Quick presentation covering trends in online to offline payments and mobile retail space.

1. February 2012
Payment Trends
Online to Offline
By Patrick Gildea
1

2. Table of Contents
• Background and Relationships
• Mobile and Innovation at the POS
• Financing, M&A and Valuations
• Payment Startup Ecosystem

3. Background and Relationships
3

4. Selected Transaction Experience
Closed more than $11 billion in M&A, Joint Ventures, and Financing transactions and more than 20+ corporate and business
development transactions including pilots, supplier, and technology partnerships.
Leveraged Buyout Cross-border M&A Buy-side M&A Sell-side M&A
OSS Business Japan Operations
Acquires Acquired by Acquires Acquires Acquires Acquires Sold to Sold to
Assets Assets nvSRAM Business
Joint Ventures Public Capital Raise Private Capital Raise Software License
Between Between
Create Create Initial Public
Series C Series B, C and D
Offering on TSE PIPE on NASDAQ
Pilots Supply Chain Sales & Marketing
Pilot test of Enters into
Pilot test of first Enters into Enters into Enters into a Enters into a
cardless debit / Exclusive BIN
NFC mobile wallet strategic supply Exclusive supplier marketing marketing
loyalty payment sponsor agreement
in US at Safeway agreement with agreement with partnership with agreement with
system at Safeway with

5. Payments Buy-side Relationships
Extensive network of senior level relationships across many of the key buyers in Payments
Networks Card Processing Prepaid
MA/Gateway - SMB MA/Gateway - Legacy Mobile Payment Platforms
Selected Venture Capital with Notable Payments Focus Investment Banks
Private Equity

6. Mobile and Innovation at the POS
6

7. Mobile is Changing the Payments Landscape
US Consumer Payment Transactions
Healthy topline growth at
Billions 128.3 136.5 156.5 3.5% CAGR 2010-15
100%
4.9 5.5 7.0
90%
25.8 Debit big benefactor of share
80% 41.5
shift- helped by bad
68.4
70% economy, credit tightening,
25.3
60%
mobile and merchants push
26.1 for lower cost payments
50%
24.5
28.1
40% 17.5
30% 12.9 Share shift from cash and
20% 47.8 check to mobile wallet and
45.9
10%
40.1 ecommerce
0%
2006 2010 2015
Prepaid Debit Credit Check Cash
Source: The Nilson Report and RJ&A research 10/2011

8. The Many Flavors of Mobile Payments
Mobile payments expected to reach $1 trillion worth of global transactions by 2014*
• Smart phone adoption finally reaching scale to sustain true mobile payments traction
• Upgrade cost and merchants’ wait and see attitude still biggest hurdle to mobile enabled POS device adoption
• Offers and loyalty will be carrot for shifting consumers to mobile mediums
• Big data and location based intelligence infrastructure will soon follow
• Winners will own both sides of payment transactions- consumer and merchant
Payment Direct Carrier Closed Loop
Mobile Wallet Mobile POS
Platforms Billing Mobile
Paying for items gift card
Using mobile phone to Using mobile phones as Using mobile apps to Paying for items using
or store credit in mobile
pay at POS the POS device transfer money your phone bill
app
• Enabled • Software on the phone • In app billing, one of • Good for micro
micropayments to enabled to manage the only current apps payments or frequent
convert from cash to money and payments use locations
cards • Starbucks trial did 3
• P2P players could million transactions in
invade at micro level first 2 months
*Source: Yankee Group, 2011

9. Mobile Wallets – Invasion of the Software Giants
Comparison of Major Wallet Platforms Sneak Peak
Source: Mercator

10. Yes, NFC Should Maybe Happen
Evolution of Payments Thoughts on NFC
Handset shipments with NFC enabled chips will be the single
biggest critical factor in timing broad use of NFC in the U.S.
Shared view with Mercator
Barter Coins Paper Plastic Digital
?
RFID/NFC QRC Cardless SIM
• POS / Phone • Clumsy • POS software • Carriers still
Upgrade experience upgrade working out the
• Fastest & Most • POS add-on • Unsecure details
secure • Available • Interchange rate? • Safe and secure
• Card present rate today • Ease of use • Phone agnostic
• Long-term winner • Doesn’t need a
device
RFID Successful Overseas – Can that migrate to the US • Longer range RFID might also come across the ocean,
enabling proximity based offers and marketing, something
• Octopus card first RFID rechargeable smart card in world- launched in Hong Kong like->
1997:
• More than 20 million cards in circulation, nearly three times the population • First likely acceptance will be for micro-payments at:
of Hong Kong. • Convenience
• The cards are used by 95% of the population of Hong Kong aged 16 to 65 • Fast food, coffee
• Over 11 million daily transactions worth a total over HK$100 million • Gas pump
(US$12.8 million) everyday. • Transportation
• Grocery
• Sony bitWallet first mobile RFID (NFC) wallet in Japan, operating on the Sony
Felica platform • In-lane checkout speed and security will be key drivers
• More than 40,000 retail locations in first 5 years of operations tipping NFC as the winner vs. existing alternatives
• Accepted at all major convenience stores, railroads and at McDonalds
• First wallet platform to incorporate targeted ads based on spend and geo- Many challenges remain but NFC will soon be here, though don’t
location
expect it to replace cards at the POS for many years to come.
Source: Wikipedia, company websites.

