Moderator:Pascal Burg, Director, Edgar Dunn and CompanyPanelist: Roy Vella, Director, Merchant Services, PayPal, Inc.George Eubank, Director, CheckFreeMartijn Hovinga, CEO, BilltoBillScot Bealer, Vice President, Worldwide Sales, UATP

Session 3: Next Generation Payment Models

Sponsored by

2CONFIDENTIAL & PROPRIETARY

100M PayPal accounts Significant online payment mark Adding 10+M accounts per quarter 15+M seller accounts (2X US V/MC merchants)

$32B annualized payment volume (45% YoY growth) 10% of US online consumer e-commerce (5% globally) 30% of payment volume from merchant services (off eBay)

56 countries & 7 currencies 36% of payment volume from International $, £, €, ¥, $CA, $AUS, Yuan

$1,000 in volume per second (Q4 05)

1.2M+ transactions daily

The Standard for Internet Payments

2001 2002 2003 2004

Q2 Q3 Q3Q2Q1Q4 Q4 Q1 Q2 Q3 Q4Q1 Q2 Q3Q1 Q4

2005

Q1 Q2 Q3 Q4

96Million

3CONFIDENTIAL & PROPRIETARY

PayPal’s Value Proposition

Why PayPal’s Different PP “Owns” the Customer Base

PP is growing more rapidly than the market (80K plus new members per week)

PP provides funding source not available elsewhere - the PP Balance

PP is a one-stop-shop to a wide range of payment options

PP can be the fastest way to pay online through the merchant-hosted express checkout functionality

PP provides customer service to buyers insulating the merchant

Relevance to Airlines

Incremental ticket sales as PayPal buyers have access to “un-budgeted funds”.

Reduced Cost (below traditional credit cards).

Consistently low fraud rate.

Ease of integration.

Break complete reliance on traditional card providers with a relevant alternative.

4CONFIDENTIAL & PROPRIETARY

Leading Global Brands Accept PayPal

5CONFIDENTIAL & PROPRIETARY

Second only to Credit Cards for both Use and Preference

Online Payment Methods Used (Past 3 Months Online Shoppers, North America)

0% 20% 40% 60% 80%

Credit Card 79%

PayPal 43%

Debit Card 39%

Gift Card 8%

COD 1%

Bill me later 10%

Yahoo! Wallet 1%

MS Passport 0%

Mailed a Check 7%

Other 3%

0% 10% 20% 30% 40% 50%

Credit Card 47%

PayPal 24%

Debit Card 17%

Bank Transfer 3%

COD 2%

Preferred Online Payment Method(North America)

Forrester: The Technographics Survey, April 2005 (Sample: 5,051, +/- 1.4% margin of error)

AC Nielsen: Global Online Shopping Habits, Oct 2005 (Sample: 21,261, 38 markets, +/- 0.68% margin of error)