Payments[5]PG

04/15/2023 2010 PartyGaming - Internal and Confidential 1

Payments


Payments Philosophy

RESPECTOurselves, Our Players and Our Partners

• What is good for the player is good for us!!!

• How many players did we insult today?

• What are we doing about our insult rates?

• If it happened to me, how would I feel?

• Do it yourself if you can, use a Wallet where you should

• Be a true partner to suppliers, and lose the suppliers that are not partners

• developing unique solutions with the payment suppliers to gain competitive advantages over the rivals.

• Continually Optimize


Methods and Markets – Status

Emerging

Existing

Endangered

Extinct

N/A for Method / Market

Au

stra

lia

Au

stri

a

Bel

aru

s

Bel

giu

m

Bra

zil

Can

ada

Cro

atia

Den

mar

k

Fin

lan

d

Fra

nce

Ger

man

y

Gre

ece

Hu

ng

ary

Irel

and

Ho

llan

d

No

rway

Po

lan

d

Po

rtu

gal

Ro

man

ia

Ru

ssia

Sp

ain

Sw

eden

Sw

itz.

Ukr

ain

e

UK

CARDS

CC

ENTROPAY

BANK

BANKTRANSFER

BPAY

CANADIANEFT

CHECK

DIRECTDEBIT

DIRECTPAY24

EPS

GIROPAY

IDEAL

INSTANTBANKING

MISTERCASH

MULTIBANCO

POLI

PRZELEWY24

USEMYBANK

WIRE

WALLET

ABAQOOS

CLICK2PAY

CLICKNBUY

CITADEL

EWIRE

MONEYBOOKERS

NETELLER

PAYPAL

PCARD

WEBMONEY

CASH

WESTERNUNION

THIN WALLET

4B_MB

CARTASI_MB

DK_MB

EURO6000_MB

MAESTRO_MB

NORDEA_MB

POLI_MB

POSTEPAY_MB

VOUCHERS

PAYSAFECARD

TICKETPREMIUM

UKASH


Methods and Markets – New Player Success Rates

Australia Belgium Brazil Canada Denmark France Germany Holland Norway Sweden UKCards

CC 77% 72% 6% 45% 81% 62% 81% 79% 65% 82% 81%ENTROPAY 75% 70% 15% 25% 55% 60% 55% 45% 30% 35% 45%

BankBANK TRANSFER 35% 35% 35% 35% 35% 35% 35% 35% 35%

BPAY 90%CANADIAN EFT 30%

DIRECTDEBIT 40%DIRECTPAY24 35%

EPS 17%GIROPAY 45% 50%

IDEAL 67% 40%INSTANTBANKING 30% 30% 30% 30% 30% 30% 30% 30%

MISTERCASH 48% 40%POLI 62% 33% 33%

USEMYBANK 45%Wallet

CITADEL 4% 23% 8% 19%CLICK2PAY 50% 8% 36% 25% 40% 10%CLICKNBUY 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50%

MONEYBOOKERS 87% 82% 77% 71% 86% 93% 89% 88% 80% 93% 95%NETELLER 71% 54% 65% 74% 72% 65% 75% 60% 69% 90%

PAYPAL 100% 100% 100% 83%WEBMONEY 100% 100%

CashWESTERN UNION 17%

Thin WalletDK_MB 84%

MAESTRO_MBPOLI_MB 100%

VouchersPAYSAFECARD 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

TICKETPREMIUM 100% 75% 100%UKASH 91% 86% 67% 81% 89% 89% 100% 82% 88%


Methods and Markets – Existing Player Success Rates

Australia Belgium Brazil Canada Denmark France Germany Holland Norway Sweden UKCards

