Paysafe Surcharging Program Overview

March 7, 2019

Houston

2 This is the footer

• Cash Discounting vs Surcharging

• Program Timelines

• Surcharging Program overview• Program Options and Amounts

• Merchant Impacts

• Program Implementation

Agenda

3 This is the footer

Cash Discount:

Cash Discount program provides a solution for a merchant to offset credit card processing fees. By offering a decreased price for cash purchases, merchants reward customers for paying in cash and in turn retain the money you would have paid in credit card processing fees.

Surcharging:

Surcharging is an additional fee charged by a Merchant to the consumer for the use of a credit card payment for goods or services. This allows Merchants to offset some of their credit card processing fees.

Surcharge vs Cash Discount

Cash Discounting – Program implementation overview

Date Action

November 2017 MCPS/Paysafe launched the Cash Discount program with the Dejavoo terminal

January 2018 PAX rolled out their application in support of the Cash Discount

January 2018 Paysafe added PAX as an one of the solutions to the Cash Discount Program offerings

June 2018 iPayment launched the Cash Discount Program with the PAX, Dejavoo and Clover devices

October 2018 Visa released an announcement providing clarification on Cash Discount program compliance

November 2018 - January 2019 Different industry releases and communications surrounding the disputes of the Cash Discount program and possible ramifications that were going to eventually be enforced. As a result, increase in Visa violations received.

February 2019 Paysafe released an announcement notifying partners of program revision as a result of the Visa clarification. Implementation of surcharging

5

• Historically, VISA® and MasterCard® prohibited most U.S. merchant types from assessing surcharges totheir customers when making purchases for products and services with a credit card.

• Due to the results from a merchant class action litigation in 2013, VISA, MasterCard and other defendantsupdated their rules and regulations regarding surcharging. In 2013, U.S. merchants were authorized tosurcharge VISA and MasterCard credit card transactions subject to certain requirements. Surchargingdebit or pre-paid card transactions are prohibited.

• Discover Card® also allows surcharging as long as the surcharge is assessed on the same type of cards onother payment networks.

• American Express® allows for surcharging but requires all other payment products, including debit cards.Since VISA and MasterCard do not allow surcharging on debit, and the merchant desires to surcharge, theywill need to cease accepting American Express and the American Express card type will need to be turnedoff on their merchant account.

Surcharge Program Overview

6

U.S. merchants have the option of adding a surcharge in one of two ways:

Option1 - Brand level (Paysafe Recommended)

• Add surcharge to all credit cards regardless of whether it is a consumer card, rewards card, businesscard, corporate card, purchase card, etc., i.e. all VISA credit cards, all MasterCard credit cards, etc.

Option 2 - Product level

• Add surcharge to all credit cards that signify an actual product the card brand offers, i.e. VISATraditional Rewards, VISA Signature, World Elite MasterCard, etc.

• Merchants that do not wish to surcharge all customers who pay by credit card but rather only those customerswho use certain higher cost credit cards may opt to charge the fee using this option.

Program Options

7

Surcharging can be imposed at the Brand Level if the surcharge:

• is the same for all credit card transactions

• is no greater than the merchant’s overall average discount rate for their credit card transactionstaken in the preceding 1 month period or preceding 12 month period

• does not exceed 4% (the 4% maximum is set even in the case where a merchant’s average discountrate exceeds 4%)

Surcharging can be imposed at the Product Level if the surcharge:

• is the same for all credit card transactions at that product level regardless of the issuer who issuedthe card

• is no greater than the merchant’s average discount rate for the credit card transactions associatedwith that particular product type/level for the preceding 1 month period or preceding 12 month periodminus the regulated debit interchange rate of 0.05% + $0.22

• does not exceed 4% (the 4% maximum is set even in the case where a merchant’s average discountrate exceeds 4%)

Program Amounts

8

• If a merchant accepts a competing brand of credit cards such as Discover and the cost to the merchant foraccepting credit card transactions for those other card types is as expensive as or more expensive than VISAor MasterCard, then the merchant, if surcharging, is required to surcharge all of the credit cardtransactions they accept in the same way.

• Since Discover allows for surcharging as long as surcharging is performed in the same manner for all otherlike payment types and the cost to our merchants for taking Discover is as expensive as or more expensivethan VISA or MasterCard, then a merchant who desires to surcharge will be required to do so on allcredit card transactions in the same manner.

