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Fax: 02-6552159 : Tel: 02-6552473 P.O.B. 780, Jerusalem 91007 Jerusalem, 7 Shevat 5774 January 8, 2014 Circular No. 2407 -06 -H

To: Credit Card Companies and Banking Corporations

Subject: Report on Credit Cards (Instruction No. 869 'Reporting to the Supervision of Banks')

Introduction

1. Following Amendment 18 to the Banking (Regulation) Law, new acquirers may enter the market. In light of this and the needs of non-bank financial institutions, the Supervision of Banks has amended Instruction No. 869 'Report on Credit Cards'.

Amendments to the Instruction 2. The name of the instruction will change from "Quarterly Report on Credit Cards" to "Quarterly Report on Card Charges". 3. The main changes are as follows: a. Complete separation of the reporting schedules for issuance activities (Schedules 01-02) from those for acquiring activities (Schedules 03-05), to accommodate the entry of new acquirers. Additionally, the instruction requires analyzing risks according to business lines, specifically companies operating in both fields. b. Expansion of reporting on issuance activities (Schedules 01-02) - Card portfolio breakdown by card type (immediate charge, deferred charge, revolving credit, charge card), by brand (Visa, MasterCard, Israeli Card, American Express, Diners), and by geographic area (domestic and international) for transaction volume and number. c. Expansion of reporting on acquiring activities (Schedules 03-05) - Breakdown of transaction volumes by card type (tourist or local), by brand (see section b above), and by acquirer license holder (domestic and international acquiring). d. Expansion of reporting on acquiring fees (Schedule 04) - Breakdown of fees by card type (tourist or local, see section b above), by brand, and by transaction type (domestic and international acquiring). Also includes the possibility of deducting cross-fee for international acquiring license holders. e. Expansion of reporting on operational risks (Schedule 06) - Breakdown of card issuance and acquiring activities by main failure categories: theft, loss, failure to deliver, card forgery, and geographic location (domestic and international). f. Expansion of reporting on credit activities by issuers and acquirers (Schedule 07) - Breakdown by main products at the differentiated level, between private and commercial persons, with interest charge vs. without interest charge, card vs. non-card, discounts for businesses and advances, revolving credit. Also included in the new format is reporting on provisions for credit losses by main products as specified above.

4. The amendments to the instruction take effect as of March 31, 2014.

5. For questions and clarifications regarding the tables in the reporting instruction No. 803, please contact the Supervision of Banks.

6. Update of files: The following pages in the "Files" document contain updates to the reporting instructions of the Supervision of Banks.

Insert page | Remove page (1/14) [8] 869-1-10 Various versions 869-1-6 *(7/13) [4] 897-53 (7/13) [4] 897-53 (1/14) [5] 897-54 (1/14) [4] 897-54

• This page was not updated but reprinted following the transition to double-sided printing.

With respect,

Ofer Soffer Deputy Superintendent of Banks

(1/14) [8] Reporting Instructions to the Supervision of Banks: Superintendent of Banks Credit Card Instruction 869-1

1. This instruction applies to all companies issuing card charges or acquiring transactions. Each company shall report on the relevant schedules for its activities. The reporting is on a consolidated basis.

2. The report must be submitted within four business days from the date of publication of the quarterly financial report.

3. The report consists of three parts: Part A - Issuance: Schedule 01 - Number of cards, number of transactions, transaction amount by brand; Schedule 02 - Number of cards, number of transactions, transaction amount by card type; Part B - Acquiring: Schedule 03 - Number of merchants, number of transactions, transaction amount, merchant fee by merchant size; Schedule 04 - Number of transactions, net transaction amount and fees by brand; Schedule 05 - Distribution of total transactions in Israel by transaction size; Part C - Operational Losses: Schedule 06 - Net actual losses (from issuance and acquiring activities); Part D - Debtors: Schedule 07 - Balance sheet credit risk - private persons and commercial persons - with and without bank/guarantee.

4. Reporting must be done via secure internet computer communication. The reporting format is attached to this document.

5. Any term in this instruction shall have the meaning ascribed to it in the Reporting Instructions to the Public, unless otherwise stated.

6. Credit Card Law - Credit Card Law, 5746-1986.

7. Credit Card - As defined in the Credit Card Law.

(1/14) [8] Reporting Instructions to the Supervision of Banks: Superintendent of Banks Credit Card Instruction 869-2

9. Credit Card Organization - International (e.g., VISA) or local (e.g., Israeli Card) - granting licenses for acquiring and/or issuance.