CC 78% 69% 50% 72% 76% 70% 80% 75% 73% 79% 82%ENTROPAY 75% 78% 82% 79% 76% 70% 68% 75% 73% 68%

BankBANKTRANSFER 70% 70% 70% 70% 70% 70% 70% 70% 70% 83%

BPAY 98%CANADIANEFT 55%DIRECTDEBIT 45%

DIRECTPAY24 65%EPS 56%

GIROPAY 65% 65% 50% 100%IDEAL 82% 87%

INSTANTBANKING 97% 97% 96% 93% 100% 98% 97% 99% 94%MISTERCASH 86% 85% 79% 78% 58%

POLI 86% 10%USEMYBANK 80%

WalletCITADEL 27% 0% 59% 5% 0% 0% 6% 0% 54% 29%

CLICK2PAY 50% 86% 49% 84% 85% 49% 31%CLICKNBUY 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

MONEYBOOKERS 97% 96% 93% 87% 95% 88% 98% 99% 92% 96% 97%NETELLER 90% 81% 87% 87% 86% 88% 87% 84% 89% 90%

PAYPAL 0% 100% 89%WEBMONEY 100%

CashWESTERNUNION 92% 0% 67% 0% 80% 25%

Thin WalletDK_MB 80%

NORDEA_MB 96%POLI_MB 100%

VouchersPAYSAFECARD 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

TICKETPREMIUM 100% 100% 97%UKASH 87% 75% 90% 25% 88% 92% 92% 63% 91% 93%


Germany – Analysis

• Largest market based on revenue share which has been declining year on year

• Comparing decline rates with supplier's data shows Germany cashier performance is sub optimal

• Bank success rates internally showed inflated success rate on new player transactions (90%), however suppliers’ data shows only 45-50%

Bubbles Size shows the Volume of transactions through the Option

bubble indicates Success Rate are good and option has relative competitive advantage bubble indicates Success rate are poor and option has comptetitve disadvantage

indicates the need to increase the relative volume for these options

Success Rate (Internal) Vs Supplier Based Success Rate

PAYSAFECARD

CC

GIROPAY

DIRECTPAY24

NETELLER

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110%

Success Rate % (based on Internal Data

Succ

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(Sup

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PlayerSuccess Rate Comparison (Actual Vs Reported) Relative Attractiveness Cards Bank Wallet Cash

Volumes %

Success Rate

New Players acquisition

Player retention

Transaction Cost

Fraud Rate

User Friendly

Comparing Methods within a Market and their Relative Performance

Overall cashier performance is poor based on relative performance of options and player experience

Industry Predicates Cards Bank Wallet Cash

Volumes %Success RateNew Players acquisitionPlayer retentionTransaction CostFraud RateUser Friendly

Comparing Methods based on Competitive Disadvantage

Overall cashier performance is poor based on competitive advantage assessment, and shows of potential to increase market share

Opportunity

$35 million in increased deposits (2009)


Germany – Summary

Options Summary• Volumes – Cards and Cash are relatively attractive than Banks, however going by German demographics, Banking options should be the

most preferred option

• Success Rates – Cards and Banking options are below expected success rate, relatively Cash have higher success rate and one of the reason Cash has % share in German market

• Cards and Wallets are the tools for player acquisition going by their volumes and success rate

• Subsequent Deposit Success Rates on Cards and Bank – current performance effects player retention and result in lesser than expected transactions per player – Cash (Vouchers) does not push player retention due to its discrete nature

• Transaction costs on Cash (Vouchers) – higher than any other options, hence higher transaction from Cash (Vouchers) also result in higher transaction cost overall

• Chargeback and returns on Cards and Bank – respectively are higher than expected in Germany, ELV is not optimally used and result sin higher return rates

• Due to the long list of options available on Cashier and low success rates, Cards and Banks are not user friendly but Cash is due to the frictionless deposit path

• Wallets are relatively weak in Germany due to higher penetration and acceptability of Cards and Banks options – so Wallets availability on main cashier page in Germany is more noise than value addition

