The benefits of Credit with the peace of mind of Debit

Liran Amrany | liran@debitize.com

Liran Amrany 9 yrs. derivative structuring @ JPMorgan 2015 Fellow, Startup Leadership Program Masters in Fin Engineering @ UC Berkeley

(valedictorian)

Co-founder & CEO

Jeff Hu Co-founder & CTO @ Postalgia Product Development @ CVS Health Yale MBA (Entrepreneurial Fellowship),

Duke Biomedical Engineering

Co-founder & CTO

Paul Sauer M.S. Computer Engineering @ UCF Vision Engineering Solutions Lockheed Martin Lead Engineer

Americans struggle to use credit cards responsibly

$115 Billion interest and late fees

38% in credit card debt

3rd leading cause of

bankruptcy

Source: Oliver Wyman “Consumer Payment Preferences: Debit Spotlight”; Federal Reserve

Many are switching to debit

9Y Growth

↑200% Debit

↑67% Credit

Why does more of your spending now go to debit instead of credit?

89% I’m trying to be more financially responsible

But is debit the answer?

Durbin Amendment

Restricted issuers’ interchange revenue

No rewards on debit cards

↓54%

Using debit does not help you build credit

56%

8%

11%

Unscorable

Credit Invisible

Subprime

So should consumers pay with debit or credit?

Monthly auto-pay is not sufficient

Harder to control spending Interest & late fees Big bill each month

Does not build credit No rewards

Less security

VS

Debitize automatically transfers funds to a Reserve Account after each credit card purchase

Checking

$ Daily

Issuer

$ Monthly

& pays the user’s credit card bill

Reserve

Users get the best of Credit + Debit

Card Benefits Peace of Mind Frictionless

Using Debitize

Build credit even faster

Debitize “Credit Optimizer” automatically targets your Amounts Owed

Featured In:

Competitive Landscape

PFM

Improve credit

Rewards

Bill pay

Frictionless

(patent pending)

Use Cases Paying off credit

card debt

Subprime households Students / First-time credit card users

24M

6M

11M

49M

Millennial debit card users

Use Cases: Millennial debit card users

Thin credit history

Wary of credit

Confidence to use credit responsibly

Build credit

Earn rewards

Use Cases: First-time credit card users

Never used credit before

“Training wheels” for credit cards

Avoid overspending

Stay out of debt

Use Cases: Paying off credit card debt

Automate debt payments

Less debt

Better credit

Hard to follow debt repayment plan

Use Cases: Subprime Households

Target top 2 components of FICO

Better credit

Lower interest rates

High interest or do not qualify for loans

We want to partner with you

Together, we can help Americans:

Build credit Stay out of debt

Contact us to discuss pilot programs or other partnership opportunities:

liran@debitize.com 510-798-6092

Thank You liran@debitize.com

The benefits of credit with the peace of mind of debit

The benefits of credit with the peace of mind of debit

APPENDIX

How it works

1. Sign up and link accounts

2. Use credit card normally

3. Funds automatically transferred to cover purchase

4. Bill paid with funds from user’s Debitize account

$ Monthly

$ Daily

Sample transactions

Issuers benefit by converting debit users to credit

$5.4bn

Interchange fees

Ave. debit interchange: 0.59%

$15.3bn

Interchange fees

Ave. credit interchange: 1.79% 22bn transactions

$910bn annual spend

Up to $10.9bn increase in annual interchange revenue

The Durbin Amendment (enacted as part of the 2010 Dodd-Frank Financial Reform)

Cap on Debit Interchange

• Banks with >$10bn assets lose ~50% interchange revenue on debit

• Big banks incentivized to get consumers to switch to credit

Anti-Circumvention

• Cap applies anytime funds automatically pulled within 14 days

• Banks reluctant to offer a competing product

Network Routing

• Debit cards must offer at least 2 non-related network affiliations for processing

• Visa/MC at risk of losing debit volume, also prefer credit

Anatomy of a Credit Card Transaction CONSUMER MERCHANT

MERCHANT ACQUIRER

CARD ISSUER

Au

tho

riza

tio

n

Req

ues

t

Authorization Request

Pu

rch

ase

Pri

ce

Pu

rch

ase

Pri

ce

less

Inte

rch

ange

Fee

an

d M

erch

ant

Dis

cou

nt

Purchase Price less Interchange Fee

(Visa and Mastercard govern the relationship between the Card Issuer and the Merchant Acquirer)

1

2

3

4 5

5%

7%

13%

14%

18%

20%

44%

0% 20% 40% 60%

Why does more of your spending now go to credit instead of debit?

Credit card has richer rewards than my debit card

Borrowing on credit

No longer get rewards on my debit card

Bank incentives to use credit

Other

Credit limit increased

Recently got my first credit card

People who switch to credit do so for rewards

Source: Oliver Wyman “Consumer Payment Preferences: Debit Spotlight”