10. Transaction - An operation to purchase goods or services, including cash withdrawal via L'VACH. Transactions made through intermediaries before the transaction was executed shall not be considered transactions. Various fees collected by the credit card company in the current quarter for cash withdrawals and transactions executed in Israel shall be considered as transactions.

11. Transaction without Document - As defined in the Credit Card Law.

Schedules 01-02: 12. Supplier, Issuer, Customer, Asset - As defined or meant in the Credit Card Law.

13. Immediate Charge Card - A charge card intended for the purchase of assets from a supplier within an immediate payment period. The consideration is paid directly to the supplier's account.

14. Deferred Charge Card - A charge card intended for the purchase of assets from a supplier without immediate payment to the supplier.

15. Revolving Credit Card - A deferred charge card in which a fixed monthly charge amount is defined in advance. If the total charges in a certain month were higher than the defined amount (by rate or sum), the difference is collected at a later date, plus interest.

16. Charge Card - A card for payment as defined in the Credit Card Law.

17. Single-Use Charge Card - A charge card that cannot accumulate monetary value, used only twice.

18. Local Card - A card through which transactions can only be executed at businesses in Israel.

19. Active / Inactive Card - The report applies only to cards that were valid on the last day of the fourth quarter. A card shall be considered active if at least one transaction was executed through it during the fourth quarter. Otherwise, it shall be considered inactive.

20. Others - A card not under the guarantee of a banking institution or under the responsibility of the reporting entity.

Schedules 03-05: 21. Acquirer - As defined in the Banking (Regulation) Law, 5741-1981.

22. Merchant - A registered merchant in Schedule 03 having an acquiring agreement valid on the last day of the fourth quarter, connected to the systems of the fourth quarter of the reporting entity.

23. Active Merchant - A merchant in Schedule 03 through whom at least one transaction was executed by the reporting entity during the quarter.

24. Number of Merchants - When referring to a merchant with branches, one must report on all branches belonging to the merchant as one merchant. If there are multiple franchisees, one must report on each franchisee separately.

25. Merchant Size (determined according to the quarterly acquiring turnover in Schedule 03) - When: 25.1. Small merchant - Quarterly acquiring turnover of up to half a million NIS.

(1/14) [8] Reporting Instructions to the Supervision of Banks: Superintendent of Banks Credit Card Instruction 869-3

25.2. Medium merchant - Quarterly acquiring turnover between half a million NIS and five million NIS. 25.3. Large merchant - Quarterly acquiring turnover exceeding five million NIS.

26. Domestic Acquiring - Acquiring of transactions executed at businesses registered in Israel.

27. International Acquiring - Acquiring of transactions executed at businesses registered outside Israel.

28. Israeli Card - A card issued by an issuer registered in Israel (Schedule 04).

29. Tourist Card - A card issued by an issuer registered outside Israel (Schedule 04).

30. Merchant Fee - The fee paid by the merchant for acquiring the card transaction. The fee may be determined as a percentage of the turnover or as a fixed amount in advance. For the purpose of this instruction.

Cross-fee - A part of the merchant fee.

The reporting will be on net fees (net fees will be the total fees collected from merchants by the reporting entity during the period, minus refunds executed by the reporting entity for which fees were collected).

31. Cross-fee (Schedule 04) - The fee paid by the acquirer to the issuer for the card on which the transaction was executed. The reporting entity shall report only the fee paid by the acquirer to the reporting entity, if the acquirer is not the reporting entity itself.

32. Other Fees - Fees not collected as merchant fees (Schedule 04).

Schedule 06: 33. Failure to Deliver - Non-compliance by the supplier with its commitment to provide a service or product, constituting grounds for stopping payments for non-delivery under the Credit Card Law.

34. "Number of Cards" - In Schedules 01-02. In the case of issuing a mobile phone chip card, the existing card must be included only once.

35. "Transaction Amount" and "Number of Transactions" - In Schedules 01-05. A transaction in installments shall be considered one transaction. The reported amount shall be the full transaction amount, and only the payment executed during the quarter shall be reported.

36. "Repayment Period" - Schedule 07. 36.1. Sorting of periods shall be done according to Section 51 of the instruction. 36.2. Revolving Credit Card - The reporting period shall be derived from the total accumulated charges on the card, as determined by the monthly charge set for the customer.