Competitive Review• We are at a competitive disadvantage and losing market share due to below par success rates on Cards and Banks bank options

require more push in terms of performance to gain market share

• Higher volumes from both new and subsequent players coming through Vouchers, Voucher gives advantage on acquisition however on subsequent deposits Voucher volumes are too high to be normal ( lower player retention)

• Higher CB rates and return rates result in lesser push of Cards and Banking Options to players, resulting in disadvantage due to their high adoption rate


Germany – Strategy

Rescue Strategy

• Conversion – move players from using Vouchers (Cash) to Banks this will impact overall transaction cost for good

• Talk to suppliers, reduce integration issues, change supplier or reduce dependency

• Routing of transactions using BIN Optimization and Sort Code Optimization to reduce the decline rates

• Reduce the number of wallets and thin wallets from Cashier to reduce the noise and clean the cashier from user perspective

• Use dynamic messaging in case of declines or Player facing transaction problems by switching options based on performance and faster confirmations

Short Term Implementations

• Solve the problems with SIDs to allow more players to transact

• Discuss with Suppliers the integration issues on DirectPay24 and Giropay

• Primary BIN classification into hostile and friendly BINs


Netherlands – Analysis

• Emerging Market, players with player values above $1,100, overall fifth largest market for PG – we are losing market share in Netherlands

• Market requires good bank options, as banks are the preferred means of transaction

• Mistercash performance is poor, we lose more than 15% new players and minimum 2 to 3 transactions per players from this option’s underperformance

• Bank’s Success Rate internally showed inflated success rate on new transactions (70%), however Suppliers data shows that Success rate are only 55%.



Opportunity


Relative Attractiveness Cards Bank Wallet Cash










IDEAL

CC

PAYSAFECARD

NETELLER

CLICKNBUY

INSTANTBANKING

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110%

Success Rate % (based on Internal

Succ

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Player Success Rate Comparison (Actual Vs Reported)


Netherlands – Summary

Options Summary

• Bank’s success rates are poor resulting in huger opportunity losses in Netherlands, Banks performance needs to be improved from its current levels

• Cards have good success rates but still below advantageous rate as declines are higher due to transaction velocity problems

• Wallets in Netherlands are more of noise than advantages when we have very good Bank and Cash Options

Competitive Review

• IDEAL is one of the most used banking option in Netherlands has relatively poor performance on our system, resulting in loss high value players from this country.

• Due to below par success rate on both Cards and Banks, results in competitive disadvantage and loss of market share, especially bank options requires more push in terms of performance to gain market share.


Netherlands – Strategy

Rescue Strategy

• Conversion – move players from using Credit Cards to Banks this will positively impact overall transaction cost




• Use dynamic messaging in case of declines or player facing transaction problems by switching options based on performance and faster confirmations


• Discuss with Suppliers the integration issues on IDEAL performance

• Primary BIN classification into hostile and friendly BINs

• Increase the number of suppliers to reduce loss due to downtimes

• Add Direct Debits


Impact Analysis

• Cards performance is based on sample data given by Optimal, Approval Rate comparison with Playtech Brands – Party approval ratios are 38% against 75% for Playtech brands

• Based on BIN Summary Analysis, overall decline rate is 25%, where 15% of total decline is due to hostile BINs and 12% is expected to be due to transaction velocity and Integration problems

• Banks performance analysis based on data from Smart2pay shows that more than 40% of unique transactions are declined due to various reasons where more than 20% are resultant of Integration issues, technicalities and lack of routing

• Neteller analysis shows that number of players lost on this wallet are far higher than what we report due to transaction velocity, routing, their gateway restrictions etc

• Entropay success rate is almost 45% lower than what we see internally, only 30% of players which goes to their domain are successfully able to make deposit, others are lost due to various CC error codes

• Analysing the Small Initial Deposit data for EFT, more than 45% of the players are lost during this process of bank account confirmation

• Moneybookers decline rate is more than 35% based on suppliers' information, indicating the huge declines we have on pending transactions

