The Future Of Payments:How To Win In Today's Crowded

Digital Marketplace

2

Claim for first online sale ever in 1994*

* The official first purchase online with encrypted credit card payment was actually a CD copy of Sting’s Ten Summoner’s Tales

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Product-Oriented Innovation

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And yet. . .

© 2014 PayPal Inc. All rights reserved. Confidential and proprietary.

Customer-Oriented Innovation5

“We are as much a tech company as we are a pizza

company”

-Patrick Doyle

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DRIVING FORCES IN PAYMENTS

Ubiquity User Experience One-Stop Shop Collaboration

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Mass Adoptionof Mobile Devices

Digitization of Cash

Money is

changing

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Mobile Drives Trends

Average American

checks their phone

150times per day – when you

aren’t sleeping that’s

once every 6 minutes.

Average person touches

their mobile device

2,617times a day!

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Using Digital

Banking

Channels To

Interact With

Their Banks

81%Want Their

Entire

Financial

Lifecycle On

Digital

Channels

69%

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Bus fare Chain grocery shopping Vending machine

Airport Street sellersFood & Beverage

Alipay Offline Ubiquity Examples (QR Code Is Prevalent)

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OfflineConsumer

Behavior

Changing

OnlineNew

Retail

Emerging

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©2017 PayPal Inc. Confidential and proprietary. 12

ONLINE DIGITAL WATCH

IN APP/

IN STORE

VOICE

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Gen Z

Visit Their

Bank Branch At

Least Weekly

23%Interested In

Instant P2P

payments

today

68%

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DRIVING FORCES IN PAYMENTS

Ubiquity One-Stop Shop CollaborationUser Experience

Source: comScore m-Commerce Measurement, May 2017 Source: Dept. of Commerce, comScore e-Commerce & m-Commerce Measurement, May

2017

Digital commerce sales = desktop + mobile

m-Commerce Share of

Total Digital Commerce Dollars

Mobile Momentum and GrowthIn Q1 2017, Mobile represented 22% of digital commerce sales in the US and is far outpacing eCommerce and overall retail growth

Q1 2017 Y/Y Retail Spending

Growth by Channel

+3%

Total

Discretionary

Retail

+14%

e-Commerce

+43%

m-Commerce

Total Digital

Commerce

reached

$100.1B in Q1

2017

(desktop + mobile

sales)

©2017 PayPal Inc. Confidential and proprietary.

Q3

2015

16%

Q4

2015

17%

Q1

2016

19%

Q4

2016

21%

Q1

2017

22%

Q2

2016

20%

Q3

2016

20%

17

66%

22%

34%

78%

Time Spent Dollars Spent

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However, there’s still a Conversion Gap with Mobile

Source: comScore Media Metrix Multi-Platform and e-Commerce / m-Commerce Measurement, Q1 2017

Despite its growth, Mobile dollars significantly lag behind its share of digital media time spent

©2017 PayPal Inc. Confidential and proprietary.

Q1 2017 Share of Retail Time Spent vs. Spending by Platform

44%

Gap

Mobile

Desktop

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Consumer Benefits

• Speed

• Convenience

• Seamless Experience

Fewer screens, fewer clicks, less friction

Merchant Benefits

• High Conversion

• Sales Lift

• LoyaltyOpted-in to use

One TouchTM in thelast year**

64 MILLION+

buyers

Turns ordinary transactions into experiences

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Advanced Segmentation Customer Support Fraud Detection