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Part A - Issuance Schedule 01

Under Banks' Guarantee | Under Company's Responsibility | Under Others' Guarantee

Charge Card Single-Use | Charge Card Single-Use

11 10 09 08 07 06 05 04 03 02 01 01 In Israel 02 Abroad 03 Total 04 In Israel 05 Abroad 06 Total 07 In Israel 08 Abroad 09 Total 10 In Israel 11 Abroad 12 Total 13 In Israel 14 Abroad 15 Total 16 In Israel 17 Abroad 18 Total 19 20 21 22 23 24 25 Local Card: From 26 Inactive Cards

(1/14) [8] Reporting Instructions Superintendent of Banks Credit Card 869-4' Em

From missing in document: In Israel | Abroad | Total Master Card

(Quarterly) Report on Credit Card Charges Brand Name Visa Israeli Card American Express Diners

(Transaction Amount in Thousands of NIS) Number of Cards, Number of Transactions, Transaction Amount by Brand (Transaction Amount in Units) | (Number of Cards in Units)

Total | In Israel | Abroad | Total | Others

Part A - Issuance Schedule 02

Under Banks' Guarantee | Under Company's Responsibility | Under Others' Guarantee

Charge Card Single-Use | Charge Card Single-Use

11 10 09 08 07 06 05 04 03 02 01 01 In Israel 02 Abroad 03 Total 04 In Israel 05 Abroad 06 Total 07 In Israel 08 Abroad 09 Total 10 In Israel 11 Abroad 12 Total 13 14 15

(Number of Cards in Units) Number of Cards, Number of Transactions, Transaction Amount by Card Type In Israel Abroad

Card Type: Credit Card Revolving Deferred Charge Card Charge Card Immediate Charge Card

Total

(1/14) [8] Reporting Instructions Superintendent of Banks Credit Card 869-5 'Em

Part B - Acquiring Schedule 03

Number of Merchants | Number of Transactions | Transaction Amount | Merchant Fee (In Units) | (In Thousands of NIS) | (In Thousands of NIS)

04 03 02 01 01 Registered merchants (with whom the company contracted) 02 Active merchants 03 Small merchant 04 Medium merchant 05 Large merchant 06 Total 07 International Acquiring

869-6 'Em (Quarterly) Report on Credit Card Charges Merchants: Active Domestic Acquiring Merchant Size Superintendent of Banks Credit Card

Number of Merchants, Number of Transactions, Transaction Amount, Merchant Fee by Merchant Size

Part B - Acquiring Schedule 04

Israeli Card | MasterCard | Visa | American Express | Diners | Other 07 06 05 04 03 02 01 01 Israeli 02 Tourist 03 Total 04 From missing in document: 05 International Acquiring 06 Israeli 07 Tourist 08 Total 09 From missing in document: 10 International Acquiring 11 Merchant Fee 12 From Cross-fee: 13 Merchant Fee 14 From Cross-fee: 15 Merchant Fee 16 From Cross-fee: 17 Merchant Fee 18 From Cross-fee: 19 International Acquiring 20 Other Fees

Net Transaction Amount and Number of Transactions by Brand (Transaction Amount in Thousands of NIS)

(1/14) [8] Reporting Instructions Superintendent of Banks Credit Card 869-7 'Em

Transaction Amount (In Thousands of NIS)

Domestic Acquiring (Quarterly) Report on Credit Card Charges Brand Name

Domestic Acquiring Number of Transactions (In Units)

Domestic Acquiring Net Fees (In Thousands of NIS)

Israeli | Tourist | Total From missing in document: Total

Part B - Acquiring Schedule 05

Number of Transactions | Transaction Amount (In Units) | (In Thousands of NIS)

02 01 01 Up to 50 NIS 02 Above 50 up to 100 NIS 03 Above 100 up to 200 NIS 04 Above 200 up to 500 NIS 05 Above 500 up to 1000 NIS 06 Above 1000 NIS 07 Total

869-8 'Em (Quarterly) Report on Credit Card Charges Domestic Acquiring Transaction Size Superintendent of Banks Credit Card

Distribution of Total Transactions in Israel by Transaction Size

(1/14) [8] Reporting Instructions

Part C - Operational Losses Schedule 06

Number | Amount | Number | Amount | Number | Amount (In Units) | (In Thousands of NIS) | (In Units) | (In Thousands of NIS) | (In Units) | (In Thousands of NIS)

06 05 04 03 02 01 01 Total Losses 02 From Theft or Loss: 03 From Forgery: 04 Total Losses 05 From Failure to Deliver:

Superintendent of Banks Credit Card 869-9 'Em

(Quarterly) Report on Credit Card Charges Net Actual Losses Total Issuance and Acquiring Activities | Abroad Activities | Domestic Activities

