ADDRESSING THE CHALLENGES OF INTERNATIONAL PAYMENTS

PAYMENT SOLUTIONS NEWS, SPRING 2014 ADDRESSING THE CHALLENGES OF INTERNATIONAL PAYMENTS In this issue PRODUCT SPOTLIGHT Our alliance with Barclaycard now offers PNC commercial card clients corporate and purchasing card solutions in 25 European markets and 9 billing currencies. MARKET FOCUS: CANADA Our newly-awarded commercial banking license allows PNC Bank Canada Branch to deliver more treasury management services, credit options, lending and equipment finance services and support to both U.S. and Canadianheadquartered clients. QUICK TIPS Explore the optimal PNC Commercial Card solution for efficiently managing your global payments. BY THE NUMBERS Global card payments growth forecast. NATIONAL ECONOMIC UPDATE A NOTE FROM JEFF FELSER, SENIOR VICE PRESIDENT This issue of the PNC Bank, National Association ( PNC Bank ) Payments Solutions newsletter focuses on the growing internationalization of U.S. firms, and how PNC provides solutions to support our clients international activities. With our multinational card program and Canadian service offerings and expansion plans, PNC is well positioned to help clients meet the challenges of operating internationally and capitalize on the many opportunities presented by doing business abroad. GLOBAL TRADE EXCEEDS $5 TRILLION In his 2010 State of the Union address, President Obama stated a goal to double U.S. exports by 2015. In the past four years, the U.S. recorded a 44% increase to $2.3 trillion in goods and services. Imports have expanded nearly as significantly, bringing total U.S. trade volume (exports plus imports) to over $5 trillion. 1 In recent years, the number of U.S. firms that are exporters has grown by more than 35%. The primary reason for international expansion is to accelerate revenue growth while reducing dependence on mature domestic markets. Yet establishing trade and maintaining an international presence create unique operational challenges, as companies deal with different time zones, languages, business regulations, work cultures, technology infrastructures and political environments. Given the complexity of doing business internationally, it is not surprising that our largest export market is Canada where exports topped $300 billion in 2013. Canada has a business environment very similar to that of the U.S., with English the dominant language. Geographic proximity to the U.S. and reduced trade barriers due to NAFTA make it even more attractive. Compared to countries like China or India (with languages and trade practices that can be very different from ours), Canada is a much easier first step for many U.S. companies seeking to expand internationally. 1 U.S. International Trade in Goods and Services, December 2013, February 6, 2014, U.S. Bureau of Economic Analysis, U.S. Census Bureau pnc.com/treasury 1

INTERNATIONAL PAYMENTS MANAGING INTERNATIONAL PAYMENTS Having the right payments solution in place is an important factor when transacting business in multiple countries. PNC s range of international payments services includes foreign exchange services, international wire transfers and letters of credit, and many of these services can be accessed through PINACLE, our corporate online banking portal. Underscoring our long-term commitment to international payments, PNC began to expand our international commercial card solutions in 2012. We spoke to a number of multinational clients to gain a better understanding of their needs. It became clear that success would require the provision of in-country and inlanguage service and 24/7 support, country by country, for both administrators and employees. CLIENT REQUIREMENTS FOR ADOPTION OF AN INTERNATIONAL CARD PROGRAM Greater visibility over expenses than is traditionally available Spending controls and local currency access for employees distributed across numerous locations Settlement in local currencies and avoidance of currency conversion fees Ability to report payments data across countries and regions Integrating data across a global reporting platform Efficient and speedy global implementation, without separate processes and contacts for each individual country Risk and fraud controls and protections Payments practices and products in some countries and regions differ significantly from those to which U.S. firms are accustomed to here at home. For example, European companies have not yet fully adopted purchasing cards and payable platforms even though usage is rapidly growing. On the other hand, EMV platforms (short for Europay, MasterCard, Visa ) and their specifications for chip-and-pin and chip-andsignature transactions are much more established internationally and are now standard in many countries outside of the U.S. We have teamed up with Barclays Bank s Barclaycard division the leading Visa commercial card issuer in Europe in order to provide PNC clients with the same consistently high service quality we provide here in the U.S. Over the past 24 months, we ve successfully developed support teams, implementation systems and dedicated resources so that together we now provide purchasing and corporate travel and entertainment cards in 25 European countries, with settlement in the seven leading European currencies plus U.S. and Canadian dollars, and service in eight languages. PNC S MULTINATIONAL CARD PROGRAM COVERAGE PNC issues dollar-denominated cards to U.S. companies operating in virtually any country worldwide. 2 For companies operating in Europe who require local currency settlement in any of seven major European currencies, PNC with Barclaycard provides a multinational program for purchasing and corporate cards. Our relationship with Barclaycard enables PNC clients operating in 14 additional international markets beyond Europe to set up local currency settlement Visa card programs with partner banks. 2 Exceptions: Cuba, Iran, Syria, Sudan SERVING DIVERSE CLIENT NEEDS PNC s broad range of commercial banking products and services reflects the diverse payment needs of companies operating internationally; supporting traveling employees; managing day-to-day facilities operations and procuring materials and services from suppliers. Global data and reporting enables greater visibility and control over payment activities, and data integration helps you define best practices, identify areas that require attention, and often negotiate better terms with suppliers. You ll find details of our commercial card capabilities, geographic coverage, and implementation timing in this issue s Product Spotlight. pnc.com/treasury 2

