Durbin AmendmentJune 2011

Durbin Amendment Milestones

2

ENACT President

Obama signs Dodd-Frank law

which directs Fed to propose

Durbin Guidelines

PROPOSE Federal Reserve

publishes recommended

guidelines

COMMENT Proposed

guidelines open for public

comment until February 22,

2011

FINALIZEDurbin

Amendment delays defeated June 8,

2011

IMPLEMENT Regulated

interchange effective July 21, 2011

IMPLEMENT Exclusivity and

merchant routing effective

October 2011 (proposed guidelines, option A)

Dec 2010

Feb 2011

June 2011

July 2011

July 2010

• An amendment to limit interchange fees for debit transactions, the “Durbin Amendment” as part of the of the Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted into law July 2010 and will be effective July 21, 2011.

Oct 2011

For internal use only

3

• Regulated Interchange– Impacts FIs with assets of $10B and greater– Currently proposed at $0.12 maximum rate (subject to final Fed review and ruling)– Interchange restricted for debit and single load prepaid programs. – Government , general purpose reloadable prepaid and credit card programs are excluded

• Exclusivity– Impacts all FIs– FIs must maintain at least two debit network relationships– Networks with POS access to DDAs for purchases

o No distinction between signature and PIN authentication– The two networks must not be affiliated

o MasterCard® signature/Maestro® PIN or Visa® signature/Interlink PIN• Merchant Controlled Network Routing

– Impacts all FIs– Issuers can no longer designate routing preference between networks– Multiple PIN network relationships will likely result in reduced interchange revenue

Durbin AmendmentKey Provisions

4

4

• Alternative A– One signature and one PIN based debit network

o Must be unaffiliated providerso Virtually eliminates negative impacts of merchant controlled routingo Relatively easy implementation, proposed effective Oct 2011

– LIKELY EXCLUSIVITY REQUIREMENT• Alternative B

– Two signature and two PIN based debit networkso Merchants would have at least two routing options in both the signature and PIN

channelso Would allow for aggressive “race to the bottom” interchange competition between the

networks – dramatically reducing issuer revenueo Operational challenges, proposed effective Jan 2013

– UNLIKELY THAT THIS OPTION WILL BE REQUIREMENT

ExclusivityTwo Potential Options

For internal use only

5

Response to Durbin ProvisionsRegulated Interchange

Interchange capped at $0.12. Restricted for signature and PIN debit transactions and single load prepaid programs

•Any FI debit issuer with assets of $10B and greater

Impacted Institutions

•NYCE is the most competitive unaffiliated network option providing maximum interchange value

•Supplement revenue from unregulated income streams via additional income from Prepaid, Credit and Loyalty

Response

For internal use only

6

Response to Durbin ProvisionsExclusivity

FIs must maintain at least two unaffiliated debit networks

•Any FI that uses either MasterCard/Maestro or Visa/Interlink as their sole debit provider

Impacted Institutions

•Join a PIN debit network unaffiliated with MasterCard or Visa

•NYCE is the most competitive unaffiliated network option providing maximum interchange value

Response

For internal use only

7

Response to Durbin ProvisionsMerchant Routing

Merchants can route debit transactions to any network

•Any FI with more than one PIN debit network will likely see interchange fall as networks compete for volume

Impacted Institutions

•NYCE is the most competitive unaffiliated network option providing maximum interchange value

Response

For internal use only

NYCE Payments Network

Issue the Card

Size & Scale ConsistentService

Coverage in all50 States

360,000 ATMs

22,500 Surcharge-Free ATMs

2 million POSLocations

1,400 DirectBillers

Industry LeadingAvailability

Issuer-Centricto optimize

existing card base transactions

Drive migration ofexpense-basedtransactions to

higher value formsof payment

83% exclusiveTransactions

A Non-CompetingNetwork

Real-TimeFraud Monitoring and Management

Text and MobileApplications

Consistent recordof Innovation

Approval Rate Management

No Impact toCardholders

during Implementation

Fully engagedwith merchants

Reporting and Data

Integration

8

StrategicFocus

AdvancedFunctionality

Thank You