Process Automation Cybersecurity

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Financial services is expected to lead AI

adoption

Acquisition of AI companies by technology players has

increased significantly; Google is top acquirer

Source: CB Insights

Top Acquirers

12

acquisitions

8

acquisitions

4

acquisitions

4

acquisitions

3

acquisitions

3

acquisitions

3

acquisitions

Q1’1

2

Q3’1

2

Q2’1

2

Q1’1

3

Q4’1

2

Q2’1

3

Q4’1

5

Q1’1

7

Q1’1

6

Q4’1

6

Q3’1

6

Q4’1

4

Q2’1

6

Q2’1

7

Q3’1

4

Q3’1

5

Q2’1

5

Q1’1

5

Q3’1

3

Q4’1

3

Q1’1

4

Q2’1

4

23

37

19

28

161512

6

16

1098

1210

57

454232

Acquisitions of AI companies by quarter, Q1 2012 – Q2 2017

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DRIVING FORCES IN PAYMENTS

Ubiquity One-Stop Shop CollaborationUser Experience

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25

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Credit Union

Mobile App

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DRIVING FORCES IN PAYMENTS

Ubiquity One-Stop Shop CollaborationUser Experience

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WE’VE BEEN GOING THROUGH A STRATEGIC

EVOLUTION OF OUR OWN

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We See Huge Opportunity

PHYSICAL MOBILE DIGITAL ONLINE

TRADITIONAL RETAIL

Commerce

Enablement

PaymentsACQUIRERS & POS TERMINALS

Transfer NETWORKS

Credit CBT

SavingsBANKS/ISSUERS

ALTERNATE SAVINGS

TECH

ONLINE LENDERS

©2017 PayPal Inc. Confidential and proprietary.

Our Vision

SECURITY

GLOBAL

World’s Leading Open Digital Payments Platform

DATA *

17M MERCHANTS 193M CONSUMERS

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EXPANDING STRATEGIC PARTNERSHIPSLeveraging the industry’s collective assets to advance the digitization of payments

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Democratizing Financial Services

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• 7.7 billion mobile connections

worldwide1

• 2 billion adults around the world

don’t have a bank account2

• $138 billion is being spent by the

underserved to manage financial

lives3

• FDIC says that 1 in 13 or 25 million

US households are underbanked

Financial services is ripe for disruption

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“World’s Best Container Company”

Ball Corporation

"We used to be a pizza company that sells online, and we needed to become an e-commerce company

that sells pizza"

-Dennis Maloney

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In what business is your credit union???

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Appendix

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Our strategy is to continue strengthening our core propositions to merchants and consumers, reinforcing our two-sided network

CONSUMERSMERCHANTS

Two –sided network

• Helping merchants take

full advantage of the

movement toward mobile

commerce

• The operating system for

digital commerce

• Moving from being a

button to being a rich

global platform company

• Powering 100% of digital

checkout

• Offering next generation

financial services that are

better and more cost

effective

• Building our compelling

payments proposition across

contexts

• Offering simple, secure

payments across devices

• Providing access to

merchants globally; also

providing access to other

consumers globally (P2P,

etc.)

Bringing merchants and

consumers together,

drawing on our proprietary

data in a secure and safe

way

©2017 PayPal Inc. Confidential and proprietary.

Being a customer champion company means giving our mutual customers

choice and optionality in where and how they want to pay

CUSTOMER CHOICE

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Increasing engagement with consumers

Growing share with core products

Expanding to capture 100% share of checkout for merchants

In new and different channels

Expanding financial services

offering

BILL PAY

The

Flywheel Effect

PayPal Connects Consumers and Merchants

©2016 PayPal Inc. Confidential and proprietary. 41

• World class brand

• 179M global customers

• #1 in security

• Fast easy online /mobile payments

• Customer First

Trusted Digital Wallet

• Braintree platform enabled

• Credit Card Processing

• Freedom of Payment Choice: Accept PayPal, Credit Cards, Bitcoin, Apple Pay andemerging options

Agnostic Payment Enabled

• Merchant Centric Solutions

• Technology Leader

• White Label / Retailer Branded Mobile App

• Innovative Solutions

Innovative Technology Partner

Buy-Online Pickup In Store is growing in popularity!Overall, buy online, pick up in store us has grown nearly 43% since 2015

©2017 PayPal Inc. Confidential and proprietary.

http://now.jda.com/ConsumerSurvey2017

Source: JDA 2017 Consumer Survey of 1,058 US consumers aged 18+

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