OVERVIEWJanuary 2014

PayCheck Direct® is operated by Bluestem Enterprises, Inc.

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Agenda• Introductions

• PayCheck Direct Overview – Program Specifics– Walk-through of site

• Merchandising and Pricing

• Marketing and Implementation

• Wrap-up

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PayCheck Direct enables employees to buy what they need when they need it through the convenience of payroll deduction

12 Months

Easy online and phone shopping

Convenient home

delivery

No revolving balances with high interest

rates and fees

Payroll deduction –no writing checks,

no online payments

Simplified approval Process

• No cost, easy-to-implement benefit for your employees• Easy approval process – no credit check• Avoids predatory practices of credit card and rent-to-

own companies• No hidden/surprise fees or interest charges• Especially helpful for those with no credit history• Improves employee financial well-being

http://www.mypaycheckdirect.com/overview-video/

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Key member value considerations for PayCheck Direct

Reasonable pricing

competitive with other retail

options

Low Affordable Payments and Interest-free

12 Months to Pay

Risk free 30 day in home trial

No forced warranty bundling

No alternate form of payment

requirement

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*National Foundation for Consumer Credit Counseling survey July, 2011.

ONLYsolutionfor some

64% NEED to utilize a source other than

savings to satisfy a $1,000 unplanned

expense*

Great solution when you WANT- Competitive pricing- Interest free opportunity- Simple and worry free convenience- Save money and build for the future

25% 0% 50% 75% 100%

A No Cost Solution That Will Benefit Your Entire

Workforce • Make a large purchase when cash & credit is not available

• Avoid costly alternatives – responsible purchase solution

• Get superb convenience and value

- Employee Relevance Spectrum -

Because of their job… they can

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Our customers understand the value proposition and appreciate the easy payment options.

We asked the question – “What motivated you to purchase?

“Wanted a new TV and liked that it was

automatically withdrawn from my checks. Thought it would be easier not to miss the money when I don't see

it in the first place”

“Price comparing with local retailers

on same item & no interest as

opposed to using a credit

card”“Higher priced items with $$ taken out of my paycheck over 12 months, worked for

us.”

“I have wanted one for a long time and I

finally could afford it

through this program.”

“Price, no interest and

low payments”

“Reasonable price and payment plan” “The fact that it

would be taken directly out of

check.”

“Liked the fact of smaller payments and that they are taken out of my weekly paycheck”

Source: PayCheck Direct CSAT survey August, 2013

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PayCheck Direct is part of a $700MM retailer committed to a no-hassle customer experience

• PayCheck Direct is part of Bluestem Enterprises, Inc., a subsidiary of Bluestem Brands, Inc. – 10 years in business.

• Our company is proud to serve millions of customers and has an ACSI score of 84 to reflect their satisfaction – one of the highest in the US.*

• For the employer, we assign an account manager with full cross-functional support.

• For the employee, toll-free customer support is available to handle all customer needs.

• We offer a very customer-friendly return policy.

* Source: ACSI proprietary research fielded in Q4, 2012 via telephone and email

Gettington.comNordstromFingerhut

Retail WebsiteJ.C. Penney

Kohl'sTarget

Best BuyDollar General

Macy'sSpecialty RetailDept/Discount

SearsWalmart

8584

8382

818181

78787878

7775

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Bluestem Family of Companies Customer Satisfaction Index*

88

The Bluestem family of companies, an experienced partner with a 60 year history

Distribution Center

• 3rd largest e-commerce retailer in MN

• Distribute nearly 100 Million product catalogs annually

• Vendor network of more than 1,400 suppliers

• Offer more than 50,000 products

• Shipped more than 4 MM products in 2012 from our own warehouse

• Serve >3 million customers nationwide

• Winner of the Governor’s Safety Award 7 consecutive years.

• Winner Top Places to Work in 2013

Top 100 retailer nationally

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Our Clients

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We offer a wide variety of merchandise categories to meet your employee’s needs.

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We continually evolve our assortment with the customer in mind• Experienced Merchandising team at headquarters• Assortment focused on categories of products that

employees want and need• High quality, relevant products that employees will enjoy

for years to come• Our merchants source the best products from vendors at

markets all over the world– Half of our products ship from state of the art warehouse– Tight controls on products shipped by vendor partners

• Pricing is competitive with where and how customer shops– Each new item analyzed at time of set up– Regular competitive reviews with resulting pricing adjustments

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Pricing comparisons completed 11/18/13

Interest rate calculated based on 23.64% APR with a payoff time period of 12 months.Comparecards.com range for low average FICO Score 23.64% as of 11/18/13.

