CONFIDENTIAL AND PROPRIETARY ©2014 DISCOVER FINANCIAL SERVICES

2014 Discover®

Dealer Incentive Program& EMV Update

Key Points - For Dealers

1) Discover Acceptance is INCLUDED with Every Acquirer Merchant ID that is issued – by contract

2) Discover rates MUST be competitive with other payment brands – for similar card types – by contract

3) Discover Transactions are INCLUDED in Dealer revenue share from Acquirers

4) Validating Discover Acceptance with a test transaction ensures your merchants can use Discover connectivity to settle PayPal in-store transactions – with other opportunities in development 2

What You Should Know About Discover®

3

Limited Supply of Gift Cards for Qualifying Engaged Dealers

Engage With Discover®

4

What Discover wants from Dealers in Engagement Agreement:

Agree to Install Discover with 100% of clients on go forward basis

Register at Discoversignage.com - deploy signage with new installs

Register at DiscoverRewardsProgram.com - Validate installs with test card swipe

Agree to fix non-acceptors we identify for a flat fix fee of $150 within 30 days

What Dealers get from our Engagement Agreement:

$200 gift card as signing bonus

$150 per fix for each non-accepting merchant identified by Discover

Access to Discover sponsored hardware and software discounts (Pending)

Opportunity to voluntarily provide list of non-accepting merchants and sales volume for consideration of additional incentives

$200 gift card

Review Dealer Engagement Agreement

Additional Revenue Opportunities

If you voluntarily provide list of merchants and sales volume that do not accept Discover, we will submit to marketing for consideration of additional incentives using the following schedule:

If approved, we will return a summary of your Revenue Opportunity:

Tier Merchant Volume $ to Dealer1 $5M+ $2K

2 $1M - $5M $1K

3 $250k - $1M $150

DN_Identifier MERCHANT_NAME ADDRESS1 CITY ST ZIP Priority Group Incentive to Dealer200 Abel Baking 123 Main Street Los Angeles CA 90014 DMA San Fran / Volume 2,000.00$ 143 Broadmoor Café 124 Main Street PALISADES NY 10964 Non-acceptor 1,000.00$ 106 China Grill 125 Main Street Brooklyn NY 10965 Non-acceptor 1,000.00$ 104 Darcy's Donuts 126 Main Street New York New York New York Non-acceptor 150.00$

98 Egg Café 127 Main Street New York New York New York Non-acceptor 150.00$

Total Incentive Available 4,300.00$

Sample Dealer

Merchant Enablement Incentive Opportunity Especially Prepared for:

Promote – So You Can Offer More Opportunities for Merchants

6

www.DiscoverSignage.com

Store Hours DecalCheck Presenters

Window Decals

Web Banners

Post FREE merchant signage and offer FREE Custom Check Presenters so that cardholders have confidence to use their favorite cards and your merchants can capture additional spend

Keys to Help You Maximize This Opportunity

Validate – Free test cards and incentives for testing terminals

7

Sales Reps get FREE Test Cards and earn rewards for validating terminal connectivity. Register on-line at DiscoverRewardsProgram.com and receive a unique user ID, password and Discover test card number

Keys to Help You Maximize This Opportunity

Discover Network EMV Update

Why EMV? …Because it works!

Networks Drive Change via Compliance Guidelines / “Liability Shift”

Counterfeit fraud in UK: 96M > 43M GBP

Mercury Confidential and Proprietary - For Recipient's Internal Use Only

4/1/2013Processor Compliance for EMV Data

North America EMV Migration

Discover Card Employee Pilot Kick-Off: Sept. 2013

10

Discover Network North America EMV Acquiring Mandate

1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017

10/1/20151. 100% Data Compromise

Relief (MC only) &2. Payments Hierarchy

Begins (MC & AMEX)

10/1/2017Counterfeit Card Liability Shift for Petro Merchants

10/1/2012Waive Annual PCI Compliance for Dual EMV/NFC Terminals

10/1/20131. 50% Data Compromise

Relief (MC only) &2. AMEX Waives Annual

PCI Compliance

10/1/2015Card Present, Counterfeit Card Liability Shift (except Petro)

10/1/2016MasterCard extends liability shift for all U.S. ATM transactions

US Issuers Expand Issuing EMV cards

- EMV migration Forum

U.S. credit and debit card issuers who are issuing or who have announced plans to issue EMV payment cards include:

American Express Andrews Federal Credit Union Bank of America Citi Fifth Third Bank Jack Henry & Associates Payment Processing Solutions PNC PSCU Financial Services Silicon Valley Bank Star One Credit Union State Employees Credit Union Travelex Cash Passport United Nations Federal Credit Union U.S. Bank Wells Fargo

An EMV card is inserted into a terminal The chip embedded in the card contains an issuer key Using input from the card, the terminal creates and

sends a unique piece of data , or “cryptogram” to the issuer’s host during the transaction, validating the card

The card is removed when the transaction is completed

How Does EMV Work?

How Does EMV Align with Mobile/NFC?

An EMV chip can be on a “contactless” card where the chip is “tapped” or “held” near the terminal …..or…..

A chip can be inside your smart phone and the phone is “waived” near the terminal…

Mobile wallets (eWallets) are rapidly growing in number, which multiplies the opportunity for incremental sales for merchants and new revenue options for ISOs

Call to Action: Get Your Merchants Ready

Your Acquirer is your best resource for Information

Sell an EMV contactless enabled terminal. EMV is also a contactless technology and this is the perfect time to upgrade your merchants.

Sell IP. EMV dial response times may double, merchants should strongly consider IP and/or wireless technology over dial.

Call on your acquirer/processor for education. Learn the brand requirements for ISV/Software merchants. The time to start preparing your merchant is now.

Smart Card Alliance EMV Forum (EMF) offers tons of guidance New WG just formed to focus on streamlining ISV/Merchant Certification process

Stand By for offers from Discover & BlueStar Only Contracted Dealers Can Participate

15

Thank You!Come See Us

at

Booth #906

Thank You!