Introducing: Electronic Check

Service

Presented to:It’s Your Money. . . Why Wait For It?

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Agenda

Market overview and opportunities Technology advances NOVA’s Electronic Check Service Competitive Comparison ECS Processing Solutions Summary

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The Era of the Electronic Check

Checks account for approximately half of all consumer expenditures in the U.S.– Estimated 36 billion checks written annually

Retailers search for more efficient means to process checks– Paper handling and fraud

Electronic check conversion offers an incredible opportunity for retailers– Checks remain the largest non-cash

form of payment at the POS

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The Case for Conversion

Extensive handling by financial institutions and retailers makes paper expensive– 6 to 12 touches per check, on average

Check fraud and collected funds are costly for retailers and other businesses

Electronic checks offer reduced handling and risk– Result in big savings to the bottom-line

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ECS Benefits to Retailers

It’s Your Money…..

Why Wait for It?

Faster Access to Funds Reduced Costs & Labor Single Depository Bank

Relationship Minimized Risk Improved Reporting

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Sample Cost Savings

Merchant Profile Checks/Year 1,091,175 Number of Locations 1,795 Average Check Amt $59 Check Volume (%sales) 25%

ECS Cost Savings Costs Savings Total $2,376,872 Cost Savings/Check $2.18 Cost Savings (%) 63.2%

$3,763,622

$1,386,751

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

Current ECS

Data taken from actual merchant

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Powerful Market Drivers

Electronic check market is proven– 1.3 billion processed in 2003

Visa estimates 14 billion paper checks still written at POS —enormous opportunity

Check 21 Act provides legal recognition of electronic checks

Opens door for electronic checks

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Technology Advances AccelerateMove to Electronic Checks

Frequent MICR rejects and poor imaging quality hindered early acceptance of electronic checks

Recent advances in high-quality, image-capture technology have greatly increased the success rate for conversion at the POS

Quality images are essential for collection Lower-cost storage and faster CPU speeds

make it practical for retailers to store and access digital receipts

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NOVA ECS Solution Offering

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NOVA’s Electronic Check Service

Innovative product that supports full portfolio of flexible solution and service level options– Not a one-size-fits-all solution

Provided in partnership with leading financial institutions– Extension of services from bank partner, not

third-party provider– Retailer gets one-stop solution for debit and

credit cards, electronic check, consolidated statements and even online reporting

– Can by integrated into Analysis System Extensive image storage and reporting

capabilities

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Only NOVA ECS….

Through the appropriate “rail”– Direct DDA Access– ACH conversion– Check Replacement Document

With the proper risk mitigation / protection

– Conversion with Guarantee– Conversion with Verification and

Collections– Conversion with Verification– Conversion Only

Process any type of check– Consumer– Business / Corporate– Convenience

Presented any way– At the point of sale (POP)– Through the mail / drop box

(ARC)

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Checks Supported with ECS

Checks NOT Supported with ECS Money orders U.S. treasury checks Cashier’s checks Federal Reserve checks Government Checks Payroll checks Third-party checks Travelers checks

Consumer checks Business Checks Corporate Checks Convenience Checks

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Point of Purchase (POP) Solution

Enables merchants to convert consumer check payments received in a face-to-face environment into electronic transactions– Consumer present/Check present– Online real-time or batch delivery

Utilizes combination of Visa’s POS Check network, the ACH network and Check Replacement Documents (CRDs) for presenting and clearing– Real-time access to more than 35 million

accounts representing 30% of DDA’s nationwide with a potential for 90% of the DDAs in the U.S.

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Accounts Receivable Conversion (ARC) Solution

ARC is used for check present/consumer absent transaction environments

– receivable payments– mail order receivables– drop-box/lock-box environment

Customers are provided a notice explaining that checks will be processed electronically

Offer Consumer Opt Out Service with PC Solution

Utilizes the ACH network and Check Replacement Documents (CRD’s) presenting and clearing

– Online real-time or batch delivery of transactions

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CHECK CLEARING “RAILS” Direct DDA (VISA POS Check): Consumer checks drawn on Visa

POS participating banks are routed to their bank, ensuring that the funds are available. This reduces the risk typically associated with check acceptance. Real-time access to more than 35 million consumer accounts nationwide with access to over 30% of the DDAs in the U.S.