For big-ticket purchases where financing is needed, PayCheck Direct is the best option

PayCheck Direct Product Units Sold Retail Price Competitor PriceCompetitor with

InterestPW870 Apple iPad Mini 16GB Black 18 $399.99 299.99$ 370.91QF606 Kurio 7S Family Android Tablet 17 $149.99 149.99$ 185.45QS467 Bluetooth Speaker&Speakerphone Black 10 $15.00 24.97$ 30.87QG663 Proform 115 CSX Upright Bike 10 $349.99 239.99$ 296.72PF711 Sony Handycam Red HD 8GB 25x Z 9 $399.99 369.99$ 457.46QS286 HP 15.6" Red Laptop 8 $569.99 501.98$ 620.65QJ145 Samsung Galaxy 7" White Tab 3 8 $239.99 179.99$ 222.54QG420 Gateway 17.3" 6GB Notebook 8 $599.99 484.99$ 599.64NZ333 Apple iPad 2 16GB WiFi Black 8 $489.99 349.99$ 432.73QS304 Sanyo 46" 1080P LCD HDTV 7 $499.99 528.98$ 654.03QH587 BEATS POWERBEATS HEADPHONES-BK 7 $149.99 149.99$ 185.45QF607 Kurio 7S Folio - Pink 7 $29.99 19.99$ 24.72PZ208 Nabi Jr 5" Kids Tablet 7 $119.99 99.00$ 122.4NZ334 Apple iPad 2 16GB WiFi White 7 $489.99 349.99$ 432.73QL890 Samsung GS III Virgin Mobile 6 $399.99 349.88$ 432.59QJ143 Samsung Galaxy 10" White Tab 3 6 $499.99 359.99$ 445.09QJ141 Samsung Galaxy 10" Black Tab 3 6 $499.99 359.99$ 445.09QG934 Sony 32" 720P LED HDTV 6 $359.99 299.99$ 370.91NT110 CorningWare French White 14pc Bakeware Set 6 $59.99 62.99$ 77.88QH362 Dell 15.6" Intel Notebook 5 $599.99 431.99$ 534.11

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What do employers need to do in support of this program?

• Our goal is for the employer to do very little• We meet jointly to discuss implementation• We are able to roll it out when it works best for

you since it’s not tied to open enrollment periods as there is no enrollment process

• Employer provides a Census File for order validation

• Usually requires approximately 15 – 20 minutes per payroll period to process new records for new orders

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What does the employee need to do to participate?• The employee shops online or by phone.• They register with PayCheck Direct when they

place their order.• We validate employment information through the

census file.• The order is processed and shipped to the

employee’s home.• Payroll deductions begin and continue for 12

months of payroll periods.• No checks to write!

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How does an employee qualify?• No credit check is required to

make a purchase• To be eligible an employee

must:– Be a full-time employee– Be at least 18 years of age– Meet the minimum salary

requirement of $18,000 per year

– Have a tenure of at least six months

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If an employee leaves, does the employer end up paying the balance?

• No. The employer has no liability for the employees’ obligations

• When an employee leaves your company, PayCheck Direct will work with the employee to obtain payment for the item

• We’ll work with the employee to pay the remaining by providing them with alternative payment options

• We just ask the employer to provide most current information for the terminated employee

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What if an employee goes on leave?• If a leave is 90 days or less, we will push out the

payment period for the employee. • For leaves greater than 90 days, we will bill the

employee directly after the first 90 days until they return to work.

• When they return to work, payroll billing will resume.

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Are we allowing/encouraging employees to get in over their heads?• PayCheck Direct believes in responsible lending.• Our purchasing tiers are designed to not exceed 3.5 – 4.0%

of gross pay and in most cases are less than 3%.Employee Purchase Limits Based on IncomeAnnualized Employee Base Income Purchase

Min Max Maximum

$ 18,000.00 $ 25,000.00 $ 500.00 $ 25,001.00 $ 35,000.00 $ 750.00 $ 35,001.00 $ 50,000.00 $ 1,000.00 $ 50,001.00 $ 65,000.00 $ 1,500.00 $ 65,001.00 $ 75,000.00

$ 2,000.00

$ 75,001.00 -- $ 2,500.00

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What does your marketing plan include?

