electronic payment developments and emerging technologies kenyatta a. chandler - director strategic...
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Electronic Payment Developments and Emerging Technologies
Kenyatta A. Chandler - DirectorStrategic Market Development – Public SectorElavon - Global Acquiring SolutionsAugust 11, 2008
2008 NASACT ConferenceChicago, Illinois
About US
About U.S. Bancorp Strong commitment to the payment space
– Bought NOVA Information Systems in 2001– Established Payment Services division in 2004
• Combines Global Acquiring Solutions, Commercial Payment Systems, Retail Credit Card Issuing, and ATM & Debit Solutions
About Elavon, North America Founded in 1991
– Formerly branded NOVA Information Systems– Headquarters located in Atlanta, GA– Wholly owned subsidiary of U.S. Bancorp – Processes $200B in annual volume for more than 1 million merchants worldwide
Agenda
Bill Payment – PINless Debit Prepaid Cards POS Terminal Service Fee Application Contactless Payments Kiosk
Bill Payment – PINless Debit
– What is Bill Payment?– What are the Benefits?– Are there acceptance restrictions?
• Low risk industries (Public Sector)
Bill Payment - PINless Debit
Bill Payment, also referred to as PINless Debit, allows governments the ability to accept “online” ATM/debit cards as payment in a card-not-present environment.
Traditionally, all online debit transactions have required a card swipe and cardholder PIN entry. Through Bill Payment, consumers can now make payments with their ATM/debit card through a merchant’s IVR (Interactive Voice Recognition) or web site payment page.
Note: Along with Accel, these are the only ATM Networks that allow PINless Debit payment processing
Bill Payment - PINless Debit
Benefits• Immediate confirmation of available funds • Convert more walk-in and check payers to an electronic payment resulting in
handling fewer paper checks • Reduction in the number of returned items and the costs associated with
processing returns • Reduction in payment processing costs
Example: $300 Payment Interchange Rate* Interchange Costs ATM (PINless) debit $.70 $ .70 Credit card 2.00% $6.00 Signature debit card 1.60% $4.80
*The above example illustrates the differences in interchange rates and is not indicative of actual interchange rates.
Bill Payment - PINless Debit
Acceptance restrictions:– Bill Payment – PINless debit is available only to specific merchant
industry types, as identified by the participating debit networks.– Organizations in these industries typically have existing and trusted
relationships with their customers. For instance, Public Sector – for taxes, fees, fines and penalties, licenses
– In the future, the debit networks may add industries based upon demonstrated proof that they are low risk industries.
Prepaid Cards
– Meeting the needs of underserved– What are prepaid cards? – What are the Benefits to Public Sector?
• Benefits to Government • Benefits to Recipients
Prepaid Cards Meeting the needs of underserved
• Almost 80 million people in the U.S. without a traditional deposit account or with limited access to credit
• Receives almost $1 trillion in payments annually from employers, states, government entities, insurance companies and others
• Over $1.5 billion (annually) in fees are paid to cash checks
28 million people$353 billion
45 million people$581.4 billion
11 million people$160.7
billion
Source: Visa USA: Analysis based on data from the Federal Reserve Bank; U.S. Census; Transunion, SEC filings and the Urban Institute
Unbanked (No Banking Relationship)
Underbanked (Low / No Credit Score)
Unregistered Immigrant
84 Million Underserved…Representing $1.095 Trillion!
Prepaid Cards
Prepaid cards are customized to meet the specific needs for Public Sector– Current Prepaid card uses
• Child Support• Unemployment • Temporary Assistance for Needy Families• Child Care
– Other potential uses include• Workers Compensation• State employee payroll • Any agency with a need to efficiently distribute recurring payments
Prepaid Cards
Benefits to Government:– Ideal alternative to paper checks– Increases efficiency and reduces expenses– Higher recipient satisfaction
NACHA studies have indicated that it costs $0.50 to $2.00 to issue a paper check
Benefits to Payment Recipients:– Makes receiving payments easier & cheaper– Increases safety and security– Saves on potential expenses
The OCC estimated that a person receiving $12,000 annually would pay $246 in check-cashing fees – Prepaid Trends Sept 13, 2006
POS Terminal Service Fee Application
– Application Overview – What are the Benefits?
POS Terminal Service Fee Application
Application Overview– Application developed to operate within the MasterCard’s Public
Sector Convenience Fee Program and/or Visa Tax Service Fee Program rules for Convenience/Service Fee processing.
– A single transaction input of the primary payment amount due also drives completion of the Convenience/Service Fee transaction.
– Automatically calculates the service fee amount based on the primary payment amount due and a pre-determined fixed percentage.
– The terminal application functionality supports face-to-face card present and card not present transactions in a retail or MOTO environment
POS Terminal Service Fee Application
Benefits– Allows for face-to-face convenience/service fee for:
• Tax Payments – Personal Income– Real Estate Property– Unemployment– Business Income– Sales & Use
• Courts Fees (not VISA)• Fines (not VISA)• Tuition (not VISA)
– K-12 Schools– College and Universities
Contact-less Payments
What are Contact-less payments?• Opportunities/experiences in Public Sector• Benefits based on speed and convenience
ContactlessContactlessPaymentsPaymentsContactlessContactlessPaymentsPayments
Mobile Mobile WebsitesWebsitesMobile Mobile
WebsitesWebsites• Conduct
Online Payments
• Complete Transaction at the POS
Contact-less Payments
– Payments made in the physical world using a mobile device
– Primarily targeted at low-value payments (below $25), commonly made with cash
– Most beneficial for retail outlets where quick throughput is required
– Primarily uses contactless reader
Contact-less Payments
Benefits for Public Sector– Can brings the speed and
convenience of contactless transactions to customers
– Customers can make payments faster and easier than having to fumble for cash
– Customers today are frequently busy and want fast and convenient payment solutions
–Piloted in 2008 in Spokane, WA
Kiosk
Why Kiosk? Applications for Kiosk Placement Opportunities Features, Advantages, Benefits
Kiosk
Why Kiosk?– Public sector organizations are using Kiosks to give customers better
service and support, and ultimately, a lower-cost government. – Public Sector organizations are implementing self-service Kiosks to
provide access to a range of services from property tax payments, vehicle registration, permitting licensing to tuition or room and board
– The use of Kiosks has also been driven by the customer’s demand for increased hours of business and shorter wait times.
Kiosk
Benefits– Operational cost reduction– Alleviate lines at customer
service centers– Convenient method for
payments• 24/7 payment acceptance
– Real-time credit to account, avoiding late fees and shut off of services
– Ability to generate convenience fees for walk-up payments
Applications– Bill Payment
• DMV• Tax Payment• Tuition
– Prepaid Cards• Single Use• Payroll Card
– Check Cashing• Payroll• Government• Personal
Placement Opportunities– Government service centers– Prison commissaries– Social service agencies– Tax collection points