INTERNATIONAL PAYMENTS We have been granted a full service branch license and have expanded our commercial banking operations in Canada. Our range of commercial initiatives for U.S. and Canadianbased companies is examined in greater detail in this issue s Market Focus. Can your business benefit from our Multinational Card Program? Check out Quick Tips for a self-diagnostic of whether this program would satisfy your company s unique requirements. Whatever the breadth and depth of services your business needs, our powerful solutions can make your international transactions more efficient and effective. Please visit our International Services website. Discover how PNC can deliver ideas, insight and solutions to help you solve your global payments needs. Meet with your PNC Treasury Management Officer to determine whether you would benefit from our expanded PNC Multinational Card Program. pnc.com/treasury 3

PRODUCT SPOTLIGHT MULTINATIONAL CARD PROGRAM SUPPORTING EUROPEAN PAYMENTS NEEDS The European market is crucial for U.S. businesses, with U.S. trade with Europe totaling nearly $800 billion in 2013. 3 A diverse array of PNC s clients operate in the region, including exporters, manufacturers, service firms and retail chains. As our clients expand abroad, they have an increased need for commercial card solutions with local currency settlement in order to efficiently support the travel needs of resident employees, manage facilities, procure materials from suppliers and operate dispersed distribution networks. In response to growing client needs throughout Europe, PNC launched a multinational card program with Barclays in May of 2012. Through this referral relationship, Barclays card unit, Barclaycard, provides commercial card solutions, support, and local currency settlement to our clients in Europe; and PNC similarly supports Barclaycard s UK clients needing dollar settlement in the U.S. One of the world s best-known banks, Barclays has a global presence and a 300-year heritage. Barclaycard is now the world s 8 th largest card issuer, operates in more than 60 countries and is the largest Visa commercial card issuer in Europe. WHO CAN BENEFIT FROM THE MULTINATIONAL CARD PROGRAM Our joint multinational card program is structured to address the needs of PNC s U.S. commercial card clients who spend a minimum of $1 million on payment cards in the U.S. and have a projected European commercial card spend of at least $500,000 (USD). To participate in the program abroad, our U.S. clients must have a permanent presence in Europe, including a company in the UK or Ireland that has contractsigning capabilities. The PNC-Barclaycard program provides a multinational solution with broad geographic reach and comprehensive reporting, yet it s equally focused on local implementation and outstanding client support in-country. This dual focused global and local service delivery model is provided through an integrated account management structure, with each bank contributing resources and technical staff to teams, as well as providing executive oversight. Every account is led by a Global Implementation Lead who is responsible for program optimization, acts as a single point of contact for our clients, and heads a dedicated team of representatives from both banks, thus ensuring consistency in service delivery and ongoing support, regardless of which bank originated the card account. GEOGRAPHIC COVERAGE: EUROPE AND BEYOND Our robust suite of corporate card and purchasing card solutions covers 25 European markets in seven European currencies, plus U.S. and Canadian dollars. 3 U.S. Census Bureau, http://www.census.gov/foreign-trade/ balance/c0012.html pnc.com/treasury 4

