The eLockbox Bill Payment Solution

1. The eLockbox Bill Payment Solution Convenient Electronic Payments for Utilities and Their Customers

2. Introducing eLockbox • eLockbox enables customers of utilities to make one-time or recurring payments electronically • Supports multiple sources for payment, including: • Checks (ACH) • Credit cards • Debit cards • Can be accessed via the Internet or biller’s call center • The biller realizes a number of benefits, including: • Greater customer satisfaction • Improved cash flow • Reduced costs and service interruptions

3. Consumers are interested in payment options beyond those available at many utilities today eLockbox offering Basic offering of utility billers

4. Features of eLockbox • Designed for the specific needs of certain recurring billers • Provides a simple electronic payment option • A hosted solution (low cost, fast-to-market for the utility) • Creates a merchant account for the utility • Settles funds in 3-5 working days from the time transactions are entered • Offers a 1-day rush feature for last minute consumer payments • Is easy to implement • No cost to the utility (no set-up fee or monthly fee) • Can be implemented within 30 days of signing contract • Can be promoted and priced one of two ways at the biller’s option: • Consumer is charged a “convenience fee” by Electracash – no charges to the biller • Biller offers the service free to consumers and pays Electracash for processing

5. Features of eLockbox, cont’d • Designed to meet the preferences of utility customers • Can choose the payment method (check, debit, credit) • Simple and straightforward consumer interface • Limited number of screens -- quicker payment process • Streamlined graphics – convenient over dial-up Internet connections • “Last minute” payments can be made • Storage of consumer information for repeat users – “click to pay” • Ability to also provide the service via the utility’s call center and CSRs

6. The transaction flow is very simple for consumers Customer enters payment data Customer is billed 1 2 Customer is billed (paper or e-bill) with pay online option at specified website Customer enters: Customer account # $ amount paying Payment account # 3 Customer makes payment 4 User receives confirmation Transaction is Complete!

7. The transaction flow is very simple for utilities Electracash Processing of Payment Funds drawn from customer’s account 1 Electracash provides hosting, payments, and confirmation pages; Moves funds between consumer and merchant accounts. 2 3 Funds deposited into merchant’s account Posting files sent to or pulled from merchant daily

8. 1. Consumers are paying bills on-line 2. Utilities benefit by providing the service 4. Issues 5. Summary Topics 3. Easy to implement and use

9. Bill Payment Households (millions)(Bank and Non-Bank Registered) CAGR = 25% Consumers are demandingmore electronic bill payment options… • Nearly two-thirds of all households now pay at least one bill with an automatic debit (Source: NACHA) • Online bill payment is the most popular application on the Internet, with a 25% annual growth rate (Source: Jupiter) • Electronic bill payment will grow five times faster at biller web sites than at bank sites (Source: Gartner) The question for most recurring billers is how to provide electronic bill payment – not if or when Source: Jupiter

10. …because they obtain a wide variety of benefits • Consumer benefits are tangible and intangible • Convenience … easy, quick, saves time, no checks, 24x7 access • Control … know bills are paid, no worrying • Choice … multiple payment options; flexible payment date • Financial Benefits … no postage, late fee avoidance, rewards points, cash flow management

11. 1. Consumers are paying bills on-line 2. Utilities benefit by providing the service Topics 3. Easy to implement and use 4. Issues 5. Summary

12. There are multiple financial benefits… • In addition to increased customer satisfaction, many financial benefits accrue (will vary by utility) • Lower remittance processing costs (electronic payments are substantially less expensive than paper-based payments) • Reduced workload on the call center (46% of are payments related) • Fewer bill payment questions (e.g. lost payments, past due date posting) • Reduced calls for processing last minute payments • Reduced costs related to service interruptions • Improved cash flow by reduced average days outstanding (i.e., accounts receivable) • Lower cost of managing past due and delinquent accounts • Reduced number of collection notices sent • Reduced bad debts • Reduced dependency on collection agencies • Improved collection employee effectiveness • Reduced exceptions and return item costs

