Why Paymentflex® – Why Now?

Paymentflex® has been issued US Patents #5,933,817 and #6,836,764 and has patents pending in other international markets. Paymentflex® is a registered trademark in the United States, Canada and the European Community and is pending in other international markets.

© Copyright Paymentflex Technologies, LLC 2009 – This document is the confidential property of Paymentflex Technologies, LLC and is not to be distributed without the express written consent of Paymentflex Technologies, LLC – No claim asserted for non-original work.

UDAP Rule and REG Z

Aligned

Marketplace Challenge: Governments and the public are demanding bankers to take action now to restore deeply eroded confidence in the economy and mistrust of financial institutions.

With unprecedented monetary and fiscal stimulus and taxpayer funded financial institution bailouts, banks need to do their part by infusing credit safely and responsibly to help reinvigorate the economy.

Consumers and small businesses need access to loans at reasonable interest rates, and want tools and incentives to help them manage and repay their financial obligations.

Banks need market-based solutions with built-in controls to mitigate risk and reward prudent consumer financial behavior while maintaining or increasing profitability.

U.S credit card issuers, in particular, must be compliant with new governmental Regulation AA (Unfair or Deceptive Acts or Practices - UDAP) and Regulation Z (Truth in Lending).

Meaningful, consumer-friendly initiatives, that bring real value to all credit customers, are a critical step.

The Solution: Access to low interest rate loans for all credit customers is critical to stimulate the economy.

Paymentflex is a patented system and method that enables credit cardholders to control their interest rate each and every month through their choice of payment amount. How it Works: The more they pay this month, the lower their interest rate the next month. Safe & Sound Credit Fundamentals: Based on established credit pricing, risk, usage and loan term principles. Paymentflex enables real choice, control, flexibility, & savings to all customers, always, each & every month. Savings in interest expense are a real, immediate and recurring reward to the cardholder. Requires no contact with the bank other than making the monthly payment. Customers and bank staff easily understand the simple, transparent, and straight-forward Paymentflex

payment amounts and related APR options.

The following is a sample presentation of a solicitation and customer statement to all customers: SOLICITATION EXAMPLE CUSTOMER STATEMENT EXAMPLE

Facts and Impacts: Benefits of Paymentflex as a feature on new or existing credit products.

Compelling Offer – Quality Applicants: Applicants across all risk profiles (not just super-prime) and all segments (general, student and /or small business) understand the simplicity of Paymentflex and will self-select to gain access to lower interest rates to revolve. A low interest rate is the most important and valued credit card feature to cardholders. In-market deployments show consumers prefer Paymentflex to other card offers, even rewards cards. Applicants have higher credit quality; banks can extend credit lines and grow safely.

Dramatic Marketing Advantages: Paymentflex cardholders get real “Empowerment” to manage their personal finances and are rewarded for financial responsibility. They get “a win-win when they choose to pay more than their monthly minimum: they're rewarded with lower

interest rates, reducing their balance sooner and improving their credit rating," Tom Dyck, EVP, TD Banknorth. They will also save a lot of money on interest charges.

Strong Alignment with the Current Regulatory and Consumer Advocacy Environment: When a bank deploys Paymentflex, it is viewed as proactive and consumer-friendly by consumer advocates and regulators.

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Why Paymentflex® – Why Now?

Unassailable Positioning: Transparency and full disclosure of all elements occur at the marketing stage, preventing confusion and eliminating cardholder fear of traps, tricks, gimmicks, or deceptive practices. Research and in-market results show that the payment requirements are understood at the solicitation stage. Reinforced by prominent disclosure of required dollar payments on cardholder’s statement, every month.

Built-in Pricing and Risk Controls: The patented Paymentflex “self-directed, risk-based pricing” methodology adjusts every month (based on the cardholder’s choice of payment). Higher Payments = Lower Risk (fundamental principle of risk management/scores). Provides real-time credit quality control and new risk separators for future modeling. Customer-friendly and eliminates the need for dramatic re-pricing initiatives. Demonstrates banks willingness to work with customer and encourages payment priority.

Safe Portfolio Growth and Profitability. Paymentflex is versatile and flexible for new and existing account strategies and delivers: Incremental transaction volume, activation rates and revolving balances from all customer segments. Decreased expenses in acquisition, customer service, retention, collections and charge-offs. This chart shows the real, incremental profit from deploying Paymentflex.

In-Market Ranges of Improvements (Models and Analyses Available):

Significant Public Relations Impact: Deploying Paymentflex significantly improves the bank’s brand imagery. Investors, employees, customers and other stakeholders appreciate the leadership, innovative spirit and focus on safe and profitable growth.

Simple and Easy: Paymentflex is totally systemic, no interface between cardholder and issuer is needed -- the monthly payment alone triggers the process. Deployment is quick and easy. The technology can be enabled in under 60 days via TSYS or First Data. Proprietary platforms for credit cards or other consumer loans can be programmed in a similar time frame.

Contact us: For more information from Paymentflex Technologies, LLC on how to rapidly and profitably deploy.

IN-MARKET CASE STUDY INCREMENTAL PRE-TAX $ PROFIT

PER ACCOUNT PER YEAR

Stephen J. Hucal President and Chief Executive Officer hucal@paymentflex.com 416.762.1200 Canada

Stephen J. Bartell Marketing bartell@paymentflex.com 914.833.8683 USA

Response Rate and Demand lift: 3+ times Industry Average – Quality Revolvers, who can make the larger payments, are

attracted to the better APR offer; they self-select and apply Activation: Increased up to 90+% initially & on-going Usage/Spend: Cards go to “Top of Wallet.”

– 15%-25+% Higher Spend Per Account

– Spend velocity/interchange revenue increases as cardholders re-spend “open-to-buy” freed up from larger payments

– They can better manage their use of credit and can reduce their balances more quickly

– Plus paying more reduces their APR & saves interest expense – Cardholders appreciate the control, choice and flexibility

Reactivation: 15+% lift of dormant cardholders Retention:

– “Save-our-Customer” program improvements up to 50+%

– Cardholders stay so attrition drops 200+ basis points

Revolve Rate & Balances: – APR is now competitive with alternative loans – Balance Increase is driven from Higher Quality customers

Yield: maintenance and/or improvements – Issuer sets payment & APR tiers, thereby controlling yield

Quality of Unsolicited Customers Doubles: – Better APRs attract more Lower-Risk applicants who can be

safely approved and assigned higher credit Lines

Charge Off Rate: 25+% improvement driven from – Higher quality balances flow-in – More customers stay current & make larger payments

(improving their credit scores) – Bad account balance ratio (loss rate) improves

Service Cost Savings: – Customer Service requests for lower APRs drop by 50+% – Collections payment priority to bank improves 5% to 10%

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