Opportunity Due Methods Underperformance Based on 2009 Volumes

Method

Actual Success

Rate

Expected Success

RateUnique

Player FailedAvg Dep per

Txn # of Txn Opportunity Gross Revenue

Cards 80% 90% 80,000 85.00$ 6.9 46,920,000$ 23,460,000$

Banks 83% 90% 8,500 105.00$ 5.1 4,551,750$ 2,275,875$

Wallets 70% 80% 5,500 65.00$ 3.4 1,215,500$ 607,750$

Total 26,343,625$

Opportunity on New Players Due to Methods Underperformance Based on 2009 Volumes

Method TypeSuccess

Rate

Exp. Success

Rate RMPs LossAvg Dep per

Tranx.Tranx per

Player

Opportunity on New Player

Deposits

Opportunity as Existing Players

Total Opportunity Gross Revenue

Cards 70% 90% 81000 115.00$ 1.65 15,369,750$ 36,146,250$ 51,516,000$ 25,758,000$

Banks 55% 85% 4500 80.00$ 1.35 486,000$ 1,771,875$ 2,257,875$ 1,128,938$

Wallets 65% 80% 6500 70.00$ 1.15 523,250$ 950,625$ 1,473,875$ 736,938$

Total 27,623,875$

Expected Annualized Gross Revenue Opportunity Based on 2009 Volumes 53,967,500$

Annualized EBITDA Impact 16,190,250$


Core Projects

• Transactional Profiling Payments Engine

• Least Resistance Routing

• Least Cost Routing

• Dynamic Cashier

• Smart Switching Capabilities

• Dynamic context sensitive messaging for retry strategies

• Conversion initiatives or pop up chat for specific issue resolutions

• Retry strategies with the engine constantly adjusting for optimization


Payments Next Steps

• Finalize initial list of short term and core changes that we have identified for Payments

• Determine the expected financial impact for each item on the list and begin implementation of items that are not dependant on external teams

• Work with Product and Dev to determine the resources required for each item that has dependencies

• Prioritize the items internally and determine based on the current pipeline when they can be launched

• Identify additional resources required to launch sooner, the timing of launches and ROI on any additional cost

• Return to the Execs with the results and determine how to move forward


Norway

Gaming Ban to be effective from June 1st 2010. The ban is to target Financial Services Providers who assist remote Gambling companies who operate in Norway without a Norwegian Gaming licence.

Complete Across the Board 7995 Block: Issuers to decline all authorizations with MCC 7995 wallets would be impacted as Neteller and MoneyBookers use MCC 7995 while funding via card

Possible actions to retain market share:• Entropay to be used as card backup to address card demand• Enhanced error messages educating customers how to proceed with the deposit• Conversion initiatives to migrate customers from solutions that would become extinct

Credit Card Declines• Entropay Promotion – Similar to the one running in Canada• Promotion by emails to the customers proactively and reactively for failed deposits and failed conversions• Event Detection System to strategically deliver a popup to the affected base of players• Client marketing tool for RMP Norwegian players and one with previous credit card transactions when they log on promote our conversion

initiatives• Campaigns for conversions via 2 methods currently in our cashier, Instant Banking for Bank Transfers and UKash vouchers for Cash• Live agent (Push Chat) assistance

Short Term and minimal Development Required• Process enhancements to existing solutions and addition of methods from existing suppliers• Entropay to improve the conversion process and success rate overall • Ewire (real-time bank and card transfer service): Currently offer in DKK. Integration of NOK and SEK for Deposits and enabling cash outs in

the 3 currencies• Citadel Instant Banking: Refine the Instant Bank transfer process and once establish will require some protocol changes yet to be determined

on our end• Paysafecard: Addition of this solution in Norway and with local currency (NOK)• GluePay (real time bank transfer service) based in Scandinavia, allowing customers to pay and receive money to and from merchants

instantly and securely

It is important to note that is it is a Complete Across the Board 7995 Block, we need to prepare for the domino affect of the bank or some of the banks in Norway becoming hostile for the alternative payments ultimately ending up at gaming sites


Belgium – Analysis

• Emerging Market, players with player values above $1100, huge Casino potential – we need to improve markets share

• Market requires good bank options, as banks are the preferred means of transaction, MisterCash one of the dominant option is available with us.

