Mobile & Social Payments - OboPay - Kothanek Agent management platform, stored value account, money transfer, airtime top‐up, account management Viral customer acquisition (invite),

1Obopay Confidential

John Kothanek Director Compliance and Operations

[email protected]

October 2011

Background and Marketplace

Obopay Confidential 2

Footprint and Investors


Global Implementations

Investors_______________________________________________________________________

Obopay:Around the World

YU Cash Wallet in Kenya and expanding in East Africa

Launching most comprehensive mobile payments service in India with broadest retail agent distribution

Powering MasterCard MoneySend offering domestic (US) and cross border


SG Obopay Service in Senegal and expanding in West Africa

FIS and STAR are offering Obopay wallet services to their bank customers

Awards & Recognition

MIT TR50IN 2010 MIT Technology Review named Obopay as one of the 50 most innovative companies in the world for our business model, deployment strategies, scalability of technology as well as success rate

Technology Pioneer 2010Obopay was the only financial services provider in the world to be named Technology Pioneer 2010 by the World Economic Forum for our innovation, transformational technology, leadership and substantial long‐term impact on businesses and society.

Fierce 15 Obopay was honored with the Fierce 15 Award by Fierce Wireless and named one of the most innovative companies to take the industry to another level.

Fierce 15In 2008 xchange magazine and Trendsmedia, the events and publishing division of Yankee Group, presented Obopay with the Most Innovative Enterprise Mobile Internet Deployment Award for being the first money transfer service system created exclusively for the mobile phone.

AlwaysOnObopay was selected as a 2010 AlwaysOn Global 250 Top Private Companies.

Best Multi‐channel Capability Project Award Winner 2011”Obopay India and YES Bank were awarded this prestigious award by The Asian Banker

Full Access to Financial ProductsHigh value transactionsFully diversified spend patterns

Limited Access to Financial ProductsMedium Value TransactionsModerately diversified spend patterns

No Access to Financial ProductsLow value transactionsRestricted spend patterns

EMER

GIN

G M

ARKE

TS

DEVE

LOPE

D M

ARKE

TSBANKED

UN‐BANKED

UNDER‐BANKED

BANKED

UN‐BANKED

UNDER‐BANKED

Mobile Wallet: Market Analysis


Money Transfer (P2P) & Family Money

Commerce Top upMinutes

Business CheckReplacement

BusinessPayments

Mobile Wallet

All phones Cash load & unloadat Retail Agent

Retail Agent Enrollment

CardlessATM withdrawal

Real TimeBank Links

Obopay Functionality

Obopay Confidential

Access and Funds Flow


Obopay has built a unique mobile technology payments platform service transactions across use cases, markets and geographies

P2P

E/M Commerce

Disbursement Solutions

Topup, Bill Pay

Retail (POS and mPOS)

Casual CommerceLoad, link or transact Transact or unload

USSD

• Talent Acquisition/Retention – If your career is “mobile” it’s a good to be you

• Merchant Happiness – Looking to cut costs and listening for alternatives

• Real Time Funds Transfer Expansion – Chasm exists between Wire & ACH

• Evolution of ACH – Same day settlement is needed

• Dodd‐Frank‐Durbin ‐ Regulatory changes mean continued opportunity

• Tightening of State Regulations – Opportunity brings more “Opportunists”

• Conformity of State Regulations – Consistency drives efficiencies

• Consumer Flight to Debit – The data is out there

• The Once Sacred Payment – Not really anymore

• Electronic Bill Pay Saturation – Not every payee is electronic

• Retail and Check Cashers – Ongoing business evolution, massive footfall exists

• Who Really Owns the Customer? – Big muscle distributors

• Social Media II – Sharing become buying, and sellers become social

• “Hacktivists” – External and internal threats are persistent

• Quality of Funds – Brutal breach and data lapse events

Marketplace Observations from a Mobile Money Practitioner


Global Deployment Use Cases


Market Market opportunity

Mobile prepaid and Virtual MoneyYouth and familiesSME short term, longer term RetailM‐commerceDonations

Market Needs

Send money anytime/anywhere instantlyLoad/unload funds instantly from accountsRequest payments from peers, clientsText to donate from bank or cardTop up, bill pay, buy onlineVertical solutions (disbursements)

Obopay solution

Solution Instant money transfer to anyone including direct from bank account and cards Get Paid for SMEWeb and mobile checkout, Facebook widgets, Social Short codesPrepaid accounts and cards

Deployment Mobile Money as a service for MasterCard, Banks, Insurance, Major RetailerDomestic Partnership FIS/StarCross border to Mexico

Opportunity M‐commerce, ecommerce, walletsInternational RemittancesLong term retail

