidential and Proprietary
P2P PAYMENTS OFFER THREE CHANNELS
FOR INCREMENTAL VOLUME FOR BANKS
High-
Touch
Model
Pathway to
Banking
Incremental
Volume
Any Time
Anywhere
Unbanked
Consumers
Casual Sales
from Banked
Consumers
Global
Remittances
Instant Market: Wide Array of Financial Circumstances
28
29. Confidential and Proprietary
PAYPALSENDMONEY
Designed specifically for financial
institutions
Send money from your financial
institution account using an
email address or mobile number
Available for multiple channels -
online, mobile, or ATM
30. Confidential and Proprietary
AGENDA
30
• Background & How PayPal Works
• Solutions To Enable Cross Border Commerce
• Concept Of Bank Managed Withdrawal (BMW)
• Existing Partners Of BMW
• Future Opportunities For Additional Collaboration
• Partnering With PayPal
31. Confidential and Proprietary
CONSIDERATIONS FOR BANKS WHEN
CHOOSING AN ONLINE PAYMENT PARTNER…
Partner
• Established Leader
• Multichannel Experience
• Well Funded
• Focused on Card Not Present Transactions
Infrastructure
• Deep Experience in Payments
• Flexible Platforms that Leverage APIs
• Full Suite of Options for Sending & Receiving Payments
Support
• Strong Internal Development Expertise
• Ability to Support Multiple Countries and Currencies
• Strong Fraud Mitigation Controls
31
32. Confidential and Proprietary
… PAYPAL WILL BE THERE ENABLING
PAYMENTS GLOBALLY
32
Enabling global
mobile commerce...
Monetizing
applications for 3rd
party developers...
Giving charities an
effective payment tool to
collect donations...
Helping consumers and
merchants with expansive
global partnerships...
The world’s favorite way to pay and be paid
Making B2B payments
more efficient with
PayPal...
Facilitating payments
for professional
services...
Allowing foreign
workers to send money
home with ease...
33. Confidential and Proprietary
NEXT STEPS
• Explore business and marketing relationship
• Preliminary technology and IT engagement
• Draft timeline and project plan
33
35. Confidential and Proprietary
HOW DOES PAYPAL WORK?
35
PayPal stores a
consumer’s financial
information and keeps it
safe. PayPal sends the
money – but never shares
their information.
Consumers choose
from multiple
funding sources to
pay for a purchase
Credit Card
Bank Account
PayPal Balance
The payment goes
immediately to online
recipients —
regardless of which
funding source a
consumer chose.
36. Confidential and Proprietary
HOW DOES PAYPAL WORK?
• Most PayPal accounts hold
USD balances as default
• Accounts can also hold
additional currencies:
– Canadian Dollars
– Euros
– British Pounds
– Japanese Yen
– Australian Dollars
– New Zealand Dollars
– Swiss Francs
– Hong Kong Dollars
– Singapore Dollars
– Swedish Kroner
– Danish Kroner
– Polish Zloty
– Norwegian Kroner
– Hungarian Forints
– Czech Koruny
– Israeli Shekels
– Mexican Pesos
– Brazilian Real (only for Brazilian users)
– Malaysian Ringgits (only for Malaysian
users)
– Philippine Pesos
– Taiwan New Dollars
– Thai Baht
36
37. Confidential and Proprietary
Bank Validates,
PP Email and
Name to identify
the user
LINKING SELLER’S BANK ACCOUNT WITH SELLER’S
PAYPAL ACCOUNT
Select “Link
Account”
Option
2
Bank redirects
the user to
PayPal
3
User logs into PP account.
PP sends user’s Name,
Email address, PP a/c Id to
bank
4
User logs on
to banking
website.
1
User’s Bank
a/c is linked to
PayPal a/c Id
5
6
User
User links the Bank a/c to PayPal a/c – One Time activityA
38. Confidential and Proprietary
Select “Withdraw
from PayPal”
Provide $$ Amount
2
Bank redirects
user to PayPal
Checkout
3
Money transferred
from user’s PayPal
a/c (Balance only)to
Bank’s Master PayPal
a/c.
5
User logs on
to his IB
site.
1
User’s bank
a/c is credited
7
User
Seller Transfers Money from PayPal a/c to Bank’s Master PayPal a/cB
User logs into
PayPal account.
4
Txn + xx
days
User redirected to
Bank website and
appropriate
message displayed
6
User logs on
to his IB
site.
6a
SELLER ‘WITHDRAWS’ FUNDS FROM PAYPAL
38
Settlement process
reviewed next slide
39. Confidential and Proprietary
SETTLEMENT OF FUNDS TO LOCAL
BANK ACCOUNT
24hr hold 24hr hold
Precautionary holds
Money transferred
from user’s PayPal
a/c (Balance only)to
Bank’s Master PayPal
a/c.
5
User’s
bank a/c
is credited
7
