DEXIT – A MARKETING OPPORTUNITY

Easier than cash, faster than debit

Content DEXIT the company

Concept – Technology and BenefitsDemandCompetitors

Company concerns and the final decisionsTarget marketProductRevenuePromotion

Dexit the company

Formed as new company in 2001 Started as private, became public in 2004

Bell Canada as partner in 2004

Get a stake in Canada’s low-value cash transactions

Deciding how and who to target with their serviceBefore/After approach

Concept and Technology

To provide easy & fast payment through RFID technology Over the counter small cash payments.

Tags held by consumers

Readers on merchants counters

Wireless link between reader and tag

Withdraw money from consumers Dexit account

Benefits

Benefits for merchants Lower cash-handling costs (both theft and shrinkage) Reduce line-ups Turn walk-aways into customers Reduced need to check for counterfeit moneyBenefits for consumers Faster than credit cards No more messing with coins Can track their transactions online

Demand

Two prior attempts had shown an interest from both consumers and merchants

Mondex and Scotiabank

Canadians among the world’s heaviest users of electronic payment systems

350,000 retailers in Canada accepted payment via IDP in 2001

17,6 million monthly IDP users were counted in Canada in 2001

IDP: Interac Direct Payment

DemandInterac Direct Payment Transactions by Province

(in millions)

Ontario (ON), Quebec (PQ) and British Columbia (BC) top three markets

Toronto (ON) Accounting for close to 30% of their province’s respective debit transaction market.

Competitors

Retailers that issued their own proprietary payment cards or gift cards

Credit and Debit card issuersMore towards Dexit than Dexit is towards them

ExxonMobil Speedpass (1997) and Oyster (the new and developed)Both using RFID

Company concerns and the final decisions

Product - Thoughts

Confident on using RFID

Consumers too accustomed to using cards?

Key chain fob or other kind of gadget?

Product - Decision

Target market - Thoughts

Target national or in a specific geographic area?

Target group of individuals who were comfortable with newer technologies (Like the Dexit tag)?

Who where the heavy users?

Better for low-value transactions

Target merchants based on the demographics and lifestyles of the consumers?

Target market - DecisionSmall target area within TorontoTargeting areas with a high consumer-to-merchant ratio

HospitalsCollege campus’Subway stationsoffice towersVarious take-away food and convenient shops

Target a younger consumer base (students)“Pendlers” on their way to work (potential heavy users)?

Should they have target another area/group?Public transportationTaxiParking

Revenue model - Before launch

Decision for finding revenue

Merchants Transaction fee and how much? Set subscription fee?

Consumers Fee for each transaction? Willing to pay if cost is transparent?

Revenue model - Solution

Fees from merchants, based on a percentage of the transaction value.Consumers pay 1.5$ each time they allocate new funds to the Dexit account.Licensing fees from organizations (royalties).Interest rates on prepaid accountsIncome from sales of Dexit point-of-sale terminals, RFID tags/readers

Partners in crime

In mid 2004 Dexit partnered with BellBell have exclusive rights to market and sell in CanadaGetting access to Bells relations to 500.000 merchantsand 15 mill. customers.

Leads to lower marketing costs:Sales and Marketing costs having gone from almost 1.5 million$in Q2 2004 to less than 600.000$ in Q2 2005)Licensing of system to other organizations

Promotion - Before launch

Limited marketing budget Push or pull? Posters, TV, radio, newspaper, Webpage Hire sales force?

Promotion - Solution

Posters in the geographical area of service Subway station, side of busses. Special offers using Dexit’s webpage Marketing surveys for existing customers

Ineffective webpage (show the bugger)

SWOT - Not Forgot

STRENGTH Reliable system Propriety system B2B and B2C target market Bell (strong partner) Fast transactions High entry cost

WEAKNESS Webpage not consumer-centric High consumer acquisition cost Expensive hardware for

merchants High entry cost

OPPORTUNITY Licensing of system (Royalties) Possibility to port the system to

online sales Profit by substitute the cash

market with e-cash so big competitors don’t see it as a threat – Investors

THREAT Adoption conservatism (Like

Euro in DK) New entries Not yet reached critical mass

(lack of awareness) Other technologies (mobile

phones)

Wrap - Up

The status of Dexit, today, is still uncertain.Only gained 20.000 consumers over the last 2 yearsOnly gained 460 new merchants since launch

Many investorsTheir license agreements with BellFirst-mover advantage in Canada

Will they survive on the market?

Have they done it right?

Thank you for your time