Pipeline Data Inc.

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• Pipeline Data Inc.

Secure, Affordable Payment Solutions
(OTC BB PPDA) September 2007
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Investor Disclaimer

• The information provided for in this investor
  presentation contains forward-looking statements
  that involve risks and uncertainties more fully
  set forth in the Company's filing. Certain
  information included in this presentation may
  contain statements that are forward-looking, such
  as statements relating to uncertainties that
  could affect performance and results of the
  Company in the future and, accordingly, such
  performance and results may materially differ
  from those expressed or implied in any
  forward-looking statements made by or on behalf
  of the Company. These risks and uncertainties
  include, but are not limited to those relating to
  the Company's growth strategy, customer
  concentration, outstanding indebtedness,
  seasonality, expansion and other activities of
  competitors, changes in federal or state laws and
  the administration of such laws, protection of
  the securities markets and other risks detailed
  in the Company's filings with the Securities and
  Exchange Commission.
• Readers are cautioned not to place undue
  reliance on these forward-looking statements,
  which speak only as of the date the statement was
  made. The Company's actual results could differ
  significantly from those discussed and/or implied
  herein.

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Company Profile
Pipeline Data Inc. (PPDA) is a value-added
provider of merchant payment processing services
and other related software products. The Company
delivers credit and debit card-based payment
processing and related services to small to
medium-sized merchants who operate either in a
physical brick and mortar business environment
or over the Internet. Pipelines payment
processing services enable merchants to
process both traditional card-present, or swipe
transactions, as well as card not-present transact
ions. For more information please visit
www.pipelinedata.com.  
Credit Card Processing for Merchant Accounts
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Pipeline Companies

• Northern Merchant Services, Inc.
• Bank referral division representing over 50
  banks comprising 420 bank branch
• locations, along with 48 credit unions
• SecurePay, Inc.
• Custom credit card transaction processor
  serving as a gateway
• intermediary between the customer and the
  financial networks, integrating
• shopping cart, gateway and custom third-party
  solutions
• Pipeline Data Processing, Inc.
• Provider of wholesale payment processing
  solutions, new account
• boarding, underwriting and risk management
• Charge.Com, Inc.
• Industry leader in Internet merchant
  account acquiring and marketing
• AIRCHARGE, Inc.
• Provider of cellular phone-based credit card
  acceptance solutions for mobile merchants

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How it Works
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Pipeline Data Economics of a Credit Card
Transaction
On a typical 100.00 retail and e-commerce
credit card purchase, Pipeline recognizes 2.14
and 2.65, respectively, in gross revenue and
0.54 and 1.01, respectively, in processing
margin. Pipeline has an opportunity to generate
more income via e-commerce accounts as they are
more likely to procure value- added services.
Retail
E-Commerce
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Market Growth

• The use of non-cash forms of payment, such as
  credit and debit cards, has steadily increased
  over the past 10 years
• The Nilson Report, the leading industry
  publication that tracks the transaction
  processing industry, is forecasting the
  following
• Purchase volume by U.S. consumers using credit
  cards will grow from 1.89 trillion in 2003 to
  2.81 trillion in 2008 (8 CAGR)
• Credit cards will comprise 47.7 of all
  transactions by 2009, up from 38.8 in 2004
• Additional forecasts estimate that purchase
  volume by U.S. consumers using Visa credit cards
  will increase 63 from 2003 through 2008, while
  MasterCard usage is projected to increase by 46
  during the same period
• The Internet marketplace is growing at a rate of
  20 annually
• Pipeline is poised to capitalize on this rapid
  growth

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Large and Growing Market
Merchants accepting credit cards continue to grow
Traditional Payments
Traditional Payments
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54
Traditional Payments
82
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Large and Growing Market
The small merchant market represents a
significant growth opportunity
Businesses Accepting Credit Cards

• There are an estimated 23 million businesses in
  the United States
• Only 27 accept card-based payment
• 50,000 100,000 small merchants begin accepting
  credit cards every month
• 80 of activations come from new businesses
• An estimated 580,000 new small businesses open
  every year in the U.S.

