2008

S Foss

Triune Payment Solutions, Inc.

8/1/2008

LIBERATING A CASH BASED SOCIETY

Triune Payment Solutions, Inc. | Summary 2

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Triune Payment Solutions, Inc. | Summary 3

Table of Contents

Summary ....................................................................................................................................................... 4

Cash Is King ................................................................................................................................................... 5

Observing the Market ................................................................................................................................... 6

National History ........................................................................................................................................ 6

Geography ................................................................................................................................................. 6

Political Stability ........................................................................................................................................ 6

Technology Infrastructure ........................................................................................................................ 6

Population ................................................................................................................................................. 7

Merchants ................................................................................................................................................. 7

Payment Methods ..................................................................................................................................... 8

Our Strategic View ........................................................................................................................................ 9

Concept ....................................................................................................................................................... 10

Transaction Methods Compared ............................................................................................................ 10

Conclusions ................................................................................................................................................. 11

End Notes .................................................................................................................................................... 12

Triune Payment Solutions, Inc. | Summary 4

Summary

The Triune Payment Solutions group offers more than seven decades worth of exceptional executive

management, operational knowledge and technological innovation skills specializing in the creation of

advanced electronic payment solutions for both domestic and international use. The group was

founded for the sole purpose of bringing together diverse and highly talented individuals to put forth

fresh and innovative approaches to monetary payment issues.

In past years this group has been responsible, as individuals and partners, for some of the most

significant technological and innovate business methods currently utilized in electronic payment

systems. This methods and systems include advanced risk avoidance, domestic and international money

transfer, stored value card systems and ecommerce systems.

As Thought Leaders in the electronic payments industry the collective has, for a number of years, had

direct and indirect relationships with a number of Pacific Rim nations including the Philippines. The

group has realized after years in dealing with the top tier Philippine Banks and Philippine governmental

officials that there was an opportunity to create a unique electronic payment system that would

capitalize on the domestic payment issues that were and are prevalent in most Pacific Rim countries.

The first stage of that opportunity has already been seized and through the efforts of Triune Payment

Solutions a robust, effective, risk adverse electronic payment system has been launched with the

cooperation of the Philippine government, banks, technology infrastructure providers and Triune’s

internal resources. We recognize that this first step has started a revolution that will liberate the

domestic Philippine cash payment based economy and move it towards an effective, non-discriminatory

method of commerce that can and will change the economy of the Philippines as well as the potential

impact on the international economy as well.

The following discussion provides our view of the revolution and what impact it will have on both

national and international commerce.

Triune Payment Solutions, Inc. | Cash Is King/ 5

Cash Is King

The historical use of representative money in the many countries of the Pacific

Rim has its roots in the European models of the 18th and 19th centuries. Many

of the current monetary system models have been elevated from the original

use of representative money to fiat money in the late 20th Century. However,

the actual practice of exchange of currency for goods and services has not

changed.

Without providing an in-depth historical lesson on the rise of monetary systems throughout the Pacific

Rim we believe it is sufficient to state that with few exceptions; Australia, New Zealand, Japan, and

Singapore, the remaining nations are mired in a middle ground where the extension of credit and

electronic commerce are either sparse or non-existent. This is not to say that these countries do

practice modern Central banking or have reasonably sophisticated banking systems.

It does reflect on these countries inability to move into the current models of commercial growth

centered on the use of the Internet for

business to consumer trading. It is paradoxical

that in many of these countries the use of

technology is high, particularly in the use of

mobile telephony and participation in the

social use of the Internet as observed in figure

1.

The growth of eCommerce across the

developed world is becoming a major

component in the calculation of the Gross

Domestic Product (GDP) of many countries.

The current GDP contribution of eCommerce /

ITC, as of 2007, to the U.S. economy was

estimated at 3.6 percent.1 As the GDP is an

internal contribution to a country’s valuation,

3.6 percent equates to a very large number as

the total US GDP for 2007 was estimated at

$13,807 Billion Dollars. While the Philippine GDP for that same time period was significantly less ($298

Billion Dollars2). There were no appreciable contributions by the eCommerce sector to the Philippine

GDP. The good news is that the Philippine GDP continued to grow at a 7% rate over the prior year

ranking it as the 37th largest economy in the world.3

The impact of a vibrant eCommerce Industry is obvious when observing the preceding figures. However,

to build such a major contributor to a nation’s economic power requires a number of favorable

conditions to be in place or the opportunity to create those conditions exist within the nation’s

boundaries. The need to move a domestic population from a cash based economy is one of the prime

conditions that needs to be met to insure a proper foundation is created for a thriving eCommerce

Industry to exist.

