QIWI start up

commission statement

About our company

QIWI, a company founded in Russia in 2004. After 9 years of operation QIWI is the leading and proven complete solution provider for one stop payment convenience to the customers in Russia and abroad. The complete systems and solution supplied from QIWI encompasses in-house hardware and software production and complies with latest IT standards allowing secured information flow between service providers and the customer. Key development strategy is Self-Service Kiosks (SSKs) installation. We have 25 models (indoor, outdoor, wall mounts, etc.) Our SSKs need only 1 m2 and a power port. These requirements allow to place it in most popular sites, such as supermarkets, shopping centers, airports, railway stations, universities, etc. Furthermore our experience shows that our business model helps reach maximum penetration rate of our service even in distant areas of the country and also helps to create a lot of job positions.

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Solutions that are performed in our System appear to be working results of continuous improvement which was made by hundreds IT specialists during several years. Invaluable experience of processing requests from hundred thousands of our payment devices makes QIWI Processing System unapproachable for any others. This is a pledge of QIWI leadership in comparison with any other company. Our team does complete IT adaptation of hardware and software (including adaptation for SSKs

and other types of payment terminals) for payment collection startup. All changes are attended by unit-tests and under thorough tests in testing environment before adaptation into industrial environment. For System stability matter we run daily automated tape-backup of all databases. Due to information safety we use world standards of encryption and signing in our authorization system. RSA-keys with 2048 bit length are used for data protection.

About our company

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About our company Agents network model

Agent

Subagent

Agent

Competition

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QIWI

All relations (including financial) with providers are performed by QIWI. The System we use has hierarchical structure with numerous sublevels (see previous page). Each agent is able to create a subagent group of any number and then to set any percentage compensation rates. All financial relations with agents and subagents (and with QIWI System as well) are based on 100% prepaid strategy, which eliminates all providers’ economic risks and guarantees acquisition of income for all executed transactions. Each agent has a unique ID in QIWI system. Each payment device is registered with exact address. When agent plugs in a new subagent into the System, he authorizes him under his own ID (and creates a subID). Thus agent bears personal responsibility for this subagent. Agents have contract-based relations with all their subagents. According to the contract, subagents deposit funds to the agent’s bank account and after that agent transfers deposited money on subagent’s account in the System. Thus, subagent has no possibility to refill his account in the System himself, which means that he can’t collect payments without agent’s control. Our System provides great possibility to monitor subagents network. There is a special web portal, where agent can track all payments, which were collected via his payment device. Using this portal agent can create any king of reports and get all payment statistics he needs. Our analytical systems are able to generate up to 1000 reports per second for our clients.

About our company Agents network model

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• All agents compete with each other. • Internal competition influences the market and brings along clients’ commission (upper commission) decrease. • Hence payment acceptance market regulates clients’ commission. • Our experience shows that while agents act in this competitive environment, more than 10% of total points of sale amount do not settle any clients’ commission.

Agents network model advantages

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WIN terminal - Linux and Windows terminals allow collecting payments by means of personal computer. This kind of terminals is highly spread amongst mobile dealer shops.

Main payment devices POS-terminal is a compact and completely functional terminal which allows performing fast and easy payments collection. Usually these terminals are placed at the cashier in the shop. POS terminals are light weighted and have a powerful battery.

Self-Service Kiosk is the most popular type of payment device in Russian Federation. This device can be placed in the street or inside of a mall/shop/ etc. SSK provides customer with 24/7 easy and user friendly service along with payment confidentiality and personal information privacy. There are SSK models with second monitor which are very popular due to the possibility of advertising.

Java terminal - simple and free solution for payment collection. Software should be installed to the cell phone. This will allow collect payments using GPRS technology. Java-terminal is free of charge cell phone applet for payment collection.

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Also we have solutions for payment acceptance via Automated Teller Machines, supermarket cash registers, via XML feed and many others.

Advantages for Mobile operator Improving affordability of prepaid top-up

Our experience demonstrates that QIWI is real and effective driver for direct top up payments increase. During last six years share of scratch cards in Russia decreased from 95% in 2003 till 9% in the end of 2010. We provide a better up to date solution for the market, for all the customers, whether they are rural population or urban population.

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QIWI company

We develop innovative payments acceptance channel which is extremely profitable for providers.

Building up this channel foremost concerned with agents and subagents network development.

During System roll-out, agent’s costs (initial investment + monthly costs) are: hardware purchase, оperating assets, place rental, connection (GPRS/Internet), cash collection, consumables, cash recounts, taxes, technical maintenance, etc. According our estimation, these costs amount to 5-6% of turnover. For an effective start up and network development, agent’s income should be 2-3%. Hence it appears that distribution channel which we plan to develop will be effective and will become an actual alternative to the traditional channels of payment collection with 8% reward (commission) from mobile operators.

New distribution channel – commission statement

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Advantages for Mobile operator Cost savings for mobile operator

Cooperation with our system is advantageous for mobile operators, because by virtue of our technology operators can considerably simplify and expand the range of payment acceptance in their favour. The technology which we provide reduces Telcos’ costs in comparison with scratch cards production and doesn’t involve any kind of economic risks. The scratch cards cost: 2-5% - theft+ fraud, 6% - commission to agents, 1% - production, 3-5% - logistic, 5-7% - others expenses In average scratch cards cost over 12% for the operator. We reduce mobile operators’ costs for scratch cards production, storage, transportation and delivery to agents. Moreover, QIWI SSK usage provides the opportunity to save on stuff for payment acceptance in the offices of mobile operator.

We deliver a cheaper and better solution for payment collection. 10

Constant (24/7) availability of the system allows to increase ARPU per month as admits to decrease the “inactive subscriber” indicator (impossibility to replenish the account). Nowadays this indicator has decreased from 14% to 4% in Russia, that is ARPU for active subscriber has increased by 10%. People in distant areas get convenient, fast and user friendly top up channel, and this enhance mobile penetration rate.

Also we have positive experience with selling contracts via QIWI SSKs.

Thus number of effective requests (which have concluded with a contract) per day amounted up to 200 through 1 SSK. The best result for 1 month of contracts selling is 50 000 contracts – which basically are new active subscribers.

Advantages for Mobile operator Increase of active subscribers base

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Advantages for Mobile operator Customer service improvement

We improve mobile operators’ customer service. The customers get the possibility to top up anywhere, anytime because of extended retail footprint and working hours (availability). QIWI is a very simple and fast way to top up. An average payment takes only 30 seconds. QIWI provides user with possibility to pay anonymous, because customer interact with a machine.

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THUS THE MAIN ADVANTAGES FOR MOBILE OPERATOR ARE: Improving affordability of prepaid top-up Enabling lower ARPU customers and impulse top-up. Significant increase in total volume of direct top-up transactions. Cost savings on traditional distribution channels. Increase of penetration rate of their service Increase of active subscribers base Direct interactive communication channel for advertisement and promo Easy and instant time to market introduction of new products, promotions, features. ARPU increase by virtue of promo actions via QIWI SSKs 24/7 comfortable and efficient service for your customers THE BENEFITS TO CUSTOMER OF MOBILE OPERATOR ARE: Simple and easy service to use, fast. Anywhere, anytime convenience. Privacy of information and payment (phone/account numbers, amounts). Low-value to high-value top-ups, amount determined by customer

Advantages for Mobile operator

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General cooperation advantages

Contacts

Andrey Novikov

Vice president international business development QIWI

E-mail: a.novikov@qiwi.ru

Tel.: +7 (495) 783 59 59, ext.: 7104 Mob.:+7 (906) 037 33 99

www.qiwi.com, www.qiwi.ru

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