• Mistercash performance is poor, we lose more than 15% new players and minimum 2 transactions per players from this options underperformance

• Banks Success Rate internally showed inflated success rate on new player transactions (70%), however Suppliers data shows that Success rates are only 55-60%.



Opportunity






MISTERCASHCC

PAYSAFECARD

MONEYBOOKERS

NETELLER

IDEAL

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110%


Succ

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PlayerSuccess Rate Comparison (Actual Vs Reported) Relative Attractiveness Cards Bank Wallet Cash







Belgium – Summary

Options Summary• Volumes – Cards and Cash are relatively attractive than Banks, however going by Belgium customer preference, Banking options should

be the most preferred option.

• Cash (Vouchers) outweighs other options due to easy availability and no transaction friction result in higher success rate

• Cards and Wallets are the tools for player acquisition going by their volumes and success rate

• Going by subsequent deposit success rate on Cards and Bank, current performance effects player retention and result in lesser than expected transactions per player. However Cash (Vouchers) does not push player retention due to its discrete nature

• Transaction Cost on Cash (Vouchers) is higher than any other options, hence higher transaction from Cash (Vouchers) also result in higher transaction cost overall

• Wallets are relatively weak in Belgium due to higher penetration and acceptability of Cards and Banks Options. So Wallets availability on main cashier page in Belgium is more of noise than value addition

Competitive Review• MisterCash one of the most used banking option in Beligium has relatively poor performance on our system, resulting in loss high value

players from this country

• Due to below par success rate on both Cards and Banks, results in competitive disadvantage and loss of market share, especially bank options requires more push in terms of performance to gain market share

• Higher volumes from both new and subsequent players coming through Vouchers, Voucher gives advantage on acquisition however on subsequent deposits Voucher volumes are too high to be normal ( lower player retention)


Belgium – Strategy

Rescue Strategy

• By Conversion initiative, move players from using Cards to Banks this will positively impact overall transaction cost






• Discuss with Suppliers on integration issues on MisterCash performance

• Primary BIN Classification into hostile and friendly Bins

• Reduce the number of wallets and thin wallets

• Add Direct Debits

• Improve our Bank Transfer offering


Brazil – Analysis

• Emerging Market, largest market in South America

• Due to limitations on deposit options and unusually low Credit Cards Success Rate, penetration rate is too low – market requires more Cash and Bank options , where we have major competitive disadvantage

• Credit Cards including Entropay are not the solution for increasing penetration as Entropay success rates are no different than CC deposits – Entropay data shows that success rate through their option is not more than 30%



Opportunity

$2.5 million in increased deposits (2009)





ENTROPAY

CC

NETELLER

MONEYBOOKERS

CLICKNBUY

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110%


Succ

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Player Success Rate Comparison (Actual Vs Reported) Relative Attractiveness Cards Bank Wallet Cash







Brazil – Summary

Options Summary• Credit Cards and Entropay are no good in this market

• Banks are hostile as well to make any penetration in the market

• Overall Brazil is under severe competitive disadvantage from cashier perspective

Rescue Strategy• Talk to suppliers, reduce integration issues, change supplier or reduce dependency




• We need Hybrid (Cards-Bank-Cash Mix) Solutions to penetrate in these markets

Short Term Implementations• Primary BIN Classification into hostile and friendly Bins

• Increase options to facilitate Bank and Cash transactions

• Explain New Credit Card Alternatives to Entropay's MCC 6012

• Entropay Enhancements


Entropay Analysis


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Payments[5]PG