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eDues Enrollment & ProcessingOverview

March 23rd 2013

Presented byNEA

Alternatives for Payroll Deduction

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Agenda What is eDues and Enrollment Options available? Work Flow for new Paymethod Implementation eDues Enrollment Processing Overview NEA PAC Transfer Overview for eDues States Contact Tracking in IMS EFT PRENOTE Processing Status Sheets PCI Compliance Which paymethod to use? Cost of EFT Vs Credit Card NEA’s Recommendation Fundamental difference in Dues collection between EFT/RCC Vs Payroll Deduction eDues Transition Processes eDues Enrollment Preparations Elements of Successful Enrollment Campaigns Best Practices Learned Securing the enrollment paperwork eDues Campaigns: Current Status eDues Technology: Current Status

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DefinitionsEFT – Electronic Funds Transfer is a system of transferring funds from one

bank account directly to another by electronic means rather than conventional paper-based payment methods and uses ACH transfers

RCC – Recurring Credit CardACH – Automated Clearing House MRA – Membership Reporting & AnalyticsIMS – Interactive Membership SystemFRS – Funds Receivable SystemFYMP – Future Year Membership Processing

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What is eDues?• eDues option is part of the Associations’ response to

legislative attacks on multiple fronts through providing “alternative” methods for dues payment to replace Payroll Deduction.

• The goals of NEA’s eDues program are:• Retain membership • Collect revenue effectively• Enhance the relationship between the members and the

associations• Support and facilitate Affiliates’ transition from Payroll

Deduction to Alternative Dues Payments

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eDues -Alternative Payment Methods

• Currently available dues payment options that can be offered for members as alternative to Payroll Deduction are:• Electronic Funds Transfer (EFT)– Bank Draft (Single and

Recurring deduction options)• Credit Card Payment (Single and Recurring deduction

options)• Single or Recurring payment through Cash/Check

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eDues Enrollment Methods for EFT & Credit CardEFT Credit Card

eDues Member Self Enrollment Website – Members directly enroll

eDues Member Self Enrollment Website – Members directly enroll

eDues Paper based Forms – This will be later keyed in by State users through IMS application.

Bank Of America Client Service Console (a third party application used by NEA for Credit Card processing) – Only States users have access to this and will have to enroll on behalf of members.

Note: MRA reports can be run for monitoring the progress of EFT enrollments

processed via both EFT Express Entry in IMS and eDues Member Self Enrollment Website.

Credit Card info should not be collected on paper due to PCI compliance requirements.

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High level flow of activities a state needs to do to offer a new payment method

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Entry of EFT data into Membership Database from the eDues paper based forms

eDues Member Self Enrollment Site The eDues Member Self Enrollment site is a tool to assist Affiliates in the

replacement of Payroll Deduction dues collection or any other dues collection payment method with the collection of dues and voluntary funds using EFT or Credit Card.

NEA requires Affiliates to post the site url behind a secured “Member Login” area in their website.

Members access eDues website via Affiliate's website using their member login and are required to enter their Member ID (Indv ID) and Home Zip code to start the enrollment process.

Allows members to enroll in one of the payment options below: EFT - Recurring EFT – One Time Payment Credit Card - Recurring Credit Card – One Time Payment

NOTE: State Affiliates have the flexibility of controlling the display of the above payment options on the eDues website.

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eDues Member Self Enrollment Site Functionalities

Following are the main features: Used for existing members only. It cannot be used for adding new members. Used by members (and can be used by State Affiliate users) to enroll for dues (and

PAC) payment using EFT or Credit Card. EFT information collected is entered and saved by real-time update to the

membership database. NOTE: Credit Card information is NOT collected and stored in the Membership database via this website.

Provides an option for Affiliates to display and collect optional or non-required funds.

Provides an option to display on this page, a “state specific” custom message based on their situation to inform their members about any disclaimer message regarding enrollment process or deduction amount and start dates.

Members who enroll for EFT payment option receive a confirmation email. Affiliates will receive a “cc” email of the same confirmation email which members

receive.

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Check Enrollment Methods Members can enroll for Check payment option by contacting

the State. State users will use IMS application to setup the check

payment option.

NEA PAC Transfer Overview for eDues States

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Contact TrackingBasic “Contact Tracking” feature is available in IMS for recording responses from members regarding the eDues enrollment campaigns (currently available for EFT only. Feature for RCC will be released in near future). Additionally, following features are available:record members’ interest in grass root activities.assign individuals and track sub sequent follow up

with members.MRA reports are available for monitoring the

progress of Contact Tracking activities

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An EFT pre-note transaction is a $0 (zero dollars) transaction sent to the banks to test the validity of the account information.

If a state affiliate has enrolled a significant number of members for EFT for the first time, it is recommended that the state affiliate work with the NEA to coordinate sending pre-note transactions before the actual EFT draws begin due to following advantages: opportunity to correct erroneous account information before the actual

draw requisite cleanups as a result of Pre-Note failures can reduce future EFT

returns rate and can help cut costs incurred due to return fees

EFT PRENOTE Processing

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The Status Sheet letter is a summary and reminder for the member of the amount to be deducted from the bank and when the deductions will occur. Available for both EFT and RCC payment options.