The Nilson Report
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Large and Growing Market
Small merchants represent a large market
opportunity

• Pipeline Data focuses exclusively on the 5
  million small merchants that generate 422
  billion in Visa / MasterCard charge volume

• Small merchants represent an attractive customer
  base
• Largest market
• Fastest growing market
• Difficult to identify and serve less
  competition
• Most profitable to merchant processors

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Recurring Revenue Model

• High recurring revenue
• Processing fees paid by merchants are recurring
  in nature
• Smaller merchants typically do not focus on
  processing fee once initial buying decision is
  made
• Credit card processing is vital to a merchants
  success
• Significant visibility due to higher merchant
  volume retention
• Approximately 88 of card processing revenue
  recurs every year
• Numerous opportunities to grow merchant volume

Loss Volume 12
Recurring Volume 88
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Portfolio Valuation

• There is a well-established and liquid market for
  merchant portfolios
• The average multiple of EBITDA paid was 3.69
  times in 2005 and 2006
• First Annapolis appraised merchant portfolio
  alone at 60 million in December 2005

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Efficient Model

• Pipeline enjoys low costs related to account
  acquisition
• through the Internet and strategic partners
• Pipeline Data
• Generates leads from potential merchants via the
  Internet
• Obtains leads via call generation and other
  marketing media
• Owns a sophisticated call center that enables
  quick turnaround merchants can be activated for
  card acceptance within 24 hours
• Enjoys favorable search engine positioning
  through its proprietary optimization tools
• Benefits from favorable positioning because it
  places the Company in prime viewing area for
  potential Internet customers
• By being well-established in the Internet
  marketplace, the Company maintains a competitive
  advantage over would-be entrants due to high
  barriers of entry

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Strong and Broad Operating Platform

• 11,250,000 annual e-commerce transactions
• 850 million in transactions / volume
• Proprietary gateway and shopping cart solution

• 8,750,000 annual retail transactions
• 850 million annual in trans. / volume
• Solid regional bank relationships

Acquisitions

• Pipeline provides wireless processing through its
  subsidiary, AIRCHARGE
• AIRCHARGE is a newly acquired entity in mid Q3-05
  that provides remote processing
• Pipeline has a strategic relationship with Nextel
  that has carried over to Sprint
• One of the premier products in the field

• 4 transactions in the last twelve months
• Charge.Com
• AIRCHARGE
• Paynet
• Valadata

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Organic Growth Strategy

• Aggressively grow the number of merchant accounts
  serviced through the solicitation of new merchant
  accounts
• Expand the portfolio of merchant clients through
  internal sales efforts augmented by expanding
  marketing and advertising. Management is focused
  on aligning marketing, sales capacity and
  incentives in a cost-effective sales cycle
• Achieve greater business efficiencies by
  creating, operating and continually enhancing
  processing and servicing operations in an
  efficient and scalable manner
• Leverage the flexibility of the Companys service
  and support platforms enabling merchant
  customization to meet specific requirements

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Application Growth
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Merchant and Charge Volume Growth
Proven History of Growth Performance
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Significant Growth Drivers

• Proprietary technology and sales engines
• Top-tier search engine placement
• Advanced underwriting and application processing
  technology
• Proprietary gateway and shopping cart solutions
• Proprietary wireless payment solutions
• Acquisitions
• Highly fragmented e-commerce and retail merchant
  portfolio market
• Consolidating market with diminishing number of
  purchasers of small to medium-sized portfolios
• Operating model leverage
• Increased transactional volume and growing
  merchant base allows Pipeline to effectively
  negotiate advantageous processing contracts
• Proven ability to improve portfolio margins and
  reduce attrition post acquisition
• Highly scalable

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Competitive Advantages

• Pipeline has a strong industry presence and is
  considered to be one of a select group of
  providers who are able to provide an end-to-end
  VISA certified card acceptance solution
• Pipeline is one of only a handful of companies to
  be certified by Visa as both PCI compliant and an
  authorized third-party processor (TPP)
• Pipelines technology includes
• Online proprietary digital merchant application
• Proprietary shopping cart and secure payment
  gateway services
• Wireless cellular phone software to enable mobile
  card payment acceptance
• Pipeline has higher gross profit margins (as a
  of revenue) than its competitors

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Strategic Partnerships
Declining Processing and Sponsoring Costs