Case Study: United States

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Market Market opportunity 693 MM adults, 584 MM subscribers, 41% unbankedAnnual consumer spending: $703B, 91% cash

Market Needs

Cash replacement, convenience for small & essential payments (top up, bill pay)Cost and Time effective P2P solutionSupport for all phone typesAgent distribution and cash in/out, to address limited reach of banks networksCompliance with RBI regulations

Obopay solution

Solution EasyPay (Bill payment, top‐up), EasySend (EasyPay+ transfer, cash out)Agent management platformMulti‐bank solutionInteroperability with ATM and National Switch

Deployment Direct service: Mobile Money ServicesDistributed through Nokia agentsPartnered with Two Retail Banks/Carrier Agnostic

Opportunity Platform Additions Agent management platformBill Pay, Top Up solutionMerchant platform

Future growth

Acquire smaller un‐acquired merchants200,000+ Retailers as AgentsInteroperability for consumers and merchants

Case Study: India


Market Market opportunity

39 MM people, 21 MM subscribers by 2011,80% + cash economy

Market Needs

Replacement for cash for person‐to‐person and person‐to‐merchant transactionsConvenient solutions for Bill Pay, Top UpSupport for al phone types, agent distribution and cash in/outMobile Money part of competitive dynamics between Telecom Operators

Obopay solution

Solution Agent management platform, stored value account, money transfer, airtime top‐up, account managementViral customer acquisition (invite), Cardless ATM withdrawals, deposit at the POSDual language supportMobilized bank accounts

Deployment Licensed platform with on‐going revenue shareOperator distribution (YU), Partnership with Equity Bank

Opportunity Platform Addition Agent management platformImplementation experience in market with low bank penetration

FutureGrowth

Extension to Uganda, Congo, East AfricaInbound RemittanceMulti‐Bank

Case Study: Kenya


Case Study: Senegal


Market Market opportunity 13 MM people, 4% bankedOne of West Africa’s most dynamic mobile market ( 37% annual growth)

Market Needs Solution for unbanked consumers

Merchant payments (utilities, mobile, informal )Person to person transfersCash in/out solution

Obopay solution SolutionStored Value accounts, money transfer, bill payAgent network managementPooled account by Bank branch

Deployment Managed ServiceDistribution through Société Générale branches and commercial partners network (CMS) and TIGO (Mobile Network Operator)Société Générale and partners marketing, sales

Opportunity Platform Additions Bank agent cash–inLocalized Platform (Multiple Languages, Multiple Currencies)

FutureGrowth

Expansion to SSA, Eastern EuropeAdvanced use cases for Eastern EuropeCommon operations across country hubsEurope to Africa and Eastern Europe RemittanceEnterprise and Small Merchants

Compliance and Risk Management


Integrated Compliance & Risk Management (Front Office)

The effective Compliance and Regulatory Officer must be in tune with all facets of the business and engaged in all market activity, inclusive of contracts and trends.

Passive observance from the back office reading reports will not suffice!

Service & Operations

Security & Compliance

Consumers & Businesses

Use CasesTechnology &

Platform

Economics

Distribution Partners

Global & Local


Which Consumers?

Which businesses?

Which markets?

What demographics?

What consumer problems?

What drives usage?

What is the value added?

What type of transaction service?

Which funding sources?

Which points of transaction are best?

Which devices?

Who are the right regulators?

What licenses do you need? What is the right security format?

What are the risks?

Contactless?Wireless?Which networks and partners?

Own or License?

What is the right pricing?

Who, Why, how, when?

Integrated Compliance & Risk Management (Back Office)

Obopay Internal 17

The Compliance Officer must be actively involved and internally “networked” to key back office processes and leaders.


Risk & Compliance:People and Process

• Experienced In‐House LeadershipChief Compliance Officer has over 25 years of Treasury, Risk Management & Operations experience (Yahoo!, Unisys, Allstate, EF Hutton and ACAMS‐Association of Certified Anti‐Money Laundering Specialist)

Director of Risk Operations is ACAMS certified with over 15 years of risk and AML experience (PayPal, Military Intelligence)

• Rigorous Front‐End VerificationThird‐Party Identity Verification

OFAC Screening

Internal Data Analytics

DDA / Card Verification & Authorization

• Account Management & Monitoring ToolsScore Driven Velocity Limits

Real‐time Event Monitoring (24 x7)

Multi‐factor Authentication

Third Party Tools


• Regulatory Compliance—Ensure that registration process, transaction monitoring and corrective action is in compliance

• Protect Brand & Reputation—Known for secure and reliable data and transaction environment.

• Profit Maximization—Optimize between fraud loss and revenue

• Revenue Quality—Focus risk management efforts on most suspicious activity so that customers are not inconvenienced

• Data Driven—Drive decisions and priorities with appropriate historical and real time data.