SUPPORTING EUROPEAN PAYMENTS NEEDS OUR CARD ALLIANCE SUPPORTS CLIENTS IN 25 EUROPEAN MARKETS WITH 9 BILLING CURRENCIES CONTRACTING COUNTRIES Ireland United Kingdom OTHER ISSUING COUNTRIES: Austria Belgium Cyprus Denmark Estonia Finland France Germany Greece Italy Jersey Lichtenstein Luxembourg Malta Netherlands Norway Poland Portugal Slovakia Slovenia Spain Sweden Switzerland CURRENCIES: Euro ( ) U.S. Dollar ($) Norwegian Krone (kr) Swedish Krona (kr) Canadian Dollar ($) Pounds Sterling ( ) Danish Krone (kr) Polish New Zloty (zł) Swiss Franc (SFr) While card payables are a growing trend in the UK, mainland Europe has been slow to adopt due to well-established electronic payment systems already in place. However, while purchasing card usage among U.K. and mainland Europe suppliers is significantly less established than in the U.S., it is accelerating. Barclaycard recently introduced a purchase control card with traditional purchasing card functionality, such as spend controls and transaction limits. The relationship with Barclaycard also provides our clients with access to commercial card solutions beyond Europe. Barclaycard s referral relationships with other Visa Multinational Premium Solutions (VMPS) banks enable cards with local currency settlement in key international markets like China, Australia, Japan, South Africa, Argentina and Brazil. And for clients who do not need local currency settlement, PNC itself can provide U.S. dollar-denominated commercial cards virtually worldwide. FOUR REASONS OUR BARCLAYCARD ALLIANCE HAS BEEN SUCCESSFUL In the two years since we launched our program, PNC and Barclaycard have worked together to align products, processes and service standards so that we can deliver common functionality across client locations. 1. PRODUCT FUNCTIONALITY Chip-and-PIN functionality facilitates transactions at EMV-enabled terminals, which are common in Europe and are credited with reducing the incidence of fraud. Spend controls on individual cards, such as merchant category blocking and single transaction limits, enable spend oversight and fraud prevention. Central billing and in-language statements in English, French, Italian, German and Spanish simplify program administration and end-user support. pnc.com/treasury 5

SUPPORTING EUROPEAN PAYMENTS NEEDS 2. SYSTEMATIC AND SIMPLIFIED IMPLEMENTATION Since the launch, PNC and Barclaycard have developed a systematic implementation process to ensure that our clients are onboarded and get cards in wallets as quickly as possible. We have refined our implementation to recognize some of the traditional barriers to implementation, such as lack of buy-in from and integration between global and local teams, as well as insufficient timelines to effectively plan, test and deploy. Clients are assisted by our integrated account management team through a simplified contracting process, so that clients can go from contract signing to rollout in as few as eight weeks. And PNC and Barclays continue to support the rollout post-implementation with ongoing monitoring and status reports. 3. POST-IMPLEMENTATION SUPPORT Important post-implementation support is continually provided for various client stakeholders through our integrated account team: Cardholders can access in-language support (languages available are English, French, Italian, Spanish and German). Program administrators are supported by in-language customer service representatives, who can provide advice on local payments practices and rules. Cardholders can access subject matter experts during office hours. PNC and Barclaycard provide administrators with consultative support, such as Vendor Match capabilities in the UK, on payments best practices that administrators can deploy in their organizations. Technical teams provide upfront training and ongoing tech support to administrators. PNC and Barclaycard both have leading merchant acquiring operations, which speed vendor enrollment and enable our clients to optimize their supplier payment initiatives. 4. GLOBAL REPORTING AND DATA INTEGRATION While the range of customer support options provides effective account and technical support to cardholders and administrators on the ground, we also provide consolidated data and reporting through Visa IntelliLink, enabling our clients to get a consolidated view of their U.S. and international card spending. Visa IntelliLink provides a range of standard and customized reporting tools targeted at multiple client stakeholders, which can be exported into common formats such as PDFs and Excel spreadsheets. Visa IntelliLink is available in 18 languages and can be accessed online 24x7 in order to monitor trends. It also offers a range of interactive drill-down options and intuitive menus for administrators to manage their programs and individual cardholder needs in real time. EUROPE, CANADA AND BEYOND In addition to the broad range of treasury solutions PNC Bank already provides to U.S.-headquartered firms operating in Canada, the PNC Bank Canada Branch (PNC Canada) has just been awarded a license to expand commercial banking services across Canada. In the near future, PNC Canada will be able to direct-issue commercial cards with local currency settlement to Canadian-headquartered companies. Our range of commercial initiatives for U.S. and Canadian-based firms is examined in greater detail in this issue s Market Focus: Canada. Discover how PNC can deliver ideas, insight and solutions to help you solve your global payments needs. Meet with your PNC Treasury Management Officer to determine whether you would benefit from our expanded PNC Multinational Card Program. pnc.com/treasury 6