1 2007 UN Report for Information & Communication

Technologies

Triune Payment Solutions, Inc. | Observing the Market 6

Observing the Market

National History

When considering the necessary precursors to

the birth and growth of an eCommerce based

environment it is necessary to understand the

fundamentals of the existing points within the

Pacific Rim countries that support eCommerce

as a method of creating economic opportunity

and growth. The first is partially based upon

historical precedent in which the nation has a

historical pattern of industrialization and

movement into the post-Industrial age. The

International Monetary Fund (IMF) has

categorized nations meeting these conditions in

the Pacific Rim as having advance economies

and has been previously identified.

Geography

It is of interest that these advanced economy countries have, in general, geographically constrained

boundaries which have lead to the growth of the nation. The general lack of contagious land mass is

indeed a barrier to homogenous national growth. The remaining economically non-advanced countries

are subjected to this geographically barrier, particularly the Philippines with over 7,000 islands and

Indonesia with more than 17,000 islands comprising their respective nations.

Political Stability

The continuity of the national policies and the political will to provide governmental assistance to

technological development are essential to the growth of a eCommerce Industry within a nation. In

particular the Philippine government has had a track record of stability from its independence in 1946.

The current Philippine government has provided the necessary incentives for foreign investments and is

actively promoting the growth of eCommerce as a means to assist its people in both educational and

commercial terms. In contrast the Indonesian government that after its independence from Holland in

1962 almost immediately fell into a authoritarian state, limiting its interaction with the Western Nations

which created a lag in development of its economy. After 1998 the Indonesian government has become

more stable and has activity promoted foreign investment and actively promoted eCommerce as a

method to create economic growth.

Technology Infrastructure

A major concern for the development of a strong eCommerce is the ability of a nation to provide a

robust means to facilitate the accessibility of the Internet. Past the underlying telecommunications

infrastructure is the need for reliable and stable co-location facilities and the technical experience to

provide 24 hour support within these facilities.

2 Pacific Rim Advanced Economies

Triune Payment Solutions, Inc. | Observing the Market 7

In the case of the Philippines the nation supports an

extremely robust telecommunications network centered on

the capital city of Manila. From that center a reasonably

reliant network crosses the nation with a fairly high rate of

accessibility.

In addition to a national telecommunications backbone there

are a number of co-location facilities that more than meet the

requirements of Tier One facility using OC192 connections

and the necessary security and redundancy to run domestic

and international based eCommerce systems. Additionally

the domestic infrastructure supports an estimated 23 Million

individual Internet users as of 2008. Estimated ownership of

personal computers in a household is about 2 Million personal computers.

Population

The population obviously plays a significant role in the ability for a nation to support an eCommerce

Industry. More than half of the current population of the Philippines, some 90 million, resides on the

island of Luzon, which is the focal point of the current economy. The average literacy of the population

is more than 92%. This ties to the high use of technology based communications systems such as mobile

phones and use of the Internet. Currently the estimated purchasing power per capita is about $5,700.

This obviously takes into account the large agrarian economy.

One additional point is that approximately 8% of the population (approximately 7.2 million) lives outside

of the country as domestic labors. Triune has substantial contact with the Philippine Overseas

Employment Administration (POEA) on other projects to assist those living abroad with a reasonable

method of transacting retail and other transactions using stored value products.

This particular population also assists the economy of the Philippines by sending remittances to their

families on a regular basis. Current estimates show approximately $11 Billion dollars sent to family

members in 2007. This is a very important aspect of the economy and should not be overlooked as

helping power an eCommerce Industry.

Merchants

Obviously it is necessary to have a merchant base that is willing to consider or has to some limited

extent utilized the sales channel offered by eCommerce. While involved with other projects in the

Philippines we have uncovered a significant opportunity to bring a large group of brick and mortar

merchants that are willing to engage in this emerging sales channel.

Currently there are a handful of online merchants doing business in the Philippines and for the most

part are faced to those Filipino’s living abroad, primarily in the United States, to have hard goods sent to

family members still living in the Philippines.

These merchants are currently constrained to the use of non-Philippine based payment systems as

merchant acquiring for online transactions has not yet made significant inroads yet. Although dated, a

3 Telco backbones for Pacific Rim

Triune Payment Solutions, Inc. | Observing the Market 8

UN survey4 provides some information as to the spending patterns that have existed and what types of

goods or services are purchased.

90 percent of Internet traffic in the Philippines goes to the USA.

The top five products and services that Filipinos buy online are books (54 %), computer

software (33 %), domain names (31 %), web hosting (25 %) and computer hardware (24

%).

