Building a Financial LadderHigh Impact Durable Growth Opportunityfor the Payment Industry

BANKINGUP

Overview

The payment industry can improve the lives of 100M Americans by expanding its own business on 2 fronts:

• Expand “prepaid cards as checking” to the 100M employees of the 2M Small & Medium size Businesses in the US

• Add secured or unsecured credit cards to the wallets of prepaid cardholders by leveraging their prepaid usage for decisioning and securitizing

Here is how…

2

BANKINGUP

Financial Services for Everybody

Everybody deserves access to theseRather

thanthis

Checking Account

Savings Account

Debit Card

Prepaid Card

Bill Pay

Secured Credit Card

Credit Card

Installment Loan

Rent to own

Auto Loan

Internet Payday

Pawn

Payday Loan

Overdraft

Deposits Payment Short Term Credit

Very Short Term Credit

3

BANKINGUP

2009-2014 Industry ScorecardDelivered new

deposit + pay service& some savings Reduced

offering post recession

StatusQuo

Prepaid Card asAlternative to Checking

(with some savings options)

mostly marketed by non-banks

Internet Payday

Pawn

Payday Loan

Overdraft

Secured Credit Card

Credit Card

Installment Loan

Rent to own

Auto Loan

Deposits Payment Short Term Credit

Very Short Term Credit

4

BANKINGUP

What the Card Market Must Do Now

Leverage Prepaid As Stepping Stone Towards Score-able Credit Products To

ReduceNeed For

VeryShortTerm Credit

Prepaid Card asAlternative to Checking

Secured Credit Card

Credit CardInternet Payday

PawnPayday Loan

Overdraft

Deposits Payment Short Term Credit

Very Short Term Credit

5

BANKINGUP

Build a Financial Ladder

Access to Checking & Payments for AllNew Generation of Prepaid Debit Cards• No credit check, no CHEX exclusion• FDIC insured, Reg E consumer protection• Handle all forms of payments: card, paper checks, ACH

Access to Short Term Credit for ManySecured or un-secured Credit Cards• History of prepaid card usage feeds credit decisioning• Savings in prepaid card, if any, used as security deposit• Just-in-time financial advice & free access to FICO score

6

First Rung of the Financial LadderMake prepaid cards used as checking accounts available to the 100M employees of the 2M Small & Medium size Businesses

BANKINGUP

From Casual Shoppers to Motivated Workers

Prepaid Cards as checking alternatives are now a proven product…

… but they are not sold where people are in the mindset of getting their financial lives in order for the long term

The workplace is the MAIN source of revenues and the BEST location to motivate people to step on the first rung of the ladder.

Prepaid CardPayslip

8

BANKINGUP

Where are the Payroll Cards?

Less than <25% penetration among US EmployersAlmost no penetration of SMBs with < 100 employees

Changes to payroll systems to issue cards

Verify vendor compliance with payroll card regulations

Direct deposit mandate not possible in all states

Not an alternative to checking accounts for EmployeesCannot receive wages for more than 1 job

Lose the card when leaving the company

Usually not connected to cash load networks (Green Dot, Moneygram, Western Union, rePower, ReadyLink…)

Bare bones service: no mobile app, no rewards program…

PAYROLL

9

BANKINGUP

How General Purpose Prepaid Cards Will Help Most useful to Employees

• Use the card for multiple jobs; keep the same card when switching job

• Load own cash on the same card

• Deposit paper checks directly into the card with MobileCheck Load (if employer only pays by check)

Easiest to deploy for small Employers• No need to change anything to existing payroll systems

(including paper check based)

• No involvement in managing issuance and termination of cards

• No regulatory compliance risk Same consumer protection as Payroll Cards

• New generation of GPR cards with FDIC insurance + “Reg. E Lite” protection + no monthly fee for direct depositors

Source: Small Business Administration

10

BANKINGUP

Solution: Open Portal for Employers and EmployeesPrivate Sector

Employees/ Firm

Number of Firms

Number of Employees

Annual Payroll

5-9 978,993 6,431,931 $218B10-19 592,963 7,961,281 $284B20-99 481,496 18,880,001 $746B

100-499 81,243 15,867,437 $691B500-999 17,671 58,427,653 $2,996B

Total 2,152,366 107,568,303 $4,935BPublic Sector Employees

State & Local (excl. education) 8,956,000Total Employees 116,524,000

Describe how GPR cards work for payroll

Ready-to-print flier for employees Select choice of GPR Prepaid Cards

for employees to sign up for

Source: US Census Bureau

Source: Bureau of Labor Statistics

Instantly deployable (public website)

11

BANKINGUP

Participating GPR Prepaid Cards

Requirements: Monthly fee ≤ $5 Free online sign up Mobile check load available Combination of:• CFSI’s Compass Principles• Visa’s “designation*” for prepaid• FDIC’s Safe Account template

Benefits to Prepaid Card Providers: New Cardholders with very high Direct Deposit activity Performance- based, low acquisition costs

http://www.DirectDeposit.Center

* As published June 2, 2014

12

BANKINGUP

Portal Design

Requirements: Responsive Web Design for PC, mobile

and tablet access Clean, flat UI English & Spanish Tracking of inbound links

Detailed activity reporting for GPR Card providers

http://www.DirectDeposit.Center

http://www.DirectDeposit.Center

http://www.DirectDeposit.Center

13

BANKINGUP

Employees EmployersNo more trips to check casher No change to Payroll

Better than Payroll Cards No compliance issue

Card Providers Avoid check issuance fees

New revenues New cardholders with very high rate of Direct Deposits

Card Networks

New Acquisition Channel Portal

More cards

More revenues

Benefits for All Players

http://www.DirectDeposit.Center

14

BANKINGUP

Completing Work On The First Rung

Prepaid Card

✓Available✓ Confirmed interest from

several “Prepaid Cards as Checking”