At least ten days before the first deduction for a given membership year, States Affiliates should run, print and mail an EFT Status Sheet letter to each member. This is a LEGAL requirement for EFT.

MRA report is available to generate the Status Sheets Note: INDP1000 – Individual Payments Status Sheet by Paymethod

report under MRA>STANDARD>INDIVIDUAL PAYMENTS. Certain key information must to be populated in the membership database

for it to be pulled in the status sheet.

Status Sheets

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• Credit card processing requires Payment Card Industry Data Security Standard (PCI) Compliance

• Following stringent security and audit measures will need to be employed:– Protect Cardholder Data– Implement Strong Access Control – Need to Know Only– Maintain Vulnerability Management Program (anti-virus)– Build and Maintain a Secure Network (firewall)– Regularly Monitor and Test Networks– Maintain an Information Security Policy

PCI Compliance

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Which payment method should you use – EFT, credit cards, or both?

Costs and Resources are the key factors to be considered before making any decisions.Credit Cards

Harder to Enroll Members – due to third party application involved Very Labor Intensive Cards Expire Every 2-3 Years – Member must re-enroll with the new card $.35-$.30 Base Transaction Cost Fees and Points Cost 2%-4% Per Transaction Reject Rate 17%-18% (11% Initially)

EFT Easy to enroll since there is no third party application involved Easy to update and maintain Bank Account info in the Membership

database $.05 Per Transaction Paid by NEA $2.00 Return/Error Fee Paid by State Affiliate Return Transactions are less compared to Credit Card returns

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The New Rates - Transactions per month 1-99,999 $.05 100,000-500,000 $.03 500,001+ $.018 NEA Pays Transaction Cost $2.00 Return State Pays Returns

Industry Average 2% Return Rate

EFT Processing Costs - NEA negotiated Rates

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Credit Cards – Transactions Per Month1-5,000 $.355,001-20,000 $.3020,001-75,000$.2575,001 – 100,000 $.20100,001 – 200,000 $.10200,001 – 300,000 $.09Percent of Each TransactionState Affiliates Pay Costs of Transactions

Industry Average Return Rate 5-7%

Credit Card Processing Costs-NEA Negotiated Rates

Comparing the Cost of EFT and Credit Cards: An ExampleConsider 1,000 Members:Member Annual Obligation = $460Total Annual Obligation for 1000 Members =

$460,000 No of Deductions = 12Deducted Each Month = $38.33

Cost of EFT based on the exampleTransaction Costs

$.05 Per Transaction Paid by NEA 1-99,999 Transactions Per Month $.03 100,000+ Transactions Per Month

$2.00 Return Fee Paid by State

Returns Return Rate 1.5% (National Average) 15 Returns Per Month (1,000 members) $30.00 in Total Monthly Return Fees $575 Dues Not Collected $605 Uncollected Dues and Returns

Net $38,300 Monthly Revenue 98.42% Collected of Total Obligation $452,740 Annual Revenue

Cost of Credit Card based on the example Transaction Costs

All Fees Paid by State $.35 Per Transaction (1-5,000 Transactions Per Month $.30 5,001+ Transactions Per Month) $.69 1.8% Visa Interchanged Rate $.10 Visa Interchange Fee $.15 Visa/MC Authorization Fee $.04 Mastercard Assessment .11% $.03 NABU Additional Costs for Credit Card Points

$1.36 Cost Per Transaction 3.55% of Deduction Amount Returns

Return Rate 8.69% 87 Returns Per Month $3,347 Dues Not Collected $1,360 Fees $4,707 Uncollected Dues and Fees

Net $33,627 Monthly Revenue 87.72% Collected of Total Obligation $403,552 Annual Revenue

Comparing the Cost of EFT and Credit Cards based on the example

EFT Credit Cards

98.42%

$452,740

87.72%

$403,552Total Obligation Collected

Annual Revenue

1,000 Members

$460 Member Annual

$460,000 Total Annual Obligation

EFT Collects $49,218 More in Annual Revenue

NEA’s RECOMMENDATION

NEA recommends EFT over CREDIT CARD for EDUES ENROLLMENT AND PROCESSINGCurrent Status 2012-2013 (As of 3/20/13)

Dues Payments

State Affiliates

Members Collected to Date

Success Rate Estimated Cost Per Transaction

Electronic Funds Transfer (EFT)

25 68,416 $20,219,072 98% .12%

Recurring Credit Card (RCC)

10 10,064 $3,925,297 82% 3.6%

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How does dues payment through EFT and Credit Card differ from Payroll Deduction?

