Co-branded Virtual and Physical Debit Cards

1 August 2007

1.0 Executive Summary
Ezybonds is a global multi-currency payment system designed to securely transfer funds via the internet, mobile phone or POS terminals.

The system is built around an e-wallet called the “Ezyaccount” which provides members with innovative payment solutions and loyalty rewards modeled on the hugely successful British Premium Bonds.

With an Ezyaccount, members are able to:

• Link existing credit cards and bank accounts.
• Trade in 13 currency accounts.
• Deposit cash.
• View real time account balances and transactions.
• Withdraw funds at any time.
• Transfer funds by email, SMS text, cash pins or debit cards.
• Upgrade existing membership levels.
• Earn significant referral commissions.
• Pay customers, suppliers, merchants, friends, companies.
• Participate in free Ezybond cash dividend draws.

Significantly, the Ezyaccount has been successfully integrated with a debit card processing solution that seamlessly transfers funds held in both virtual debit cards and physical debit cards.

2.0 Debit Card Overview
The Ezyaccount debit card processing solution has become a powerful payment option that competes head on with existing credit card payments traditionally used by consumers over the internet. These debit cards now empower any consumer to own a universally accepted payment card regardless of their age, marital status, social class or credit rating. It exposes all consumers to Internet shopping which is an ever-increasing trend.

3.0 The Australian Perspective
Over the past ten years or so, new payment systems have emerged as Australians move to a cashless society. Although credit cards have generally been the preferred payment method, the use of EFTPOS, B-Pay and electronic fund transfers has increased dramatically as consumers embrace e-commerce.

Currently, Australians conduct more than 80 million credit card and 60 million EFTPOS transactions monthly. The rate at which Australians use their credit cards has increased, with shoppers spending up to $9 billion in the past 12 months, up from $3.6 billion in 1998.

Data also shows that the number of ATM’s in Australia has increased from 14,700 at the end of June 2002 from a mere 8800 in 1998. The number of EFTPOS terminals grew to 402,000 from 362,000 over one year ago and 218,000 five years previously.

However, in recent years, debit cards have emerged as an alternative payment option.

Debit cards are similar to traditional credit cards in that they can operate from the same retail terminals. However, they differ from normal credit cards in that they are required to be in the “black” in order for them to be functional. Debit cards can be topped up by the transfer of funds into their account and can be run down to zero balances through purchases.

The use of virtual debit cards is expected to increase dramatically.

“In five years Host-Based Stored Value programs could generate 1 billion transactions a year on a sales volume of $32 billion and - very importantly create $478 million in new revenue for Issuers.” (Visa, 2002).

4.0 Types of Debit Cards
Debit Cards offer a viable alternative to credit cards for online and offline transactions. They are readily accessible and convenient for consumers, merchants, companies and financial institutions alike.

Ezybonds issues both virtual and physical debit cards in a variety of card types dependent upon branding and user preferences. These card types can be produced using either generic card designs or tailor made card designs. Although virtual cards are issued instantly, physical cards are delivered subject to stock availability.

(a) Virtual Debit Cards
Virtual debit cards are pictures of generic or tailor made cards that do not physically exist. Although they operate with only a card number and PIN code, they must be pre-loaded with funds before they can be used for the following types of transactions:

• Internet payments.
• Card to card transfers.
• Deposits to an Ezyaccount.
• Withdrawals from an Ezyaccount.
• SMS transfers.
• Offline payments at physical locations where the internet or mobile phones are available.

As virtual debit cards are just pictures and not real, they cannot be used at POS terminals or ATM machines.

Virtual debit cards are available to Ezybond members www.ezybonds.com and delivered by email with the following information:

• A picture of the virtual debit card.
• Card activation instructions.
• Card number.
• Expiry date.
• PIN Code.
• Linked Bank Account Details.

Examples of virtual debit card types include:

Student Cards
Student Cards are a safe, secure, parent-approved, virtual debit card that meets the spending needs of teens, helps develop responsible financial behavior and eliminates online fraud risk normally associated with credit cards.

Payroll Cards
Companies can deposit the wages into cardholders’ virtual accounts each pay period with the employees then able to access the funds online via their Ezyaccount.

Merchant Cards
Instead of paper credits or cash refunds, virtual debit cards can be loaded with the exact value of the product return or exchange. Cards can also be mass distributed to drive consumers to an online retail location for some prize, award, benefit or a special price or discount.

Loyalty and Membership Cards
Loyalty or Membership virtual debit cards can be tailored to suit a merchants’ individual program needs. The virtual debit cards can track customer transaction activity, hold point balances, or verify identification for some form of benefits or rewards.

Gift Cards
Virtual gift debit cards can replace traditional gift certificates. They are attractive, easy to use, and avoid the refunding of cash on any unused gift certificate balances. They have fixed values and make perfect gifts.