13. …but the financial benefits require effective marketing of the service Customer use of electronic bill payments is driven by several criteria (in priority order)* • Very proactive marketing of the service • Notices on the bill • Bill inserts • Trained CSRs informing users of the service • Mass advertising • Posting on the utility’s web site • Payment types accepted (check, credit card, debit card) • Availability of recurring and one-time convenience payment options • Reasonable price * Source: Edgar, Dunn & Company analysis

14. Topics 1. Consumers are paying bills on-line 2. Utilities benefit by providing the service 3. Easy to implement and use 4. Issues 5. Summary

15. The process for launching eLockbox can be simple and quick • 30 days from merchant approval/contract to customers using feature • Signed merchant contract • Merchant account created • Insert statement-stuffers and/or message on bills • Payment and confirmation pages built and approved by merchant • Merchant begins accepting transactions • Customers using new service 30 days A demonstration of the consumer usage process is illustrated on the following pages.

16. Graphics guide user to where to find account number on the bill statement Select method of payment and enter payment amount Choose “normal” or “rush” payment priority and fee is disclosed accordingly

17. Picture of check assists customer to identify routing and account numbers and reduces payment errors

18. Card-based transactions Credit and debit card payment options are also simple Enter an account number and an expiration date

19. Enter identification information Enter personal information for authentication Customer information is gathered and stored to pre-populate data fields or facilitate future enrollment for customer self-care

20. Confirmation screen allows customer to review their input and make any needed corrections

21. Final payment request confirmation provided (can be printed)

22. Topics 1. Consumers are paying bills on-line 2. Utilities benefit by providing the service 3. Easy to implement and use 4. Issues 5. Summary

23. There are a number of basic decisions to be made The critical decision factors are: • Do you want a simple vs. complex payments model? • Do you want a company pay rather than a consumer pay model? A number of other decisions need to be made: • Offering of multiple payment options • Providing click-to-pay functionality • Ability to also help the customer through the CSR channel • Is approval needed from any regulatory agencies/public utility commission

24. Solutions differ in terms of functionality,cost and implementation times Bill Payment Models Lower Cost and Implementation Times (Minimal implementation costs, 30 days) eLockbox™ Web Payments Payments Solution for Web and IVR Service Bureau EBPP Solution In-House EBPP Solution CIS Solution With EBPP Higher Cost and Implementation Times ($250K-$1MM+, 6-12 months) Simple Functionality Complex Functionality

25. Customer vs. Biller Payment

26. Topics 1. Consumers are paying bills on-line 2. Utilities benefit by providing the service 3. Easy to implement and use 4. Issues 5. Summary

27. Summary of Offering • eLockbox provides several discrete benefits to the utility • Offers a low-cost, streamlined electronic bill payments functionality • Rapid and easy to set up • Consumers like new functionality, and will use it • Provides eChecks, as well as credit and debit cards • Empowers the CSR channel • Allows click-to-pay/customer registration for future payments • Meets approval of regulatory agencies/public utility commission • Supports outsourcing the service rather than deploying and operating the service in-house

28. Summary of Offering, cont. • Utility choice of how to deliver the service to customers • If convenience fees are paid by the customers who use the service, the utility does not incur any direct costs • If the utility absorbs all or part of the cost, the customer acceptance may increase • Can proceed in a two-step process – customer pays, then biller considers biller pay model

29. Electracash is established, profitable, and growing fast • Founded in 1999, Electracash is a California corporation (headquartered in Long Beach) with offices in Memphis, TN, and San Francisco, CA. • Serves over 700 merchants • Processed nearly two million eChecktransactions in 2003 • The six top management personnel average 30 years of experience in the financial services industry • Excellent reputation in the electronic payments industry Jody Hancock, VP Marketing & Channel Development (562) 498-6888 jhancock@electracash.com