From: J. David Oder
Sent: Thursday, April 26, 2018 9:22 PM
To: John M. Hutchison; Tom Pritzker
Cc: Taylor Oder; Jarett T. Oder
Subject: Fwd: Card Connect / First Data

FYI -

Begin forwarded message:

From: "J. David Oder" <***@***>
Date: April 26, 2018 at 6:11:45 PM MDT
To: xxxxx < ×××××@firstdata.com>
Subject: Card Connect / First Data

xxxxx,

Appreciate the few minutes this AM.

Per our conversation, I wanted to arm you with additional data points that continue to surface here. Some of these, if not all, will be discussed with you by the Card Connect team during your upcoming meetings.

These are not meant to be accusatory in any way but I do feel the actions of Card Connect (CC) need to be exposed and addressed as l believe it's impacting the reputation of First Data (FD) and certainly costing FD on many levels. I am also happy to get on a call to provide additional insight / support for any items below as well as introduce data points not documented below.

I personally was running FD's VAR program, managed all gateway relationships and was very engrained in the day-to-day activities with ×××××, ××××× and many others on the FD team at the time when Card Connect was brought into FD. I can speak to their activities more intelligently than most.

•   CC has informed FD many times (including at ETA last week) that their plan is to sunset the FD platform. ×××××, the CEO of CC, delivered this message along with his strategy to move to TSYS. (I was on the phone with xxxxx and heard ××××× say it myself) He explained how this will come at a great cost to CC but the value of the partnership with TSYS is far greater than what FD delivers. Is FD leadership aware of this and what is the plan to offset the FD revenue loss? This may take time to complete but the wheels are already in motion.

•   ××××× has personally told me how FD does not lead with a strong developer focused strategy. This is the exact opposite of CC's public messaging. I assume you agree.

•   CC has informed many large ISOs / partners on the FD platform that an RCS certification with FD is not possible. This directly conflicts with FD's commitment to providing RCS certification to partners (per the press releases this week).

•   CC has a large kickback / financial relationship with ××××× that limits the value of FD's solutions in many cases. ××××× ×××××. ×××××, is on the CC payroll and often does the public speaking engagements for CC, xxxxx admitted this to me personally.

- CC is a reseller of ××××× and white-labels their solution. They also send merchants directly to ×××××.

•   CC has been actively trying to move their entire sales organization to TSYS. This has caused some challenges with their sales team and resulted in some reps leaving CC.

FD has been able to acquire some large enterprise clients through CC (which is great) but my concern is FD does not own / control the relationship directly. CC presents FD as a commodity processor and consistently attempts to devalue FD. There is no "partnership" with CC but rather a very high-risk relationship with a company that has done everything possible to work against many of the key FD leaders.

•   CC recently hired ××××× from Vantiv. This person was fired from Vantiv for unethical behavior. He is very vocal and upfront regarding his disdain for FD.

•   CC claims (publicly) that they are winning business against FD due to the strength of their technology. Recent examples include Academy Sports and Xxxxx. I was told by ××××× that xxxxx was a direct result of our team (Shift4) having limited bandwidth for the boarding. This account wanted other key Shift4 value adds that played a role in the decision. To my knowledge, xxxxx was not a deal won due to CC technology but rather due to their pricing (at a loss) and the relationship with ×××××.

- I also know security was not a factor as both merchants failed their SAQ's.

CC charges a P2PE fee that is a huge profit center for them. The merchant is under the assumption that becoming "P2PE Validated" reduces or eliminates the SAQ. FD is the party doing the filings and assuming the risk.

•   The "technology" that CC is taking to market does not include key FD solutions. The product gaps are significant. How is CC supporting EMV QuickChip? NFC, etc.?

•   CC claims to offer a stand-alone gateway solution that they market to non-FD clients. This does compete against FD's various gateway offerings.

•   CC has a significant number of merchants that are not boarded directly with FD. This may be due to the accounts existing prior to the FD acquisition but the merchants have no idea that they are not on FD. These merchants cannot be leveraging a number FD solutions and creates a scenario where the merchants are further devalued.

- Many merchants are being sold a point-to-point encryption (P2PE) solution that is boarded on the CC platform and not FD. I cannot find any mention of this solution on PCI's website.

•   CC has offered to pay many large ISO's and integrators (×××××, ×××××, etc.) for their residuals on accounts that move from FD to the CC platform, ××××× told me this last week. This puts FD in a position where you are losing the processing revenue to your other supported platforms, I don't see how this activity benefits FD.

CC has historically presented a narrative that does not align with the activities documented above.

During my time at ×××××, I worked with ××××× to stop CC's unethical activity but the approach was to simply terminate the relationships rather than expose the behaviors as FD is now doing. I believe this approach was due to the fact that ×××××, xxxxx and other key CC employees came from ××××× (and were all terminated).

I have an email from ××××× that was sent to ××××× in error when I worked at ×××××. In this email ××××× details how he "hired a hitman to go after XXX's employees and merchants" and xxxxx even jokes about the situation, cc'ing ×××××. This was simply the culture over there.

I have also attached a few emails from the CEO of ××××× (xxxxx) where he details CC's behavior in his market. Please keep the sender confidential as he is live with CC. I plan to take him off of the product ASAP.

Please let me know when you are free to discuss. I appreciate your partnership!

Regards,

J. David Oder
Shift4, CEO
×××××@shift4.com
www.shift4.com
C ×××.×××.××××