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Commerce and Payments Year in Review © 2018 First Data Corporation. All rights reserved. The First Data

name, logo and related trademarks and service marks are owned

by First Data Corporation and are registered or used in the U.S.

and many foreign countries. All trademarks, service marks, and

trade names referenced in this material are the property of their

respective owners.

2018

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Recap: FDC’s

predictions

for 2018

Another evolutionary year

Consumer expectations for

faster access to their

ecommerce orders, and same

day delivery, is changing

physical retail

As retail and digital

increasingly converge,

traditional retailers are turning

to M&A of startups to catch

up on retail transformation

In addition to M&A, retailers

are forming unexpected

partnerships with big

technology giants

Retailers and banks are

utilizing machine learning and

AI to strengthen services and

streamline operations

Retailers are experimenting

with smaller format physical

stores given changing

shopping dynamics

Disparate industries are

working together through

IoT collaboration to reach

more households with

connected commerce

1 2 3

4 5 6

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2018 Commerce and Payments Year in Review

Holiday

Spending

Kickoff

Amazon

Goes

Further

Offline

Cashierless

Automation

Retail

Apocalypse

Data

Privacy

Digital

Bank

Launches

FinTech

Friendships

Trends in

Blockchain

Chinese

Payments

Expansion

Payments

and the Capital

Markets

1 2 3 4 5

6 7 8 9 10

FDC’s Top Trends of 2018

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Holiday season kickoff

Note: Figures include Brick & Mortar and Ecommerce channels. Source: First Data aggregated same-store data.

3.4%

5.7%

2.6%

7.8%

11.9%

7.1%

5.6%

11.3%

5.0%

0%

5%

10%

15%

2016 2017 2018

Pre-Holiday (Nov 1- Nov 21) Thanksgiving + Black Friday Thanksgiving to Cyber Monday

Total Spending YoY Growth

› 2017 saw very strong growth

to kick off the holiday season

– spurred in part by recovery

spending as a result of

hurricanes in 3Q17.

› Comparatively, Pre-Holiday

spending growth of 2.6% was

not spectacular, but solid

considering the tough comps.

› Thanksgiving + Black Friday

showed noticeable

acceleration to 7.1% vs. the

Pre-Holiday period.

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Holiday season kickoff

Note: Figures include Brick & Mortar and Ecommerce channels. Source: First Data aggregated same-store data.

YoY Growth Retail Spending

1.6%

5.9%

1.3%

9.0% 9.3%

7.5%

5.8%

8.0%

3.9%

0%

5%

10%

15%

2016 2017 2018

Pre-Holiday (Nov 1- Nov 21) Thanksgiving + Black Friday Thanksgiving to Cyber Monday› Within Retail, Pre-Holiday

spending growth of 1.3% was

the slowest of the last 3 years.

› However Thanksgiving +

Black Friday Retail growth

jumped to 7.5%, driven by

strong growth in both

Ecommerce and Brick &

Mortar.

› Similar to the prior two years,

growth from Saturday through

Monday tapered off a bit.

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Holiday season kickoff

Note: Figures include Brick & Mortar and Ecommerce channels. Source: First Data aggregated same-store data.

YoY Growth Total Spending vs

SMB Spending

2.4%

4.5% 3.6%

0.2%

2.5% 1.4%

2.6%

7.1%

5.0%

0%

3%

6%

9%

Pre-Holiday (Nov 1 - Nov 21) Thanksgiving + Black Friday Thanksgiving to Cyber Monday

Transactions Average Ticket Total Spend

0.2%

2.4% 1.2%

0.6%

5.0% 4.3%

0.8%

7.5%

5.5%

0%

3%

6%

9%

Pre-Holiday (Nov 1 - Nov 21) Thanksgiving + Black Friday Thanksgiving to Cyber Monday

Total

SMB

› SMB spending growth has

outpaced the total

marketplace.

› And while they are driving

transaction growth, SMBs

have also figured out how to

encourage customers to

spend more per visit.

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Amazon goes further offline

2018 YTD $5.8B Physical retail sales

$12.8B Physical retail sales

2017

Includes sales from 465 North America and 7 International

Whole Foods locations + ~15 physical bookstore locations

Now operates 630 physical retail locations, up 30% YoY,

and now includes bookstores, Amazon Go convenience

stores, and Whole Foods grocery stores, among others

Source: Company press releases and web sites; TJI Research.

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Solutions are emerging from

startups to established

enterprise

tech providers

Retailers from the U.S. to

the U.K. and France, to

China and beyond are

testing the concept

Go-ing beyond the cashier… across the globe

Source: Company reports; ZDNet.

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“Retail Apocalypse…” or continued evolution?

The reality

› In-store still the top destination

› Net growth of 2,000+ stores in 2018

› Positive forecasts

› Retail struggle = Mall struggle

› Consolidated closings

Omnichannel Customer

Experience +

Note: Figures include all tracked spend across all categories, including Brick & Mortar and Ecommerce channels. Source: First Data aggregated same-store data; IHL; US Census Bureau; National Retail Federation.