• If a merchant accepts credit cards in both a retail location and on an internet website the merchant maychoose whether to assess a surcharge only in the retail location or only on the internet website or in both payment environments.

• The merchant may also choose to surcharge by Product Level in their retail location and Brand Levelon their internet website or vice versa.

• Regardless of what surcharge option the merchant chooses, merchant must assess the same method ofsurcharging across all card brand credit cards.

Competitive Level Playing Field Limitation

9

Before choosing to surcharge, merchants may want to consider a number of factors, including:

The potential impact on their customer’s experience.

• What the merchant’s competitors might be doing.

• What information must be disclosed to the merchant’s customers and how.

• Merchants will get assessed discount on the additional surcharge amount since the surcharge will bepart of the transaction total.

• When issuing credit returns to a transaction processed on a credit card that was assessed asurcharge during the sale, the surcharge would need to also be returned to the customer as it is partof the transaction amount. If a partial credit return is being processed, then a pro-rated amount ofthe surcharge is required to be returned to the customer and the merchant needs to be prepared tocalculate this.

• Ensure all employees are trained to run the Surcharge Program properly

• Adherence to applicable local, state, and federal laws

Merchant Impact

10

First Notification:

If a merchant is found to be in violation, Paysafe is notified and will work with the merchant to ensure they are compliant.

Second Notification:

After first notification, if merchant is still in violation, they will be notified and will have 30 days to comply

Third Notification:

Third offense – merchant is fined. Fines start at $1,000.00 and will be passed to the merchant

Merchant Violations

Program Implementation and Boarding

12

Merchants who desire to surcharge must satisfy specific notification and disclosure requirements before they will be authorized to begin surcharging.

• Merchants must submit a completed Surcharge Notification Form to Paysafe 30 days prior to their desired date to begin surcharging.

• Merchants must also provide notification to VISA and MasterCard 30 days prior to their desire date tobegin surcharging via the following sites:

VISA: www.visa.com/merchantsurcharging

“Merchant Credit Surcharging” > “Before you start” > “Notify Visa of surcharge”

Mastercard: https://www.mastercard.us/en-us/surcharge-disclosure-webform.html#contentpar_text

Registration Requirement

13

The information that the merchants will need to fulfill such notifications are as follows:• Business Legal Name• Merchant DBA Name• Merchant Number(s)• Merchant Contact Information (name, address, phone and email)• Merchant Location Address(es)• Number of Locations Surcharging• Type of Channel that will be Surcharging (retail/face-to-face, eCommerce, mail order, telephone order)• Type of Surcharging: Brand Level (all cards) or Product Level (specific cards)• Select Other Card Brands that Merchant Accepts• Date the Surcharging will Begin

• Acquirer/Payment Service Provider/ISO Information:

Paysafe Payment Processing Solutions

Contact Name: Cynthia Joyce

Phone: (800) 327-0093

Email: mcpsCompliance@paysafe.com

Registration Requirements

14

State and Federal Laws: These card brand surcharge rules do not affect any obligation of a U.S. merchant to comply with all applicable state or federal laws, including but not limited to state laws regarding surcharging of credit or debit card transactions and federal and state laws regarding deceptive or misleading disclosures.

Merchants should consult with their legal counsel about the laws regarding surcharging within their state. Currently, we are aware of 7 U.S. states that have laws limiting surcharging including:

• Colorado

• Connecticut

• Kansas

• Maine

• Massachusetts

• Oklahoma

• Texas

Merchant Considerations

15

The surcharge rules require coding specifications within point-of-sale (POS) equipment applications whether by terminal, software or gateway.

• Specific coding is required for proper functionality of the surcharge to become part of the total transactionamount as well as proper receipt disclosure.

• Not all point-of-sale equipment is updated to support surcharging.

• If equipment does not support surcharge specifications, merchants will need to upgrade their equipmentto a solution that does.

• Supported Equipment (Verified by Paysafe):

Dejavooo Able to differentiate PIN and signature debit from credit transactions so surcharge is not applied.o Allows for PIN and signature debit entitlements to remain on account.o Amex entitlement will be disabled.

PAX is NOT recommended at this time as it cannot differentiate debit from credit transactions so PIN & signature debit would have to be removed.

