Accepting Checks over the Internet

1. Accepting Checks over the Internet Convenient Electronic Check Payments for Merchants and Their Customers

2. Products • Electracash offers merchants and billers the following services: • eCheck (for both one-time and recurring payments) • These are debit ACH items • Two simple implementation options • Electracash Managed Service: Electracash hosts the check payment page • Electracash Gateway Service:: XML-based interface for real-time and/or batch processing. • Virtual Terminal: enables merchant’s employees (e.g., customer service representatives, other back office personnel, etc.) to accept electronic checks by entering the customer’s account data on the customer’s behalf • over the phone • via the mail • over the counter • Direct Deposit: Ability to send money from merchant to its customers, vendors, and employees (not payroll). • These are credit ACH items

3. 1. eChecks for online buying and bill payment 4. Summary Topics 2. Flows are simple and features are strong 3. Easy to implement and use

4. eCheck Offering Summary • eCheck enables customers of merchants to make one-time or recurring payments online from their checking accounts • Supports payments from checking accounts: • Consumer • Businesses • Accessed via the Internet web sites • Can be accessed via the biller’s call and/or mail centers (Virtual terminal) • Merchants and billers realize a number of benefits, including: • Greater customer satisfaction • Improved cash flow • Reduced costs

5. Positioning To reach more consumers, demand more payment options • 10 million households without a credit card are online • 89% of US Adults have a checking account • More than 490 million electronic checks were used for online payment in 2002 • Nearly triple the volume of 2001 • Point of Sale e-checks: • Reached 167 million in 2002 • Average transaction amount of $70 • Accepting checks online has increased merchants’ online site revenues by as much as 20% • (Source: Electracash Merchant Survey 11/2002)

6. Bill Payment Households (millions)(Bank and Non-Bank Registered) CAGR = 25% Consumer Check Use Online Consumers are demanding more 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

7. Consumer Benefits • Consumer benefits are tangible and intangible • Convenience … easy, quick, saves time, no paper checks, 24x7 access • Control … know bills are paid, no worrying • Choice … flexible payment date • Financial Benefits … no postage, late fee avoidance, cash flow management

8. Merchant Financial Benefits • Lower remittance processing costs (electronic payments are substantially less expensive than paper-based payments) • 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 • Checks only have a 60 day liability window as opposed to 180 days for credit cards

9. Benefits when Marketed 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 merchant’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

10. Topics 1. eChecks for online buying and bill payment 2. Flows are simple and features are strong 3. Easy to implement and use 4. Summary

11. 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!

12. The transaction flow is very simple for merchants and billers 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

13. Features • Offer flat rate or per-item fee structures depending on your business: based on industry segment, transaction volume, and average transaction size • No hidden fees – all pricing established up front, Same day notification on (NSF) returned checks • Daily distributions • Completely redundant Internet connections, database and web servers • Outstanding customer and technical support

14. Risk Management/Fraud Controls • Authorization that customer intended the transaction • Authentication that user is who he/she claims to be • Verification that account number is valid • Risk analyses of merchant applicants • Fraud scrubbing • Negative databases • Positive databases searches • 128-bit encryption

15. Topics 1. eChecks for online buying and bill payment 2. Flows are simple and features are strong 3. Easy to implement and use 4. Summary

16. The process for launching eCheck acceptance is simple and quick Merchants can be accepting checks within 48 hours • Signed merchant contract with accompanying documentation • Electracash technical team works with merchant : • Set-up the payment page • Post links to the merchant site • Payment and confirmation pages built and approved by merchant • Merchant begins accepting transactions • Customers using new service A demonstration of the consumer usage process is illustrated on the following pages.

17. 1. eChecks for online buying and bill payment 4. Summary Topics 2. Flows are simple and features are strong 3. Easy to implement and use

18. Summary of Offering • eCheck provides several discrete benefits to the merchant or biller • Offers a low-cost, streamlined electronic buying and bill payments functionality • Rapid and easy to set up • Consumers like new functionality, and will use it • Empowers the CSR channel • Supports outsourcing the service rather than deploying and operating the service in-house

19. Electracash is established, profitable, and growing fast • Founded in 1997, Electracash is a California corporation (headquartered in Signal Hill) with technical offices in Memphis, TN. • Serves thousands of merchants merchants • Processed nearly two million eChecktransactions in 2003 • The top management personnel average 30 years of experience each in the financial services industry • Excellent reputation in the electronic payments industry Jody Hancock Marketing & Channel Development (562) 498-6888 jhancock@electracash.com