21st Century Solution for Mobile Commerce:

21st Century Solution for Mobile Commerce: Decreasing vulnerability and increasing convenience of online transactions

Table of Contents Introduction.... 4 E-commerce & M-commerce Trends... 5 Debit Cards Becoming Commonplace... 6 Fraud - A Growing Industry Obstacle... 8 IFAN Has the Solution.... 10 ipin Technologies.... 10 Mobicash America.... 13 Quidme Advantage... 14 Quidme Market.... 15 The Winning Approach.... 16 IFAN s Success Strategy.... 18 Conclusion.... 20

Introduction More than ever before, people are shopping online and moving toward new debit/credit card and online payment options. Along with this rising trend is the increasing need for consumers to protect their private data when making online or remote transactions. As such, the rapid growth in e-commerce creates a need for innovative payment technologies that safeguard consumer data, reduce costs, and provide ubiquitous convenience. The solution to this problem lies at the convergence of retail, payments, financial services and mobility. 4

E-commerce & M-commerce Trends According to the Department of Commerce, retail e-commerce is growing at roughly 16% annually, easily outpacing traditional brick and mortar retail sales in the U.S. economy. As such, retailers are becoming increasingly focused on mobile-centric and e-commerce strategies to cater to consumer demand for convenience and easy-to-use and secure mobile payment options. General purpose cards are a wildly popular payment option, especially for purchases and payments in which the card is not physically present (card-not-present), such as transactions conducted over the telephone or Internet. The latest estimates from Goldman Sachs on mobile commerce (m-commerce) growth indicate that by 2018, retail sales will grow to some $626 billion, or about as much as e-commerce did in total last year, up sharply from just $133 billion during 2013. In the U.S., m-commerce sales are forecast to more than triple over the same interval, eventually raking in nearly 33% of all e-commerce sales as the broader e-commerce space beat expectations as estimated by the likes of Euromonitor, emarketer and Forrester. E-commerce and m-commerce growth is largely driven by the rapidly increasing consumer adoption of tablets and mobile phones, Americans growing confidence in shopping on these devices, and merchants efforts to fine-tune the mobile shopping experience. 5

Debit Cards Becoming Commonplace 6

According to the 2013 Federal Reserve Payments Study, general-purpose cards accounted for more than 60% of all noncash payments by number and 5% by value in 2012. Most commonly used were debit cards, which account for 64% of total general-purpose card payments by number, followed by credit cards at 32% and prepaid cards at 4%. By number, general-purpose debit card payments grew by approximately $9.4 billion, nearly 8%, from 2009 to 2012, representing the largest growth among all types of payment. The estimated number of PIN debit card transactions accounted for 36% of all general-purpose debit card transactions. For the same four-year period, the Federal Reserve reports that the number of general-purpose card-present debit card payments increased 8.4% per year, a faster rate than card-not-present transactions, which grew at 3.2% per year. 7

Fraud A Growing Industry Obstacle 8

In card-not-present transactions the consumer provides to the merchant sensitive card information, such as cardholder name and card number, address and zip code, expiration date, and security code. The card itself, however, is not physically read or seen by the merchant s equipment. When this information is entered online, the consumer faces the risk of fraud or unauthorized transactions. In 2012, the estimated number of unauthorized transactions was 31.1 million, 92% of which were made using general-purpose cards (2013 Federal Reserve Payments Study). The value of this fraudulent activity was an astounding $6.1 billion. Forrester Research estimates that retailers annually lose between $300 - $400 million in revenues due to fraud. In addition, consumers are at risk of financial loss or identity theft. From account takeovers to device emulation and malicious software, criminals use a variety of tricks to place fraudulent orders or highjack sensitive personal data. Though consumers typically don t take the same security precautions on their phones as they would a PC, a survey by the National Cyber Security Alliance and NQ Mobile shows that nearly 75% of smartphone owners are concerned about security threats on their mobile devices. Fortunately, while criminals focus their time, energy and resources on innovative ways to commit fraud in the e-commerce realm, anti-fraud technologies are also on the rise. 9