• Operational Efficiency—Minimize manual review and intervention.

• Scalability—Insure systems and operations can handle rapid growth.

• Configurability—Design systems to react to changing patterns without requiring development or coding.

Global Compliance &Risk Management Tenants


Global Risk Management Process


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Real Time Event Monitoring

Obopay Confidential

Online – Real Time Analytical

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Real Time Event Monitoring (REM):Transaction Monitoring

Obopay Confidential

Transaction Scoring

Behavioral History

How long have you been a customer?

How many good/bad/suspicious transactions have you done?

What channel did you use to get to us?

Are you sending or receiving large/small amounts to/from a lot of different places?

Do you load and then send immediately?

Regulatory Requirements

Size & Frequency

Structuring & Layering

Reporting & Monitoring

Parameters

ACH Load, Unload & Funds Availability

Card Load

P2P Send & Receive


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Transaction Scoring Workflow

Obopay Confidential


Compliance:Global PCI Certifications

•PCI Compliance ‐ US and India

−PCI Level III – since 2007

−PCI Level I (v1.1) – 2008

−PCI Level I (v1.2) – 2009

−PCI Level I (v1.2.1) – 2010

−PCI Level I (v1.2.1) – 2011

• India attained, US in process (8/31)

−Benefits

Securing cardholder information

Reducing fraud risk

Secure the brand image

Secure customer confidence

Integrated cardholder information architecture

Align with privacy principles

Sustained ongoing compliance

Global PCI ComplianceGlobal PCI Compliance

Obopay Confidential

• Registered with FinCEN as an Money Service Business

• All required domestic state licenses

− Currently licensed in 40 states (domestically required in 40 states & DC)

• Acquiring and maintaining MTLs represents significant barrier to entry, representing a strategic advantage. Applicants must have:

− Impeccable Credibility, Solid Business Case/Premise, Executive Leadership

− Sound Business Practice, Compliance, Audit Achievement and Surety Bonds

• Deloitte independent AML audit completed in Q3 2008

• BDO independent AML audit completed in Q2 2010 & Q4 2011

• Completed 9 state audits in 2009, 13 in 2010, and 6 in 2011

• Local Regulatory Adherence;

− US: Treasury Department and States

• Bank Secrecy Act , OFAC and Patriot Act (KYC)

Independent Partner and State oversight

Obopay Board of Directors Governance

− India/Africa: Reserve & Central Bank Regulations

KYC, BASEL II, Customer Acceptance and AML/AFT

Operative Guidelines for Mobile Banking

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Compliance: Regulatory and Licensing

States* for which licenses have secured by Obopay (41)

States that do not require a licenses (7)**

States that require International license (1)

Obopay Money Transfer Licenses in the U.S. (41)

State with 2011 license requirement (2)

* Includes District of Columbia ** From an Obopay service perspective

Compliance:Yearly MTL Maintenance Costs

• MTL License Renewal Fees

41 Licenses

License renewal fees range from $250 ‐ $4000

Total cost for all license renewal fees ‐ $35,000

• Surety Bond Premiums

41 Bonds

Surety bond premiums are roughly 2% of the designated surety bond coverage

Total costs for all surety bond premiums ‐ $130,000

• MTL Examinations

13 examinations since January 2009

Total cost of all examinations – $35,000

Average cost of an examination ‐ $2700

Approximately 5 examinations per year ‐ $13,000

• Miscellaneous Cost

Fingerprinting Fee, Number of Transmissions Fee, etc. – Less than $5,000

• Total Cost per year for all MTL Licenses (approx)

$190,000Obopay Confidential 27

Compliance:Yearly Staffing for MTL Administration

• MTL License Renewals

41 Licenses

Hours to complete a license renewal ‐ 5

Total hours spent for all license renewals – 400

• Quarterly Reports, Annual Reports, Semi–Annual Reports

Total Quarterly, Annual, and Semi‐ Annual reports per year – 70

Hours to complete Annual/Semi/Quarterly Annual Reports – 3

Total hours per year to complete reports ‐ 200

• Administrative

Hours to complete fingerprinting and paperwork for newly appointed officers and directors ‐ 5

Hours to complete Secretary of State Reports ‐ 3

Total hours per year to complete administrative reporting – 200

• Audits

Hours to prepare documentation for an audit – 80

Hours spending with examiners during an audit – 120

5 audits per year

Total hours per year spent on audits – 1,000

• Total Staff Hours per year on MTL Administration‐ 1,800


29Obopay Confidential

THANK YOU !

Documents

Mobile & Social Payments - OboPay - Kothanek Agent management platform, stored value account, money transfer, airtime top‐up, account management Viral customer acquisition (invite),