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eDues Transition ProcessesInvolves the following:Business Process ChangesMembership and Dues Data RequirementsLeadership, Member and Staff PreparationMember Communications StrategyMember Communications ExecutionMembership and Dues Data TransformationMember Recruitment and RetentionImplementation and Support

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eDues Enrollment preparations(For FY)

FYMPSET Processing should be complete.FYMPMULT Processing should be complete.Keep the following member information up-to-date:

Non-work or Home Email – not “Personal”Work LocationPrimary Phone – Home or CellPrimary Address

Ensure all Local data and Work Location data is updated Ensure membership types and obligation amounts are

correct for member on each level (NEA, SEA, LEA)

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eDues Enrollment preparations (For FY) – contd.

Ensure that the State is set up as Payment Category Breakdown in FRS.Ensure Billable Parties have been set up. Ensure EFT/RCC has been added as a “paymethod” option.Setup required eDues parameters under EDUES CONFIGURATION tab in

IMSSetup Deduction Schedule EFT/RCC.Setup critical eDues Contact Info to received enrollment notifications

and to generate Status Sheets. Run and print required eDues forms or eDues Rosters for collecting EFT

enrollment info.Setup eDues Member Self Enrollment website through NEA.

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Elements of Successful Enrollment CampaignsAny enrollment option selected by Affiliate requires a successful eDues campaign with the goal to motivate and encourage members to enroll in the alternative dues payment option. Below are the NEA recommendations for a successful eDues campaign:• Personally contact each member • Inform Members

• Objectives of Campaign• When and Where they will be contacted• What the member will need to bring• What are their enrollment options

• What the Recruiters will need• Where the members Are• Who the members Are• How to enroll the members• Effective contact tracking

• Keep in mind that members’ time is “Valuable”.

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Best Practices/Lessons Learned from other Association's Campaigns

• Home/School Visit Campaigns• Phone Campaigns• E-mail Campaigns • Flyers and Mailers

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Securing the eDues FormsHaving proper guidelines to ensure the security of the eDues forms for their handling and transportation, and to destroy them appropriately after their usage is a very CRITICAL step for an eDues Campaign since these forms contains members’ very sensitive information such as banking info and personal contact info.

Affiliates Participating in eDues using EFT or Credit Card for Dues Collection

ARIZONA EDUCATION ASSOCIATION *ARKANSAS EDUCATION ASSOCIATIONCOLORADO EDUCATION ASSOCIATIONGEORGIA ASSOCIATION OF EDUCATORSIDAHO EDUCATION ASSOCIATIONINDIANA STATE TEACHERS ASSOCIATIONIOWA STATE EDUCATION ASSOCIATIONLOUISIANA ASSOCIATION OF EDUCATORSMISSISSIPPI ASSOCIATION OF EDUCATORS *MISSOURI NEANEA-NEW HAMPSHIRENEA-NEW MEXICO

NEBRASKA STATE EDUCATION ASSOCIATIONNORTH CAROLINA ASSN OF EDUCATORS *OHIO EDUCATION ASSOCIATIONOKLAHOMA EDUCATION ASSOCIATIONSOUTH DAKOTA EDUCATION ASSOCIATIONTENNESSEE EDUCATION ASSOCIATIONTEXAS STATE TEACHERS ASSOCIATIONTHE SOUTH CAROLINA EDUCATION ASSN *UTAH EDUCATION ASSOCIATIONVIRGINIA EDUCATION ASSOCIATIONWISCONSIN EDUCATION ASSN COUNCIL *WYOMING EDUCATION ASSOCIATION

* Primary Method for Collecting Dues

Current Campaigns

INDIANA STATE TEACHERS ASSOCIATIONKANSAS NEA

MISSOURI NEANEBRASKA STATE EDUCATION ASSOCIATION

NORTH CAROLINA ASSN OF EDUCATORS OKLAHOMA EDUCATION ASSOCIATION

eDues Enhacements – Completed Recently!

Mid-Year Conversion Project – (to support loss of Payroll

Deduction during the middle of the membership year): Completed in March 2013 Release

Create Calculations, Extracts, Imports to convert from Payroll Deduction to Individual Payments

Conversion Forms/Reports Enhance Member Self-Enroll, EFT Express in IMS Enhance Membership System to Display Individual

Payments Enhance Obligation Transactions for Multi-Paymethods Creates Foundation for Lockbox – Electronic Payments

eDues Features – Coming Soon!

Enhancements to Individual Payments upload from Payroll Deduction (File Mapping/Lockbox Processing): Expected Release - April, 2013

Multiple Deduction Schedules : Expected Release - April, 2013

Based on Local and Type of MemberEvaluation and possible implementation of a New Credit Card

Processor/Gateway: Expected Release - TBD

Recurring Credit Card Email Notifications: Expected Release - April, 2013

Enrollment ConfirmationReturnsExpiring Card Notifications

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eDues Documentation available on InsideNEA

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Questions?Stan Binder – Sbinder@nea.org 202-822-7670

Chaitra Hirenallur – CHirenallur@nea.org 202-822-7639Prem Udayan – UPrem@nea.org 202-822-7869