IFAN Financial Has the Solution San Diego-based IFAN Financial (IFAN) designs, develops and distributes software designed to enhance and enable secure mobile payments. Operating through two wholly owned subsidiaries, IFAN is growing its portfolio of solutions to meet the demands of today s mobile payments market. ipin Technologies ipin Technologies is currently developing a new method of purchasing online through secure debit card payments and processing. This solution enables debit card users to make transactions and cash transfers via mobile phone, tablet, or computer without entering their confidential debit card information online on a same-as-cash basis. 10

How ipin Works ipin attaches to almost any smartphone, tablet, or desktop computer. It converts the phone or computer into a consumer PIN same-as-cash payment terminal at merchant websites, which means the merchant site never has access to the cardholder s information. The device is small enough to fit in a pocket or purse, making on-the-go online transactions safer than ever. All this happens in three simple steps: 1. The ipin device is inserted into the smartphone; 2. When the user is ready to complete their online payment transaction, they simply swipe their debit card through the ipin device; 3. They then enter their 4-digit PIN number on the ipin pad. 11

ipin Technologies currently holds exclusive rights to two patents that enable the company to secure transactions by withholding customer data and incorporating triple data encryption. Aside from offering security advantages for the consumer, ipin Technologies solution offers a range of merchant benefits for online, in-store and mobile sales: DDSince processing fees are a function of risk, it significantly reduces merchant processing costs per transaction. DDIt nearly eliminates chargebacks because transaction are processed on a same-as-cash basis by MasterCard and Visa, as if the consumer was physically present in the store and provided his or her PIN code. DDIt enhances customer security due to the fact that merchants won t have access to a customer s personal information and will be less susceptible to identity theft if the merchant s records are hacked. Once the product is introdeced and fully functional, the ipin Technologies solution will include a mobile app, card reader, and consumer network. It will give users the ability to use their smart phone or computer to make purchases in a more secure, convenient, and cost effective manner that is currently available. 12

Mobicash America Mobicash America is an early-stage technology company that develops mobile payment solutions. The company s platform product, Quidme, utilizes the text messaging function of a mobile phone, allowing the technology to operate on almost any phone or network, with or without data service. The functionality of the Quidme platform allows users to pay bills, to purchase goods and services, and to send money to friends and relatives locally or internationally via a simple text message. These features significantly and radically expand the available market for mobile payment access and disrupt the payment space as we know it. Brick/Mortar 1958 BankAmericard Wider Reach 1975 Visa Web 1999 Paypal Mobile 2015 Quidme Quidme will generate revenues via: DDInterchange Fees; DDMonthly card fees; DDCheck cashing fees; DDInternational remittance fees; DDQuidme buy button licensing fees; and DDMarket usage market data. 13

Quidme Advantage Unlike competitors, Quidme is a purely mobile-based solution and one that works without data coverage. While others offer fragmented applications, Quidme is pioneering the mobile payments industry with a comprehensive, innovative solution. Quidme works on any phone and allows for the instant transfer of funds without releasing sensitive personal or bank account information. Quidme currently has three patents pending that will help the company to secure a position of leadership and innovation in this rapidly expanding industry. Apple and Google have each approved the Quidme platform for their mobile app stores, which allows the Quidme application to be distributed for all Apple iphones and tablets in the itunes Store as well as for most Android devices through Google Play. 14

Quidme Market Quidme products target individuals in the rapidly growing under-banked and un-banked populations. These consumers need cost-effective, convenient, and secure access to money remittance technology in order to make payments and send cash worldwide. This population comprises roughly 16% of the U.S. population and 2.2 billion consumers globally. It may become an increasing share of the U.S. market, as 45% of the tech-savvy millennial generation now only use debit cards and cash, not credit cards, as their primary source of payment. 15

The Winning Approach IFAN s innovative technology and approach to the mobile payments industry addresses key issues within the payment processing industry and provides superior solutions to traditional payment methods: 16

DDTheft/Vulnerability The customer is exposed to identity theft and the risk of unapproved transactions when using credit online and providing personal data to the merchant. IFAN Solution ipin Technologies holds key patents, enabling the company to prevent exposure of personal customer data during business transactions. DDHigh Processing Cost High fees come as a result of higher risk. Ultimately, these de-incentivize certain businesses from accepting credit cards and limit the ability of consumers to use them. IFAN Solution IFAN offers an instantaneous method to process the transaction and eliminates extended processing time, dramatically reducing the cost. DDQuicker, Cheaper P2P Money Transfers Credit is a slower and less secure process because intermediaries hold customer information for processing. This costs significantly more due to the risk of theft and longer processing times. IFAN Solution Quidme allows cost savings of approximately 55% when compared to traditional money remittance services such as MoneyGram and Western Union. Cheaper, quicker and more secure transactions come as a result of this proprietary debit text payment technology. No personal data is given away. 17