Point of Sales Equipment

16

Merchants who surcharge must provide clear disclosure as follows:

• At the point-of-entry of a retail merchant location or in an online environment on the first page of thewebsite that references credit card brands

• This disclosure must indicate that the merchant surcharges and that the surcharge is not greater than themerchant’s cost of acceptance (example included at end of document)

• At the point of interaction or sale with the customer, i.e. cash register in a retail store or payment page ofan internet site

• This disclosure must indicate that the merchant themselves are imposing the surcharge, the amount of thesurcharge as a percentage or set dollar amount, and the disclosure must not slight or reflect negatively against anycard brand, card network, issuing bank, etc. Itemized Surcharge dollar amount on the transaction receipt providedby the merchant to the customer with transaction total including the amount of the Surcharge

Disclosure

17

Samples of Disclosure

We impose a surcharge on credit card transactions

that is not greater than our cost of acceptance.

Point-of-EntryPoint-of-Sale

Surcharging Supported Equipment:Merchants must use a point-of-sale device that produces a receipt that clearly discloses the Surcharge amount to the customer.

Device File Template / App Supported Front End

Download Support

Dejavoo Z11Dejavoo Z8Dejavoo Z9

Application Name: v3coreF w CrDb_20180716Templates: Z8SURFDORETZ8SURCFDORES

Omaha / TSYS File built in-house by File Builds.Support is in-house.

THE CLOVER NAME AND LOGO ARE TRADEMARKS OWNED BY CLOVER NETWORK, INC., A WHOLLY OWNED SUBSIDIARY OF FIRST DATA CORPORATION, AND REGISTERED OR USED IN THE U.S. AND MANY FOREIGN COUNTRIES

19

Complete Cover Sheet indicating Dejavoo as equipment and choose surcharging

To board a new merchant for surcharging in the Online Application:

• Select front end and Equipment ownership:

• Industry Type: Surcharge

• Equipment Type: terminal

• Vendor: Dejavoo

• Device Type/Software: Dejavoo

**Ensure Surcharge Notification Form is attached when submitting application

Boarding Process – New merchant

20

To update an existing merchant for surcharging - submit a ticket in Instore and attach 2 forms:

1. Cover Sheet – indicate Dejavoo as equipment and choose surcharging

2. Surcharge Notification Form

Aux team will add Surcharging to merchant account via SOS ensuring equipment type and all relevant fields are selected.

Boarding Process – Existing merchant

Dejavoo FAQs

22 This is the footer

All Dejavoo Z line terminals support surcharge.

Dejavoo Terminals

Z11 Countertop• Tri Communications Dial/IP/Wi-Fi• Internal & External Pin Pad option

Z8 Z11 Z9 Z3 PIN Pad

Verticals: Retail / Restaurant

Processor Certifications:

• TSYS

• First Data Omaha

Feature/Functionality:

• PIN Debit

• EMV/NFC

• Self Discovering Wi-Fi

• Apple Pay, Google Wallet etc.

Z9 Wi-Fi• Dual Communications• IP/Wi-Fi• Internal PIN Pad

23 This is the footer

• Surcharge Program works on both FDR and TSYS.

• A surcharge can only be applied to true credit cards. The terminal is configured to not allow surcharge on PIN debit or hybrid cards (says debit on card AKA check cards). Even if the hybrid card is run as credit, the surcharge will not be applied.

• PIN debit and EBT transactions will process without the surcharge.

• Configurable settings for rate percentage or flat fee per card type. Cannot be both. Rate will be configured as a percentage of total transaction amount, or fixed fee.

Each card brand will have rates configurable for the following cases:• EMV

• Swiped/Tapped

• Manual Keyed Card-‐Present (CP)

• Manual Keyed Card-‐Not-‐Present (CNP)

Dejavoo Surcharge Fee Information

24 This is the footer

• The merchant does not have an option on the terminal to bypass the surcharge.

Surcharge feature has several special cases for particular transactions:

• For Return, Void and Ticket, cashier must input the total amount of original transaction.

• For Retail Tip, surcharge is added on subtotal amount including Tip.

• For Restaurant transactions, surcharge is added on the base amount.

If surcharge was enabled and was added to transaction then both customer and merchant copy of a receipt will contain the disclaimer stating the following:

Dejavoo Surcharge Fee Information

A fee of $3.00 was addedTo the total purchase.

25 This is the footer

Receipt / Report Examples - Retail

Example of debit card. Surcharge will not apply to the transaction.

26 This is the footer

Retail Tip

Receipt / Report Examples - Restaurant

27 This is the footer

Surcharge Sale Flow Example

Thank you