ACH Network: Consumer checks drawn on non-participating banks are processed via ACH. The ACH network is a safe reliable system used by hundreds of thousands of companies for Direct Deposit of payroll and by the Federal government for benefits payments, such as Social Security. The ACH system is a closed, private network that is not accessible to the general public.

Check Replacement Documents: Business, corporate and convenience checks are electronically captured and recreated as Check Replacement Documents. These CRD’s run through the traditional banking system in accordance with the Check Clearing Act for the 21st Century, also known as “Check 21” legislation.

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Direct DDA Market Share – August 05Participating DDAs: Up to 10% 10% to 19% 20% to 29% ≥ 30%

DC

PARI

Source: Visa Member DDA Market Share Data

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Direct DDA Access Banks

Source: Visa U.S.A. POS Check Service Production Data – August 2005

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ECS Service Level Options

Conversion with Guarantee– Checks are converted into electronic transactions and all funds are

guaranteed– All paperwork is eliminated – no follow-up needed from merchants– The retailer assumes no risk for all qualified and approved transactions

Conversion with Verification– Checks are imaged and converted into electronic transactions– Routed for verification either through the participating Visa bank or

through EnCircle for ACH submission – Retailer retains the risk of returned items for all transactions

Conversion with Verification and Collections– Offers all the advantages of conversion and verification, while eliminating

the need for businesses to perform their own collection activity – Retailers retains the risk on returned items, but will have all monetary

returned items automatically handled by EnCircle Collections after the first resubmission.

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ECS Service Level Options (cont’d)

Conversion only– Checks are imaged and converted into electronic transactions, retailer performs

own authorization– Retailer retains the risk of returned items for all transactions

ECS Custom Combination– “Custom-designed” risk programs are available, consisting of any combination of

the above services, triggered by a predetermined dollar threshold. – Retailers retain the risk of loss on returned checks, depending upon the specific

combination and dollar thresholds selected

NSF Service Fee Processing– All service levels except Conversion with Guarantee support the ability to

electronically resubmit transactions that have been returned for non-sufficient funds, electronically collect an NSF service fee from the consumer’s account, and automatically fund the business’s account with these fees—eliminating the labor and lengthy time-to-collection of manual systems.

– NSF Service fee not available with ARC.

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Competitive Comparison

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NOVA ECS: The ONLY Flexible Solution Provider

Service NOVA Certegy Telecheck

ECS with Guarantee ECS with Verification ECS with Verification and Collections All in one processing check/credit/debit

Funding in 24-48 hours

Consolidated reporting

All at a Competitive Price!

Business check acceptance and conversion

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TeleCheck Paper

  Y Y N N   N N N

  

N  Y

  N N N

Competitive ReviewCompetitive Review

Service Levels  Offers Guarantee   Offers Verification   On-line access to DDA account  Electronic settlement Other Services  Direct electronic collection placement  Centralized proprietary Image Archive Merchant in-house Image Archive

Reporting  Offers consolidated reporting  Provides detail transaction reporting  

Customer Service  Consolidated merchant card and check support  One phone number to call for card and checks  On-site merchant training option

NOVAECS

  Y Y Y Y   Y Y Y

  Y Y

  Y Y Y  

TeleCheckECA

  Y N N Y   N Y Y   

N  Y

  N N N

CertegyPaper

  Y Y N N   N N N

  

N  Y

  N N N  

CertegyElecCheck

  Y N N Y   N N N

  

N  Y

  N N N

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ECS Processing Solutions

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ECS Solution Options

Terminal/imaging solutions– VeriFone Omni 3730LE, 3750 & 3750 IP– VeriFone Omni 3200, 3210, 3200SE & 3210SE – Hypercom T7Plus, T7PT & T77T– Nurit 2085, 8320 & 8320IP – RDM 6000i Imager

PC-based software solutions– viaWARP with Magtek Imager/MSR

Integrated POS solutions– IBM imager & IBM ACE software– Epson imager– VAR interface solutions

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ECS Image Management Solutions

POS Image Capture Image Batch Archival, Retrieval and Reporting

– Remote batch submission timing– Local batch capture option– Participating and Non-Participating Items – Retrieval with reported transaction data

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Return Detail: Store, MICR data, lane, status, ACH date, tracking, ACH history

Images:Stored securely on Payment Archive

Return Queries:Look for patterns of specific checks, export to spreadsheet or database and get data ready for collections

EnQuire - Items Reporting

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Questions & Answers

Thank You!