• Vendor relationships and increasing volume are
  driving lower processing costs
• Overcapacity in the industry continues to benefit
  Pipeline with lower processing costs
• Costs are expected to continue to decline in the
  future, as contract negotiations with the
  Companys largest processing vendor have
  successfully concluded

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2nd Quarter of 2007 and 2006 Financial Results

• 2nd Quarter of 2007
• Revenue increased 57 YOY to a second quarter
  record of 13.1 million
• Gross Profit increased 34 YOY to 4.4 million
• Adjusted EBITDA of 1.6 million, up 25 YOY
• Adjusted EBITDA rose 45 from the first quarter
  ended March 31, 2007

• 2006
• Revenue of 41.8 million, up 74 YOY
• Gross Margin of 35.7, up from 27.1 YOY
• Gross Profit increased 129 to 14.9 million YOY
• EBITDA of 5.1 million, up 320 YOY
• Operating Income of 2.6 million, or 6.3 of
  Revenue
• Net Income of (2.3) million compared to 370,000
  YOY includes 2.1 million charge for early
  retirement of debt

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Financial Overview YTD Financial Results
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First Quarter 2007 Compared to Second Quarter 2007
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Selected Statement of Cash Flows Data
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Investment Highlights

• Emerging Growth Company in Large and Growing
  Market
• Strong and Broad Operating Platform
• Significant Growth Drivers
• Strategic Partnerships
• Stable and Recurring Revenue Base
• Cash-efficient Model
• Strong, Committed Management Team

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2nd Quarter Press Release

• "Our operating results for the second quarter
  were marked by excellent growth in our core
  businesses. Pipeline will continue to expand
  gross profit and EBITDA through aggressive
  organic growth and the reinvestment of our
  positive cash flows. As previously stated, we
  expect gross profit margin to expand further in
  the third quarter of this year due to more
  favorable pricing from key vendors."
• -MacAllister Smith, CEO

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Contact Us

• Pipeline Data Inc.
• (OTC BB PPDA)
• 1515 Hancock Street, Suite 301
• Quincy, MA 02169
• Phone [phone]
• Fax [phone]
• Web site www.pipelinedata.com
• For More Information
• ceo_at_pipelinedata.com
• Or
• phil_at_pipelinedata.com

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Management

• MacAllister Smith, President, Chief Executive
  Office and Director - has been president, chief
  executive officer and director since March 2002.
  Mr. Smith has over sixteen years of experience in
  the merchant processing industry and has held
  ownership positions in three companies that have
  been merged with public corporations. From 1996
  to 1998, Mr. Smith was regional vice president of
  Nova Information Systems (NYSEUSB), a 2 billion
  corporation and one of the three largest credit
  card processors in the industry. He founded and
  was president and CEO of Pinnacle Financial
  Technologies, Inc. from 1994 to 1998, a
  nationally recognized firm and a pioneer in
  electronic benefits transfer programs. Pinnacle
  Financial Technologies, Inc. merged with Nova
  Information Systems in 1998. Mr. Smith was also
  co-founder and senior partner of AccesServices,
  Inc. from 1997 to 1998. He was part of the team
  that designed and built a nationwide network
  processing switch for retail and online
  MasterCard, Visa, American Express and debit card
  transactions. AccesServices was sold to Digital
  Courier Technologies, Inc. (NASDAQDCTI) in 1999.
  In 1999, Mr. Smith founded and served as
  president and CEO of Cardaccept, Inc., a
  specialty payment processor. After completing
  two strategic e-commerce acquisitions, the
  company merged with Pipeline Data in 2002.
• Donald W. Gruneisen, Chief Financial Officer
  has served as CFO since September 2002. He has
  been chief financial officer of Northern Merchant
  Services, Inc. (NMSI) since July 2001.
  Mr. Gruneisen has over 20 years of experience in
  the telecommunications industry, with expertise
  in the areas of finance, management, accounting
  and top executive corporate management. He holds
  a B.S in Accounting and Law and an MBA from
  Clarkson University. Mr. Gruneisen is a Certified
  Public Accountant with eighteen years experience
  as a corporate officer (including serving in the
  positions of chief executive officer/general
  manager). He has been the treasurer and director
  of finance for NMSI since July 2001. From June
  2000 to July 2001, Mr. Gruneisen was a consultant
  providing strategic guidance with specialization
  in billing, accounting and tax issues associated
  with the telecommunications industry and
  financial management.
• Kevin Smith, Chief Operating Officer has served
  as chief operating officer since May 2004, as
  well as president and director of Pipelines
  subsidiary, Pipeline Data Processing.. Mr. Smith
  has over 14 years experience in the merchant
  processing industry. He was employed by Concord
  EFS (acquired by First Data (NYSEFDC)) from 1998
  to 2004, serving as its senior vice president of
  ISO sales, and as chief operating officer of
  Concord Payment Systems, a wholly owned
  subsidiary of Concord EFS. During his tenure,
  Mr. Smith was responsible for the wholesale
  credit card processing division, which included
  all aspects of operations and sales. Prior to
  that, Mr. Smith served as operations director for
  Bancard Systems of Irvine, CA.