 

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov DecCatalog   X     X   X     X    

Flyers         X           X  

Email X   X   X   X   X X X  

Postcards                     X  

The key to successful employee engagement and usage of the program is communication. PayCheck Direct will create a program for communicating out the program to your employees. The program will be submitted for your approval prior to execution.

Below is an example of a recommended program for a typical calendar year:

2020

What marketing communications are presented to our employees?

• The website and catalog are co-branded

• 3-4 catalog mailings per year

• Opportunities exist for messaging to employees through catalogs, email and online

• Ample opportunity is available for reinforcing your presence with your employees in these communications.

Client Logo

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What do you expect usage/penetration to be?• An employer can expect employee usage to be

10 - 20% or higher each year with high repurchase rates.

• The key to success is in the communication plan approved by the employer.– Program brochures will be developed for distribution

during annual open enrollment.– Catalogs will be delivered to employees 3-4 times per

year.– Email templates will be created for the program.

• PayCheck Direct or employers can send periodic employee emails.

• Periodic emails will be made available for hot deals, newsletters, reminders and other program appropriate correspondence.

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How do we differentiate ourselves from our competition?

PayCheck Direct Company A Company B Company C Company D

Merchandise Array

7000+ Offers Varies Varies Varies Varies

In-Home Trial 30 days in home return

for full refund

Up to 14 days after receipt

Refuse at door Up to 3 days after receipt

Up to 7days after receipt

Restocking Fee No NA 15% restocking fee

25% restocking fee

NA

Employee Tenure >= 6 mos. Varies Preferred >= 2 years

NA NA

Pricing 15 – 30% lower in many

cases

- - - - - - --

Free Shipping Appliances ship for free

Promotional Offers

Yes Promotional Offers

Promotional Offers

Major Brands Yes Yes Yes Yes Yes

Alternate Method of Payment Required

No Yes No No No

As of March 1, 2013

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We are focused on providing an excellent experience for your members• Members may order either on the web or over the phone – 87% of

our orders are through the website today• 30-day return policy is standard• Customer Service team is located in our Eden Prairie facility – as we

expand we will continue to service onshore– Hours are expanding to 8:30 AM to 8PM CT Beginning in late October– Email available as well at customer.service@mypaycheckdirect.com– Voicemail is also available 24/7 and will be responded to next business

day• All orders are followed up with a Customer Satisfaction Survey

(CSAT) – results reviewed with the PayCheck Direct team• Members with open orders leaving their employer are given three

options for paying off their order– Pay off the balance in full on a credit card– Pay a monthly payment on their credit card– Pay a monthly payment via check (they will receive a statement)

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Does PayCheck Direct operate in a secure environment?

PayCheck Direct is committed to working in a secure environment. We are classified as a level 3 merchant for PCI (Payment Card Industry) compliance.

– Installed perimeter firewalls between any wireless networks and the customer data environment, and configured these firewalls to deny or control any traffic from the wireless environment into the customer data environment.

– Do not allow any direct routes inbound or outbound for traffic between the Internet and the customer data environment.

– Appropriate facility entry controls are in place to limit and monitor physical access to systems in the customer data environment.

– Intrusion-detection and/or prevention systems are in-place and up-to-date and used to monitor all traffic in the customer data environment alerting personnel to suspected compromises.

– All users are assigned a unique ID before allowing them to access system components or customer data. Passwords must be changed at least every 90 days. Terminated employee privileges are revoked immediately.

– All client data for PayCheck Direct employers/employees is firewalled and only used for purposes of conducting business provided for under client agreements.

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How can PayCheck Direct afford to do this without charging interest?• The likelihood of repayment is substantially

higher when payments are made via payroll deduction– This allows us to take on customers without a credit

check, making the program available to the broadest possible audience

– This significantly reduces the cost of collecting payments and losses associated with bad debt

• Employer access to employees reduces marketing costs We pass these savings

on to your Employees

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How did PayCheck Direct decide to enter this business?• We saw a market emerging as a result of the

economy and changing perception of other forms of financing.

• Existing firms in this space are small and lack the ability to leverage our scale and customer service platforms.

• Financial stress on the part of consumers, which decreases productivity at work, is unfortunately growing, creating a real need for new alternatives.

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PayCheck Direct looks forward to a strong partnership with your organization

• Best in class program• Diligent focus on the customer’s experience• Promote membership messaging• Account Manager support• Full support team behind the program• Highly responsive organization