Incentive Cards
Incentive Cards allow companies to make bonus, incentive or commission payments directly to their employees, agents and independent contractors by funding a virtual debit card with fixed values.

(b) Physical Debit Cards
Physical debit cards closely resemble the appearance of traditional plastic credit cards and operate by using proven magnetic stripe technology with existing banking infrastructures.

However, unlike traditional magnetic stripe cards, funds must be added to the physical debit cards before they can be used for the following types of transactions:

• Online payments.
• POS terminals.
• ATM machines.
• Card to card transfers.
• Deposits to an Ezyaccount.
• Withdrawals from an Ezyaccount.
• SMS transfers.
• Offline payments at physical locations where the internet or mobile phones are available.

Physical debit cards are ordered online at www.ezycashcards.com and are delivered by post. Some examples include:

Re-loadable Debit Cards

Payment Cards
Payment cards allow cardholders to instantly receive and or spend funds from business owners requiring expense accounts. Companies can load cards quickly and easily for staff and workers who spend a large portion of their time away from their home base.

Government Payment Cards
Government payments such as the employment and sickness benefits, childcare and Medicare payments can be placed into the cardholder's account.

Student Cards
Student Cards are a safe, secure, parent-approved, prepaid card that meets the spending needs of teens and helps develop responsible financial behavior.

Payroll Cards
Companies can deposit the wages into the cardholders’ account each pay period with the employees then able to access the funds at a variety of outlets.

Merchant Cards
Instead of paper credits or cash refunds, cards can be loaded with the exact value of the product return or exchange. Cards can also be mass distributed as coupons, driving consumers to a retail location where the card is passed through a POS device to verify eligibility for some prize or award, or to receive a benefit, such as a special price or discount.

Loyalty and Membership Cards
Loyalty or Membership cards can be tailored to suit a merchants’ individual program needs. The cards can track customer transaction activity, hold point balances, or verify identification for some form of benefits or rewards.

Disposable Debit Cards

Gift Cards
Gift cards replace the traditional gift certificate. They are attractive, easy to use, and avoid the refunding of cash on unused gift certificate balances. They have fixed values and make perfect gifts.

Incentive Cards
Incentive Cards allow companies to make bonus, incentive or commission payments directly to their employees, agents and independent contractors by funding the cardholders’ physical debit card with fixed values.

5.0 Features of the Debit Cards
Debit cards are accepted at over 19 million locations worldwide. These locations include physical-world merchants, as well as those that offer Internet, telephone, and mail order shopping. In addition, debit cards can also be used to access cash at ATMs or Ezybond merchant locations.

Implementing a debit card program in conjunction with the Ezybonds global payment system offers a number of benefits including co-branding and revenue sharing opportunities. Depending upon the types of services or features required by consumers, the benefits include:

Benefits to Card Issuers

• Earn significant transaction fees whenever debit card transactions are processed.
• Capitalize on the cash float as debit cards are prepaid and disbursements are made over time.
• Increase revenues from cross selling and up-selling other products and services.
• Develop relationships with niche markets.
• Strengthen consumer relationships and build loyalty.
• Add revenue-generating functionalities to debit cards and enhance the earnings potential of deposit accounts.
• Provide valued customers with a debit payment product offering maximum utility.
• Earn fees on micro payment transactions [i.e. music downloads or ring tones], previously a niche market that was inefficient to access.
• Reduced handling costs.
• Lower costs in infrastructure supports such as banking system and phone networks.
• Provide versatility of combining Ezybonds global funds transfers via internet, mobile phone and physical terminals in one convenient platform.
• Offer offline, online and peer-to-peer transactions.

Benefits to Corporates

• Payroll flexibility.
• Loyalty, bonus and incentive programs.
• Expense account management.

Benefits to the Consumers

• No age or employment requirements so anyone can get one.
• An off the shelf product with no need to apply to a bank.
• A convenient purchase record identified instantly on the cardholder’s e-statement.
• Universal acceptance at over 19 million acceptance locations worldwide and growing.
• Fast, easy, and hassle-free purchasing.
• Instant access via a virtual debit card.
• Security of magnetic stripe encryption and authentication technology.
• No interest expense, as funds are deducted from the cardholder’s deposit account.
• Money management and a simpler way way to keep track of money vs. carrying cash.
• Monitoring spending on the web, by telephone, and through optional monthly statements.
• A teaching tool for teenagers and students.
• Gift giving for general purpose spending or with virtual gift certificates.
• Cash loading available for instant on-line purchases.

Benefits to Merchants

• More customers.
• More options.
• More sales.
• Instant cash and no charge backs.
• Less cash handling.
• No credit hassles.
• Less paper work.
• Customer loyalty.
• Stronger customer relations.
• Cross promotional opportunities.
• Unique co-branding opportunities.