IFAN s Success Strategy With online sales reaching $294 billion in the U.S. in 2014, accounting for nearly 9% of all sales in the U.S. (Forrester estimates), the stage has been set for innovative payment technologies like the ones IFAN is rolling out. As smartphone and tablet proliferation continues to be quite strong, with around 8% and 4% growth respectively this year (some 243 million units total shipped, or around 35% of the consumer electronics industry s revenue), the demand for solutions that hand even greater control to the user will only increase as the number of mobile users increases. IFAN s solutions also address growing fraudulent activity plaguing online and mobile commerce. With such a huge moving target for identity thieves (17% of all identity theft in 2013 was credit card related), the fact that the ipin solution enables payment transactions without the merchant having access to the customer s card information is a valuable selling point to consumers who understand the everyday risks involved, especially after two years of high profile data hacks at major retailers like Target and Home Depot. Mobicash America is also poised to capture market share with its nextgen online payment app, Quidme, which is approved for all Apple iphones and tablets as well as most Android devices. Quidme offers easy peer-to-peer transfers, as well as online payments between anyone with a telephone number and text capability in a secure environment. 18

The cash transfer market is changing rapidly as technology disintermediates players like Moneygram and Western Union with amazing new technologies. Western Union completed 231 million transfers worldwide last year, moving approximately $79 billion from person to person, or approximately an amazing 28 transactions per second, each at a significant cost to the customer. Most online alternatives can take days or even weeks to complete and Western Union (79% of which is consumer-to-consumer transactions) has survived largely on its ability to do instant transfers. However, this market is quickly ebbing as innovators in the mobile payment and cash transfer technologies space, like IFAN, come increasingly to the fore, spurred on by consumer demand from sectors like remittance. The Quidme platform also has the potential to reduce the cost of remittance payments as much as 80%. The comprehensive Quidme platform works without data coverage on any phone, enabling consumers to instantly transfer funds without having to expose their sensitive personal and financial data to potential identity theft. This is a game changer for remittances (sending money back home), which have an average transfer fee of around 8%. The market for remittances is significant. According to World Bank statistics, India receives the most international remittances ($70 billion), followed by China ($39 billion) and the Philippines, France and Mexico. Quidme s ability to also act as a platform for paying bills and making purchases means it is a highly disruptive technology that can t only radically expand the available market for mobile payment access, it also has the potential to disrupt the established payment space as we know it. 19

Conclusion The mobile payments space is rapidly growing as consumers move toward new debit/credit card and online payment options. This growth creates the need for IFAN to provide industry advantages that offer fast, secure and cost-effective transactions. IFAN s strategy to capture market share of this burgeoning space is through the continued development of highly disruptive solutions, made available via ipin Technologies and Mobicash America. As earlier noted, ipin Technologies has achieved significant development milestones on its smartphone card reader, mobile app and merchant network solution a particularly bullish achievement considering the amazing features this solution makes available. With user interface integration to Android achieved and successful data read/transfer from the card swipe attachment to the mobile app now validated, IFAN is nicely positioned for finishing the transaction status call-back functionality and front-end database (in order to support a merchant processing transaction) development milestones for this powerful solution. Once complete, this solution will not only offer 20

consumers control over their transaction data, it will give retailers and consumers unprecedented price transparency and significantly lower-per-debit-card-swipe processing fees while simultaneously eliminating most chargebacks since the transactions are viewed as being same-as-cash. Quidme will empower users to share products with their community of friends and followers. The social media interface will allow users to purchase these items instantly in a secure environment. It will also facilitate the seamless transfer of funds among friends, families, merchants, and service providers on a global basis and for a fraction of the cost of existing alternatives. IFAN continues to explore additional opportunities to expand its product portfolio to meet the growing demands for consumer/merchant convenience, speed, and security within the mobile commerce market. Products in development will combine the functionality of social media, e-commerce and banking with the broader conveniences of the mobile environment. 21