(Net) Actual Losses

Part D - Debtors Schedule 07

(In Thousands of NIS) Total

Credit: From Revolving

To Businesses: From Discount | Vouchers and Advances

13 12 11 10 09 08 07 06 05 04 03 02 01 01 Up to 1 month 02 1 to 3 months 03 3 months to 1 year 04 Over 1 year 05 No repayment period 06 Total 07 Bad Debts: From 08 Non-bad debts overdue 30 to 89 days: From 09 Non-bad debts overdue over 90 days: From 10 Provision for Credit Losses 11 (After Provision for Credit Losses) Net Balance 12 (Before Provision for Credit Losses) Recorded Balance 13 Non-bad debts overdue over 30 days: From 14 (After Provision for Credit Losses) Net Balance 15 (Before Provision for Credit Losses) Recorded Balance 16 Non-bad debts overdue over 30 days: From 17 (After Provision for Credit Losses) Net Balance

869-10 'Em

Credit Card Not for Cardholders Debtors

Credit Not for Cardholders

With Interest Charge | Without Interest Charge

Total | Total

(1/14) [8] Reporting Instructions

Under Others' Guarantee | Under Company's Responsibility | Under Banks' Guarantee

Recorded Balance Before Provision for Credit Losses (Repayment Period)

Superintendent of Banks Credit Card

Credit Card Debtors - Private Persons

Credit Not for Cardholders

Commercial Credit For Cardholders

Credit Not for Cardholders

Commercial Credit For Cardholders

Credit Not for Cardholders

With Interest Charge | Without Interest Charge

Total | Total

(Quarterly) Report on Credit Card Charges

Balance Sheet Credit Risk - Private Persons and Commercial Persons - With and Without Bank/Company Guarantee

(1/14) [4] Reporting Instructions: Superintendent of Banks Appendix C - Updates Key - Instruction 897-54' Em

Insert Page | Remove Page | Instruction Subject | Circular Date *(12/11) [6] 810D-1 (12/11) [6] 810D-1 Reporting Instructions 2389 21.7.2013 (Continuation of Supervision) (7/13] (7 [810D-2-3 (12/11) [6] 810D-2-3 *(12/11) [6] 810D-4 (12/11) [6] 810D-4 (7/13) [7] 810D-11 (12/11) [6] 810D-11 *(12/11) [6] 810D-12 (12/11) [6] 810D-12 (7/13) [3] 830-1-3 (2/12) [2] 830-1-3 (7/13) [16] 832-5-8 (3/13) [15] 832-5-8 *(3/13) [15] 832-13 (3/13) [15] 832-13 #(3/13) [15] 832-14 (3/13) [15] 832-14 (7/13) [10] 876-11-12 (8/12) [9] 876-11-12 (7/13) [4] 897-53 (4/13) [3] 897-53 (7/13) [1] 897-54 ------------------ *(7/13) [17] 801-1 (7/13) [17] 801-1 Emergency Reporting 889 2393 30.7.2013 (7/13) [10] 801-2 (9/11) [9] 801-2 *(9/11) [39] 801-3 (9/11) [39] 801-3 (7/13) [52] 801-4 (7/13) [51] 801-4 (7/13) [75] 803-1 (1/13) [74] 803-1 (7/13) [79] 803-2 (7/13) [78] 803-2 (7/13) [1] 889-1-11 ------------------ *(7/13) [4] 897-53 (7/13) [4] 897-53 (7/13) [2] 897-54 (7/13) [1] 897-54 (11/13) [4] 838-1-24 Various versions 838-1-23 Reporting Instructions 2402 13.11.2013 *(7/13) [4] 897-53 (7/13) [4] 897-53 Supervision (11/13) [3] 897-54 (7/13) [2] 897-54 2406 05.01.2014 828 (1/14) [3] 828-1-2 (10/10) [2] 828-1-2 For Fees (1/14) [2] 828-4-5 (2/10) [1] 828-4-5 The Services (1/14) [3] 828-6-7 (10/10) [2] 828-6-7 The Banking *(7/13) [4] 897-53 (7/13) [4] 897-53 (1/14) [4] 897-54 (11/13) [3] 897-54 2707 08.01.2014 869 (1/14) [8] 869-1-10 Various versions 869-1-6 Credit Cards *(7/13) [4] 897-53 (7/13) [4] 897-53 (1/14) [5] 897-54 (1/14) [4] 897-54

• This page was not updated but reprinted following the transition to double-sided printing.

Technical correction