MARKET FOCUS: CANADA PNC BANK CANADA BRANCH NOW OFFERS EXPANDED SERVICES IN CANADA This February, Canada s Office of the Superintendent of Financial Institutions granted PNC Bank Canada Branch ( PNC Canada ) a full service branch license which allows it to expand the range of commercial banking services and support it offers throughout Canada. PNC Canada s full service branch license enables us to better serve the large number of our U.S. clients already doing business there, and Canadian-headquartered companies as well. TRADING VOLUMES WITH CANADA Canada is already the U.S. s largest export market and the second largest source of imports after China. Total U.S. merchandise exports to Canada surpassed $300 billion in 2013 19% of our total exports 4 and imports were $332 billion, 15% of our total. In addition, Canada is the largest export market for 36 states, and represents over 40% of the export volume for some. 5 MERCHANDISE EXPORTS TO CANADA BY STATE 4 ($BN in 2013, and share of total state exports) $8.9 11% $3.1 17% $18.8 11% $1.2 14% $1.6 28% $1.3 8% $2.2 12% $0.6 39% $0.4 28% $2.1 24% $0.3 11% $2.7 72% $0.7 44% $2.2 29% $2.6 21% $25.9 9% $1.9 28% $5.8 28% $4.4 32% $4.0 31% $1.6 22% $3.1 5% $7.5 32% $20.1 30% $2.0 16% $11.8 35% $25.9 44% $20.0 39% $7.7 31% $8.7 27% $4.3 22% $6.3 17% $11.6 28% $1.8 21% $3.2 18% $6.7 23% $3.7 14% VT: $1.9 46% $14.2 17% $1.4 51% NH: $1.4 32% MA: $3.7 14% RI: $0.5 22% CT: $1.9 12% NJ: $6.8 19% DE: $0.7 14% MD: $1.9 16% Canada Rank as Destination for State Exports 1 st $0.6 13% FL: $4.5 7% 2 nd >$0.1 3% Total trade volume in 2013 exceeded $700BN in merchandise imports and exports plus services business. 4 Foreign Trade Division, U.S. Census Bureau 5 International Trade Administration, U.S. Department of Commerce pnc.com/treasury 7

EXPANDED SERVICES IN CANADA DOING BUSINESS IN CANADA When expanding internationally, companies tend to first export to and a establish presence in countries that are close geographically, share a common language, and that have similar infrastructures, business practices, regulatory environments and political cultures. Many of our clients have expanded into Canada. It s typically the first market many businesses enter when they get into international business and we ve talked to a lot of clients who ve seen their growth in the U.S. markets somewhat stymied and they re looking to expand and Canada is a natural progression for them. George Hoffman, SVP, Head of International Treasury Management, PNC s Canadian expansion to add jobs, Pittsburgh Business Times, February 18, 2014 Of course companies doing business internationally even as close as Canada face a number of challenges as they deal with customs documentation and adapt their operations for sales tax accounting, procurement procedures, and even different packaging and labeling. Many of our clients with subsidiaries, operations or sales offices in both Canada and the U.S. have asked for our assistance managing payables, receivables and currency, and arranging credit and treasury services across the border. They cite a number of advantages to working with a U.S. financial institution that has a full service branch in Canada, including: Familiarity with their business and industry sector Responsiveness to treasury management and credit requirements in both countries Capabilities to lend to both their parent organization here and its Canadian subsidiary WHAT PNC CANADA CAN NOW OFFER In Canada since 1998, PNC Canada is based in Toronto, with offices in Montreal, Vancouver and Calgary. In addition, clients using PINACLE, our online corporate banking portal, can view their financial activities in at both PNC Bank and PNC Canada. PNC Canada can deliver a broad range of banking services, including treasury management, credit options, lending and equipment finance. As PNC Bank does in the U.S., PNC Canada can now assist clients in accelerating receivables and streamlining payables. In addition, PNC Bank Commercial Card clients in the U.S. with a Canadian subsidiary can today choose either U.S. dollar-denominated or Canadian dollardenominated cards for their businesses. OUR COMMITMENT TO MEETING CLIENT NEEDS The receipt of a full service branch license to expand our commercial banking operations in Canada underscores PNC Canada s commitment to effectively serve both U.S. firms operating in Canada as well as Canadian companies doing business in the U.S. If you are considering trade with Canada, or growing your present business there, talk to your Treasury Management Officer to discuss how PNC Canada may be able to assist you. pnc.com/treasury 8