11. So Where is All the Money Made?
US Transaction Processing Revenue
$25.0
Healthy topline growth at
$20.2 4.7% CAGR 2010-15
$20.0
$16.8 $4.1
$1.4
$15.0 $13.6 $3.9
$1.1
$3.5
$10.0 $1.0
Merchant acquiring fastest
$14.7
growing and biggest
$5.0
$11.8 benefactor….
$9.1
$USD Billions CAGR
$-
2006 2010 2015 5.0% Mobile Oh yeah,
Card Issuing $3.5 $3.9 $4.1 1.8%
innovation and more
Prepaid $1.0 $1.1 $1.4 4.0%
Merchant Acquiring $9.1 $11.8 $14.7 9.0%
at POS online
shopping
Source: The Nilson Report, World Report and RJ&A research 10/2011

12. Cool Stuff Happening at the POS
Innovation at the POS will support the shift from cash to electronic transactions and
thus driving revenue growth for Acquirors.
QR Codes Mobile POS Cloud POS Ultrasonic
Quick Checkout
Cardless Debit
Carrier to Retail
Wallet
Loyalty Social Cards & Data

13. Themes to Watch For in Retail Payments
Square market approach combines POS
Own the customer +
for merchants and wallet for consumers.
This convergence optimizes CRM, enables
more enhanced loyalty and offer features
and merchant and frankly creates a nice and sticky
switching cost for merchants.
Big data will become more
instrumental in tracking usage
and behavior to drive timely
and relevant offers to
Loyalty, incentives, consumers. First evolution will
be at card side, as PMs start
ads and big data tying user # to merchant ID
and track data on network
backend. Next evolution will
be at the wallet or POS,
tapping into Level III data and
tracking consumers across the
network backend.
Technologies that are convenient, easy to
deploy, easy to understand and make the
Customer experience Don’t wait in
line Payment
Enter my phone
overall purchasing experience better for
consumers will be great interim plays
+ pin and go –
no wallet! until NFC goes mainstream.

14. Financing, M&A and Valuations
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15. Q1 Payments Financing Activity
Date Target Investors Amount
2/25/2012 Billmyparents n/a $0.22M
2/22/2012 GoPago JPMorgan Chase & Co.
2/16/2012 Flattr Passion Capital $2.1M
2/16/2012 Quickpay Fontinalis Partners
2/15/2012 Chirpify Upstart labs
2/10/2012 Stripe Sequoia Capital $18M
2/7/2012 Dwolla Thrive Capital, Union Square Ventures, Village Ventures $5M
2/6/2012 MoBeam DFJ Athena $1.5M
1/31/2012 Cardspring Accel Partners, Felicis Ventures, Greylock Partners, Morado $10M
Ventures, SV Angels
1/31/2012 Mogl Austin Ventures, Avalon Ventures, Sigma Partners $10M
1/26/2012 HelloWallet Morningstar; TD Fund $12M
1/17/2012 ShopKeep Total Technology Ventures; Tribeca Venture Partners $2.2M
1/12/2012 Jumio Edquardo Saverin $25.5M
1/11/2012 Payoff.com Anthemis Group; FirstMark Capital; Great Oaks Venture Capital $2MM

16. Q1 Payments M&A Activity
Date Target Buyer Amount
2/21/2012 OrcaOne Ingk Labs
2/20/2012 Kima Labs Groupon ~$10-$20M
2/17/2012 Princeton Payment Solutsions Financial Transaction Services, LLC
2/14/2012 WikiPay WikiLoan
2/7/2012 Integral Computers Sage Pay $27M
1/24/2012 eCommlink’s Prepaid Processing Assets Greendot $2.5M
1/20/2012 Mertado Groupon
1/19/2012 CardStar Constant Contact

17. Payments Public Valuations

18. Payments Startup Ecosystem
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19. Payments Startup Ecosystem – There are Plenty!
Prepaid / Cards Cash & SMB Financing / Bill Pay Mobile Payments
Consumer Financing Gaming / Virtual Currency / Carrier Niche Transaction Processing
Social Payments / Big Data Web Payments/ Loyalty Personal Finance / Gamification
Mobile Deals / Loyalty Technology /QRC / POS Acquiring/Gateways