✓ Existing templates for good products criteria:• CFSI’s Compass Principles• FDIC’s Safe Account

Template• Visa’s new prepaid card

designation label

→To be finalized→ Product criteria (fees & features) for

participation in portal

→ Build the Portal

→ Recruit participating Prepaid Card providers

→ Source of Financial Literacy material for Portal

→ Initial marketing push to launch Portal

http://www.DirectDeposit.Center

15

Second Rung of the Financial LadderLeveraging prepaid card usage for issuance of secured or unsecured credit cards

BANKINGUP

Overcoming the Credit Score Quandary

Credit cards report to all 3 Bureaus…

… but reasonably priced unsecured cards are unavailable without a sufficient FICO score

… while applicants to FICO-indifferent secured cards often don’t have the money for a security deposit.

Prepaid Cards can be a source of : Decisioning data for credit cards Security deposit funds for secured credit cards

Credit Card

17

BANKINGUP

Prepaid-To-Credit PathwayGive Prepaid Cardholders Access to Credit and Help (re)build FICO Scores

Prepaid Card usage history = input to the credit card issuance decisioning process

If credit card is secured: use prepaid savings purse as security deposit

User has now 2 cards:• Prepaid Card = “everyday payments” - always safe to use• Credit Card = “credit building payments” - use with caution.

Prepaid and Credit cards are operationally separate for compliance with CFPB & Treasury requirements

Prepaid Card

(Secured) Credit Card

18

BANKINGUP

The Financial Ladder in a Mobile App

Manage Both Cards• Prepaid: balance, history, savings, write checks, top

up phone, manage rewards, contact customer service• Credit: balance, history, pay card bill, contact

customer service

Obtain Just-in-Time Financial AdviceTake interactive financial tutorials as they are pushed from time to time to the phone to increase credit line and become eligible for other financial services

PREPAID

CREDIT

Username

Password

19

BANKINGUP

Consumers Prepaid CardBetter access to credit Providers

Build up FICO score Motivate usage

Credit Card Providers New referral revenues

New revenues New cardholders with easier decisioning

Card Networks

New Acquisition ChannelMore cards

More revenues

Benefits for All Players

CREDIT CREDIT CREDIT

PREPAID

Username

Password

CREDIT

PREPAID PREPAID PREPAID

20

BANKINGUP

Completing Work On The Second Rung

Deposit

Pay

Save

Prepaid Card

Security Deposit Secured

Credit Card

Un-securedCredit Card

Decisioning

PREPAID

Username

PasswordAP

I

✓Available✓ “Prepaid as Checking”

platform

✓ Savings sub-account

✓ API for access to transaction history and mgmt. of savings

✓ Mobile App for handling Prepaid Card with push messaging channel

→To be finalized→ Credit Card Providers interested in the

security deposits and/or usage history of prepaid cardholders

→ Source of Financial Literacy / Credit Scoring Advisory for Mobile App

→ Mobile App update for Credit CardCREDIT

21

BANKINGUP

Summary

Industry-wide growth initiative– Foster GPR adoption in the workplace– Provide safe pathway from prepaid to FICO score-building credit

Immediate positive impact on 1/3rd of the US population

Easy to scale

No new untested product

Will grow both the prepaid and credit card businesses

22

AppendixBusiness Models, Workplan & Resources

BANKINGUP

Employees Employers CardFree sign up Free access to portal Networks

New Transactions

Card Providers No check issuance fees Revenues

New Card Revenues

New cardholders with very high rate of Direct Deposits Merchants

Marketing costsPer activated card fee Portal

Issuers and Processors

Existing Costs Bank

Portal Operator Pays • IT Hosting & Operations• Portal marketing• Due diligence for employers registering for a micro-site

Portal Operator Gets • Per activated or per-loaded card fee from Card Providers

Workplace GPR Cards Portal Business Model

Processor

http://www.DirectDeposit.Center

OnlineSign Up

24

BANKINGUP

Consumers Prepaid Cards CardFree sign up Providers Networks

Pay interest on balance & annual fees Earn lead-generation New Transactions

Credit Card fees Revenues

ProvidersNew card

New cardholders with easier decisioning Merchants

revenues

Marketing costsPer activated card fee

Issuers and Processors

Existing Costs Bank

Prepaid-to-Credit Pathway Business Model

ProcessorOnlineSign Up

CREDIT CREDIT CREDIT PREPAID PREPAID PREPAID

PREPAID

Username

Password

CREDIT

25

BANKINGUP

Milestones and DeliverablesItem Category DeliveryFirst Rung: GPR Cards Portal for Workplaces

Build Employees/Employers GPR Portal Technical Q4 2014

Agreements with first Prepaid providers Legal Q4 2014

Initial market awareness campaign Marketing Q1 2015

Measure number of active cards & gross $ volume Analytics Ongoing

Second Rung: Prepaid-to-Credit PathwayXML template for prepaid-originated decisioning data Technical Q1 2015

Mobile App for managing prepaid + credit card & distributing financial advice material

Technical Q2 2015

Agreements with 1 secured & 1 unsecured Credit Card provider

Legal Q2 2015

Initial marketing campaign to select prepaid cardholders Marketing Q3 2015

Measure number of active card pairs, credit balances, FICO scores, credit incidents

Analytics Ongoing

26

BANKINGUP

info@bankingup.com1-212-671-1015

Banking Up55 Broad Street, Floor 7New York, NY 10004

27