SMU Dedman School of Law October 8, 2007 Glenn Wheeler – Chief Executive Officer

1. SMU Dedman School of Law October 8, 2007 Glenn Wheeler – Chief Executive Officer

2. Agenda Topics • Who is NCHA/PRO • Who Are The Other Players • Payments Overview • What is Happening in Each Channel • Success Stories and Challenges • Conclusions

3. Who is NCHA/PRO • Non-profit 501 c 6 association of member financial institutions • Consortium of financial institutions that come together to address common industry needs • Key Products and Services: Check Exchange, Education, Risk Management

4. Who is NCHA/PRO • Approximately 800 member financial institutions (Holding Companies) • 30 Employed staff with offices in Dallas (headquarters) and Phoenix • Outsource Relationships • Corporate Board of Directors (from membership) • Growing number of partners – vendors, non-financial institutions

5. Who is NCHA/PRO Check Exchange and Settlement Collecting Banks Paying Banks Large Banks Large Banks ~80% ~35% Electronic and Physical Routing/Distribution/ Settlement Providers Aggregators Mid-size/Small Banks Aggregators Mid-size/Small Banks ~25% ~20% Credit Unions Credit Unions ~40%

6. Who is NCHA/PRO Check Exchange and Settlement • Settlement For Over 20% of All Checks Written in the Unites States • 6 billion checks • 6 trillion dollars • 40% are exchanged electronically • Less than 10% electronic a year ago

7. Who is NCHA/PRO Risk Management – Rule 9 • Broadens presentment warranties that otherwise exists in UCC 4.208 • No forged endorsements • No alterations • No knowledge of any unauthorized signatures • CHANGES #3 to: No unauthorized signatures and is not counterfeit • Future – Revisions to UCC Similar to Rule 8

8. Who is NCHA/PRO Risk Management • Image Survivable Check Security Features • Payment Fraud Information Tools • Training • Education • Payments Approach to Fraud – Breaking Down Existing Silos

9. Who is NCHA/PRO Training and Education • Payments Support For Questions Around Payments • Training and Education – Certification Classes Taught Via Web and In Person • Industry Advocacy • National Automated Clearing House Association (NACHA) • Electronic Check Clearing House Organization (ECCHO)

10. Who Are The Other Players? Check Exchange and Settlement Collecting Banks Paying Banks Large Banks Large Banks ~80% ~35% Electronic and Physical Routing/Distribution/ Settlement Providers Aggregators Mid-size/Small Banks Aggregators Mid-size/Small Banks ~25% ~20% Credit Unions Credit Unions ~40%

11. Who Are The Other Players? • Federal Reserve • Financial Institutions and Aggregators • Service Providers (Image Exchange, Check and ACH Processing, Card Transactions) • Regional Payment Association • Local and Regional Check Clearing Houses • The Clearing House • NACHA and ECCHO

12. Payments Overview (# of Items processed) Observations Total 88.8 3.6% Credit - Private Label Total 79.8 • Electronic payments ~ 11.2% CAGR • Will continue to displace cash and checks • Debit card payments are the fastest growing product ~ 25% CAGR • Credit card payments ~ 3-5% CAGR • Check payments ~ -5%CADR • Expected to level-off to ~ 18-20 billion items / year • B2B checks (currently ~70% of B2B transactions) will be slower to erode 4.4% Online Debit 21% ATM** - withdrawals 2% ACH* 13.4% Offline Debit 24.9% Electronic 7.3% Credit - General Purpose -4.3% Checks* Fedwire / CHIPS (not shown) 2000 0.17 billion 2003 0.19 billion CAGR3.8% CAGR Note: Does not include cash payments Sources: 2004 Electronic Payments Summary; Federal Reserve * Depository Institutions Payments Study; Federal Reserve ** Dove Consulting Group, 2004 + FEDWIRE Annual statistics ++ CHIPS Annual statistics

13. What Is Happening in Each Channel? • Checks • Continual Decline But 33% of All Non Cash Payments • Less Reliance on the Physical Paper Check • NCHA Volume = 40% Electronic Conversion • Improved Collection Times • Fraud Prevention • Information Rich • Estimated to Level Off at 18-20 billion per year

14. What Is Happening in Each Channel? • Automated Clearing House (ACH) • Continued Growth • Checks That Are Not Images – Likely to Covert to ACH Transactions • New Fraud and Risk Considerations • Attractive Payment Tool for Some Merchants and Businesses

15. What Is Happening in Each Channel? • Debit Card • Strong Growth • Reducing Smaller Value Cash Transactions • Resulting in Some Reduction in Check and Credit Card • Credit Card • Moderate Growth • Acceptance in Online Transactions • Security and Information Protection

16. What Is Happening in Each Channel? • ATM • Moderate Growth • Reduced Needs for Cash • Acceptance of Envelope Free Deposits (Imaging) • Service Customers With Less Overhead • Cash • Diminishing Need • Constant Battle With Forgery • High Risk For Consumers (Lose It and It Is Gone)

17. Success Stories and Challenges • Success Stories • Unprecedented Industry Transition of Check to Imaging and Electronics • Check Collection Becoming More Efficient • Debit Cards Have Made Certain Payments Easier and More Convenient • Technology Continues to Create New Opportunities to Attack Fraud • Payment System – Multiple Options All Efficient

18. Success Stories and Challenges • Challenges • Litigation Continues Over Patent Infringement Relates to New Technology • Significant Number of Checks Are Turned Back Into Paper at the Receiving Institution • Payment Systems Are Often in Silos • Significant Fragmentation in Industry • Fraud Remains A Big Problem

19. Conclusions • Payments are a Big Deal: Banks, Merchants, Consumers, the Nation, Global • Technology is Creating New Opportunities to Improve the Efficiency of the Payment System • Significant Growth Opportunities: Online, Mobile, Check Conversion to Electronics • Consistent With Society – Movement to ECommerce