The top five sites Filipinos shop at are Amazon.com (54 percent), eBay (11 percent),

myAyala, Network Solutions (8 percent) each, Barnes and Noble (6 percent) and

Register.com (6 percent).

Filipino online shoppers spend an average US$522 per year.

Payment Methods

Traditionally payments made for online transactions are

restricted to transaction accounts (credit / debit card accounts) or

via bill payment systems such as PayPal. However, in the Pacific

Rim non-advanced economic nations the possession of such

accounts is highly restricted due to the inability of reasonable

credit risk management and large reoccurring losses due to a high

level of fraudulent activity. The primary associations normally

used, VISA, MasterCard and American Express are not making

their brands readily available in the Philippines as well as the

surrounding nations.

The merchants that do offer other payment methods for online

transactions are very cumbersome and in our view provide a

significant obstacle to the growth of the eCommerce Industry.

Some of the other available online payment options include the

use of a manual bank transfer in which the consumer must provide

proof of funds availability in their bank account prior to the

completion of the sale and shipment of goods. Another option

other than the use of a transaction card is payment thorough Western Union as illustrated in figure 5.

These payment options do not make sense under the current conditions of

economic status if an eCommerce Industry is to move forward. In our view a

new application of a traditional method is necessary to move this Industry

forward.

4 Transaction Cards in Asia Pacific

5 Online Merchant Payment

Options

Triune Payment Solutions, Inc. | Our Strategic View 9

Our Strategic View

Taking all of the current observations into account Triune has concluded that the failure of eCommerce

Industry growth falls squarely upon the inability of existing payment methods to reach the lowest level

of the national population within the non-advanced economy nations. It is our view that the following

provides the basic reason for the failure of eCommerce to take hold, particularly in the Philippines.

Based upon this very simple observation Triune has elected to further its existing business in the

Philippines to include a new method of generating eCommerce, primarily Business to Consumer,

transactions. In the current state we have created and assisted in the deployment of a payment system

application which is currently running on dedicated servers in a Tier One collocation facility in Manila.

This payment system is supported by one of the largest Filipino-owned financial institutions in the

nation which Triune engaged for this project.

The current application is utilized as a “eWallet” payment system for international online payment

services that courts the consumer that does not wish or cannot use transaction card accounts to

complete eCommerce transactions. The application was designed to support all of the current U.S.

banking standards as well as accommodate the national banking practices and laws of the Philippine

government. It is this application that provides, what Triune, views as a payment method that will

permit the expansion of eCommerce to the vary base of the national population.

The current application, while geared towards use in the International market, is modularized and is

highly adaptable to the few changes necessary to launch it as a domestic product. In the current state

Triune believes that a modified application, existing contacts with multiples of large retail merchants in

the Philippines, the addition of a third factor not previously discussed which is the direct contract with a

group of more than 1,200 existing Filipino outlets where financial transactions are conducted and the

backing of several Filipino financial institutions the growth of a eCommerce Business to Consumer

Industry can and will succeed.

Triune Payment Solutions, Inc. | Concept 10

Concept

The logical extension of the strategic view of Triune is the overarching concept that will define the

payment system for non-advanced economy nations. This concept, while generalized for this discussion,

provides counterpoints to what we feel are failure points in the current available payment

methodologies.

Transaction Methods Compared

Triune Payment Solutions, Inc. | Conclusions 11

Conclusions

This document has attempted to show, at a very high level, how a national economy can be impacted by

the contributions of an eCommerce Industry that is energized existing concepts and components. It only

awaits those who have the ability to mold those concepts into a system that works.

Triune believes that the ability to make online payments easy and safe for all parties involved with the

transaction; the consumer, the financial institution and the merchant presents a valuable opportunity

for those that see the future of eCommerce in the non-advance economy nations of the world outside

of the traditional methods.

Triune has the experience, knowledge and proven ability to provide the innovative systems necessary to

complete such a project and is ready to move forward with the proper partnerships.

Triune Payment Solutions, Inc. | End Notes 12

End Notes

1 Bureau of Economic Analysis, “Downturn in Finance and Insurance Restrains Real GDP Growth in 2007”

http://www.bea.gov/newsreleases/industry/gdpindustry/gdpindnewsrelease.htm 2 Indexmudi, “Philippine Economy”, http://www.indexmundi.com/philippines/economy_profile.html 3 Wikipedia, “Economy of the Philippines”, http://en.wikipedia.org/wiki/Economy_of_the_Philippines 4 United Nations Asian Pacific Development Information Program, “ITC – Profile Philippines”,

http://www.apdip.net/projects/dig-rev/info/ph