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Management

• James Plappert, Chief Marketing Officer has
  served as chief marketing officer since October
  2005. Mr. Plappert is a seasoned executive with
  over 24 years of experience in the payment
  systems and merchant bankcard industry. He has
  held a number of executive level positions in
  prominent companies, including National
  Processing Company NPC (acquired by Bank of
  America), PNC Bank and First National Processing
  (acquired by iPayment). Mr. Plappert also served
  as executive vice president of mergers and
  acquisitions for First American Payment Systems
  from January 2002 to April 2003, which culminated
  in a private equity transaction with Lindsay,
  Goldberg and Bessemer. He co-founded ACH Payment
  Solutions, Inc. in 2002, where he remains a
  director. For over eleven years, Mr. Plappert has
  held a number of executive level board positions,
  including president, with the Electronic
  Transactions Association (ETA), the leading
  international trade association in the merchant
  processing industry.
• Thomas Tesmer, Chief Technology Officer - has
  served as chief technology officer since July
  2004. Mr. Tesmer is an experienced and competent
  senior operations executive with more than 25
  years of experience in the transaction processing
  industry. Prior to joining Pipeline, he was the
  president of Symmetrex, Inc., a processing
  company supporting third-party clients that
  operate stored value card programs in the U.S.
  and foreign markets. Mr. Tesmer was the
  executive vice president, front end systems, of
  Heartland Payment Systems (NYSEHPY), one of the
  largest merchant acquiring processing companies
  in the nation. He served as president and chief
  executive officer of AccesServices, Inc., a
  nationwide network processing switch for retail
  and online MasterCard, Visa, American Express and
  debit card transactions. AccesServices was sold
  to Digital Courier Technologies, Inc.
  (NASDAQDCTI) in 1999. Mr. Tesmer is currently a
  member of the board of directors of Q Comm
  International, Inc.

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Management

• Jack Rubinstein, Chairman - has been chairman of
  the board since inception. Mr. Rubinstein has
  been the general partner of DICA Partners, an
  investment hedge fund located in Hartsdale, New
  York, since the commencement of its operations in
  1991. Mr. Rubinstein also acts as a management
  and financial consultant to various public
  companies in the telecommunications industry. He
  was a founding public board member of CD Radio,
  Inc. (Sirius Satellite Radio ( NASDAQ SIRI)) and
  aided in the funding of the Molloy Group, a help
  desk software developer. Mr. Rubinstein is also a
  founding member of The Capital Advisory Services,
  a consortium of consultants aiding the capital
  market needs of emerging private and smaller
  public companies. Mr. Rubinstein began his
  business career as a securities analyst with
  Shearson Hamill Co., specializing in the
  electrical equipment and business services
  industries. After seven years as an analyst, he
  joined Bear Stearns Co. where he was a
  director, managing the proceeds of corporate
  insider securities sales. At Bear Stearns, he
  also managed the derivatives investments of
  several senior officers, as well as a few select
  individual clients. In 1988, Mr. Rubinstein
  joined Morgan Stanley Co. where, in addition to
  serving corporate officers and select individual
  clients, he provided his expertise to private
  investment partnerships. Mr. Rubinstein is a
  graduate of Cornell University and received an
  MBA in Finance from New York University.