QUICK TIPS MANAGING PAYMENTS AROUND THE WORLD EXPLORE THE BENEFITS OF COMMERCIAL PAYMENTS CARDS Determine the optimal PNC Commercial Card solution for your company s international payment needs. Do you have or are you planning to establish international operations? Yes Do you require local currency settlement for your international payments in Canada, Europe or elsewhere? No No Use PNC commercial cards for U.S.-based payments Use PNC U.S. dollardenominated commercial cards worldwide 6 Yes Yes Yes CANADA PNC Bank issues cards with CAD settlement to U.S. headquartered companies operating in Canada. Our new PNC Canada commercial banking license will later enable PNC Canada to issue cards in CAD to Canada-based companies. EUROPE PNC s referral relationship with Barclaycard provides commercial card solutions in 25 European markets and in 9 currencies. (Must have a U.K. or Ireland signing entity and plans to spend $500,000 in Europe.) OTHER COUNTRIES Through Barclaycard, PNC U.S. clients can access commercial cards in 14 additional countries via referral arrangements with select Visa card-issuing banks. Sweden Finland Norway The Netherlands Estonia Denmark Belgium Ireland U.K. Germany Poland Luxembourg Jersey Slovakia France Austria Italy Slovenia Lichtenstein Switzerland Portugal Spain Greece Brazil Argentina China Japan India UAE Hong Kong Thailand Malaysia Singapore Indonesia Australia South Africa New Zealand Malta Cypress For details, please refer to the Product Spotlight, contact your PNC Treasury Management Officer, or visit pnc.com/treasury. 6 PNC does not issue dollar-denominated cards in Cuba, Sudan, Syria and Iran. pnc.com/treasury 9

BY THE NUMBERS GLOBAL CARD PAYMENTS GROWTH FORECAST Global purchase volume on credit, debit and prepaid cards is projected to double between 2012 and 2018. While U.S. card volume is expected to increase 71%, its share of total card volume will decline from 32% to 27%, as other regions Asia/ Pacific, Latin America and Middle East/Africa generate even stronger growth. GLOBAL PURCHASE VOLUME (IN TRILLIONS) By 2018, global payments are projected to reach $13.3 trillion +145% $13.0T %Change +71% $7.2T 2018 $4.2T +72% $4.3T $5.3T 2012 +60% $0.8T $0.5T +100% $1.2T $0.6T $2.5T +100% $0.4T $0.2T U.S. Canada Latin America Europe Midde East / Africa Asia / Pacific GLOBAL CARD PAYMENTS MARKET SHARE 2012 32% 4% 4% 19% 1% 40% 2012 32% 4% 4% 19% 1% 40% 2018 27% 3% 4% 16% 2% 48% 2018 27% 3% 4% 16% 2% 48% U.S Canada Latin America Europe Middle East / Africa Asia /Pacific U.S Canada Latin America Europe Middle East / Africa Asia /Pacific Source: The Nilson Report, January 2014, Issue 1032 pnc.com/treasury 10

PAYMENT SOLUTIONS NEWS, SPRING 2014 This PNC Payments Solution News was prepared for general information purposes and is not intended as legal, tax or accounting advice or as recommendations to engage in any specific transaction, and does not purport to be comprehensive. Under no circumstances should any information contained in this newsletter be used or considered as an offer or commitment or a solicitation of an offer or commitment, to participate in any particular transaction or strategy. Any reliance upon any such information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Neither PNC Bank nor any other subsidiary of The PNC Financial Services Group, Inc. will be responsible for any consequences of reliance upon any opinion or statement contained here, or any omission. VISA is a registered trademark of Visa in the United States and other countries. MasterCard is a registered trademark of MasterCard International Incorporated. EMV is a registered trademark in the United States and other countries, and is an unregistered trademark in other countries, owned by EMVCo. PNC, PINACLE and Merchant Services are registered marks of The PNC Financial Services Group, Inc. ( PNC ). Deposits with PNC Bank Canada Branch are not insured by the Canada Deposit Insurance Corporation. In Canada, bank deposit, treasury management and lending products and services are provided through PNC Bank Canada Branch. In the United States, bank deposit, treasury management and lending products and services are provided by PNC Bank, National Association, a wholly owned subsidiary of PNC and Member FDIC. Merchant Services are provided by PNC Merchant Services Company. Lending and leasing products and services, including card services and merchant services, as well as certain other banking products and services, may require credit approval. 2014 The PNC Financial Services Group, Inc. All rights reserved. pnc.com/treasury 11