Payments in Americas

1. Payments in Americas European experiences Henrik Parl Managing Director Payments in the Americas Conference

2. 70’s: Swift started with bilateral agreements Swift closed for Postal organisations 90’s EBA adding Step2 in new millennium 1999: Euro intro 1997-2003: EU directive - Regulation 2003: SwiftNet 2003: SEPA, EPC and PEACH 2004: New legal framework in EU Giro payments electronic/paper based 1989: Eurogiro initiated 2000: EURO Single settlement provider 2004: FED IACH connected to Eurogiro 2004: SWIFTNet CUG by Eurogiro 2004: Visa Gateway 2004: Eurogiro positioned strongly within EU and as gateway to/from EU History of payments in Europe and Eurogiro General market development Eurogiro development Payments in the Americas Conference

3. AF Afghanistan International Bank AT * P.S.K./BAWAG BE * Financial Post BR Empresa Brasileira de Correios e Telégrafos - ECT CA National Bank of Canada CH * PostFinance/Swiss Post CV Cape Verde Post CN China Post CS Postal Savings Bank CZ CSOB DE * Deutsche Postbank DK Sydbank EG CIB (Egypt) S.A.E. ES BBVA ES Correos y Telegrafos FI ING/Postbank (EUR transfers) FR * La Poste GB * Alliance & Leicester Commercial Bank plc GB Visa GR Hellenic Post HR Croatia Post HU Magyar Posta IE * An Post IL Israel Postal Authorities IS * Póstgíró IT * Poste Italiane JP Japan Post, Postal Savings Business Headquarters LU * P & T Luxembourg LV Latvia Post MA Barid Al Maghrib NL * ING/Postbank NO ING/Postbank (EUR & NOK transfers) PL ING/Bank Sląski PT * CTT Correios de Portugal RO Banc Post RO Posta Romana SE ING/Postbank (EUR & SEK transfers) SI Postna Banka Slovenije SK Postova Banka SN La Poste, Senegal TG Societe des Postes du Togo TR Turkish Post TN La Poste Tunisienne USA Deutsche Bank USA Federal Reserve Bank 45 connections in 41 countries * Shareholder Payments in the Americas Conference

4. Geographical Overview Payments in the Americas Conference

5. Monthly transactions Payments in the Americas Conference

6. Eurogiro products • Payment transfers • standard (max. 3 days) and urgent • to accounts with members • to accounts with 3rd banks • Money orders • standard • TMO, semi urgent cash • Western Union urgent cash • Bulk and pension payments • Gateways & alliances Payments in the Americas Conference

7. New IT- Solutions Post/ELS Members/Multiple BIC Bank/CUG members SWIFT Western Union New Products UPU/TMO Sub Clubs SEPA FED THE WORLD Visa Card Solutions New Gateways EUROPE The Eurogiro strategy 2003 - 2008 Payments in the Americas Conference

8. Eurogiro – providing connectivity Gateway of business opportunities for Eurogiro Members and partners: The Eurogiro SWIFTNet Closed User Group • Only one IT platform needed; • Exchange transactions in FileAct format with any SWIFTNet member and any Eurogiro member on the same system; • Access from SWIFT system to (postal) members with ELS systems and access from ELS system to (banking) members with SWIFT system The Eurogiro/Visa Direct solution • Receive payments from Visa card holders; additional volume and revenue to the Eurogiro members Payments in the Americas Conference

9. Eurogiro – providing connectivity (cont.) The FED-Eurogiro Partnership • Incoming traffic (from potentially any US bank) with fee and foreign exchange income • Only one bilateral agreement required (with FED) Eurogiro/UPU – The Tele Money Order (TMO) • New revised two-day cash product based on the traditional Money Order, mixing Track & Trace techniques and Eurogiro bulking principles • Can be exchanged electronically between the UPU/IFS network and the Eurogiro network Eurogiro/Western Union – Urgent Cash • Eligibility for a special Eurogiro/Western Union performance bonus (bonus based on growth in transactions) • Option to connect to Western Union through the Eurogiro ELS interface Payments in the Americas Conference

10. Why is Eurogiro relevant for you? Eurogiro was started as a pan-European (Postal) initiative to create cross border connectivity Could a similar initiative be relevant for Americas? Can something be learned from the Eurogiro ’experiment’? Payments in the Americas Conference

11. Some potential solutions for cross border payment solutions in Americas • A1) Many-to-many solutions • A2) Many-to-one solution • B1) Own solution • B2) Share with existing solution • C2) Low value • C2) High value Payments in the Americas Conference

12. Example 1: Many-to-one solution Transatlantic gateway Eurogiro Network FED ACH FED/ Eurogiro Format- converter Payments in the Americas Conference

13. Value Proposition to U.S. Banks • Gateway between Europe and USA giving access to all account holders in participating countries • Enable US Banks to access US ACH with international payments as if they were domestic payments (including non-Fed customers) • Full transparency and low cost for STP transactions • Three value day transfer in USD Payments in the Americas Conference

14. Value Proposition to U.S. Banks (cont.) • Fixed to variable currency option • Guaranteed maximum spread on FX • Certainty of payment • Limited production covering Austria, Germany, Netherlands, Switzerland and United Kingdom • Blended fee of $2.00 to U.S. originator to send payment to any of the five countries (not including FX) Payments in the Americas Conference

15. Example 2: Swift Eurogiro Closed User Group Eurogiro SWIFT Gateway Eurogiro Network Eurogiro CUG SWIFTNet Payments in the Americas Conference

16. Lessons to be learned from forming payment co-operations • Do not try to solve all things for everyone • Run projects in small groups with clear decision authority • Select limited number of pilot countries preferably with largest volumes • Use standard technology, procedures and formats • Pool investment, volumes, contract to get critical mass and low costs • Secure global connectivity • Secure commitment beforehand Payments in the Americas Conference