Debt burdens and lack of technology improvements

are common to struggling retailers

4.5%

5.7%

4.9%

0%

2%

4%

6%

8%

10%

Brick & Mortar Ecommerce Total Spending

3Q17 4Q17 1Q18 2Q18 3Q18

Total Spending – YoY Growth

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“Retail Apocalypse…” or is old the new new?

Source: JLL Retail Research.

Ecommerce “natives” are forecasted to open

850+ physical stores in the next five years

Given the importance Brick & Mortar still holds in retail,

many pure-play ecommerce firms are opening physical locations

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Current state of data privacy

Key Takeaways From First Data’s

Cybersecurity Study on PII Data

Recent Cybersecurity

Market Events

Key Highlights

› The survey was divided among four key demographics: Linksters (18–23),

Socializers (24–34), MTV Generation (35–54), and Maturists (55+)

› The older you are, the more likely you are to believe that fraud is inevitable

› 25% of consumers assume their PII is safe unless they are told otherwise

› 26% of consumers say they have had their PII compromised within the last

month; 34% say that their PII has been compromised within the last year

Consumer Trust With PII Data

Most

Trusted

Least

Trusted

46% Financial

39% Healthcare

30% Insurance

8% Telecom

8% Foodservice/QSR

4% Petroleum

Thousand of Mobile Apps Leak Data from

’s Firebase Database

June 23, 2018

said to have exposed 340M

records, more than Equifax breach

June 1, 2018

advising all 336M users to change

passwords after bug exposed them in plain text

May 3, 2018

admits public data of its 2.2B users

has been compromised

April 4, 2018

Source: TechCrunch, June 23, 2018; USA Today, June 1, 2018; FORTUNE, May 3, 2018; NBC News, April 4, 2018; First Data 2018 Consumer Cybersecurity Study.

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Traditional banks shifting to digital

Consumers Are Shifting Their Behaviors

American most often use online and mobile to

access their bank accounts

Source: Company reports; The Daily Telegraph; ABC News; Reuters; Engadget; Morning Consult, on behalf of the American Bankers Association, conducted a survey of 2,000 U.S. adults.

2%

4%

7%

18%

26%

40%

Mail

Telephone

ATM

Bank Branches

Mobile

Internet

2018 Digital Bank Launches

Leading Mobile Banking Ecosystems

33M 23M 26M

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FinTech and banks – Becoming best of friends

Bankers Expecting

FinTech Influence

Percent of expected contribution to the banking

ecosystem by FinTechs

17%

25%

54%

2016 2018 2020E

Source: Company reports; World Retail Banking Report 2018, Capgemini and Efma.

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Trends in Blockchain

A Foundation for

Blockchain Innovation

West Virginia

Mid-Term Elections

Walmart to Add Transparency in

Food Traceability via Global

Supply Chain

ICE to Launch Platform for

Trading Digital Assets

Canadian Border Services

Streamlining Freight Shipping

2018

Implementations

Blockchain-as-a-Service to

Facilitate Deployments

Source: Computerworld; Coindesk; ZDNet.

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China payments going global

150M+ Outbound

Trips

$5.5T+ Mobile

Payments

1.3B+ Total

Population

~$260B Outbound

Tourism

Spending

Source: Company reports, Mercator Advisory Group; UN World Tourism Organization; Suning Institute of Finance.

Enormous Spending Power Abroad Growing Partner Ecosystem

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Payments and the capital markets

IPO M&A

Source: Company reports.

Financing

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Other headline topics from 2018

Retail

Delivery

Retail

M&A

P2P

Monetization

U.S.

Open Banking

Alternative

Lending Landscape

Terminal

Tremors

Faster

Payments

Bank

M&A

Cashless

Society

PSD2

Goes Live

Shared Ecommerce

Payment Button

Bank Regulatory

Rollback

GDPR Becomes

Enforceable

Cashless

Stores

China

Opens Up

AI in

Everything

Expanding Voice

Ecosystem

Ongoing Merchant

Litigation

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First Data – An exciting 2018

Feb

Launched in

Germany and Austria

Reached ~$50B in

annualized volume

750K+ Clover units

shipped

Apr

Reached ~$58B in

annualized volume

Jun

Disburse-to-debit

partnership

Investor Conference

Aug

JV extended

Remittance processing

business agreement

Oct

Reached ~$70B in

annualized volume

Partnership

Sep

1M+ units

shipped

FirstSense launched

Partnership

Card processing

agreement with SBI Card

Mar

Expanded partnership

Card processing

agreement

May

European card processing

agreement

Agreement and

acquisition

First Data Education

established

Jul

Class 8 announced

Reached ~$65B in

annualized volume

Jan Nov

Launched in

Argentina

First Data Holiday

Insights launched

Clover launched in

Canada

Partnership

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Stay tuned…

Holiday Insights Dashboard

Live Now

Holiday Season Recap

Coming Soon

2019 Outlook

Coming Soon

….there’s more in store from First Data Insights

Get in touch with us anytime at FirstData.com/SpendTrend