Electronic Payment Developments and Emerging Technologies

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Electronic Payment Developments and Emerging Technologies Powered By Docstoc
					2008 NASACT Conference
     Chicago, Illinois Electronic Payment
                       Developments and
                       Emerging Technologies

                         Kenyatta A. Chandler - Director
                         Strategic Market Development – Public Sector
                         Elavon - Global Acquiring Solutions
                         August 11, 2008
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

   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
  84 Million Underserved…Representing $1.095 Trillion!

                    11 million
                      billion                            Unbanked (No Banking Relationship)

                                    28 million people    Underbanked (Low / No Credit Score)
                                    $353 billion

                                                         Unregistered Immigrant
                45 million people
                $581.4 billion
                                                         Source: Visa USA: Analysis based on
                                                         data from the Federal Reserve Bank; U.S.
                                                         Census; Transunion, SEC filings and the
                                                         Urban Institute
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
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

Contactless                                                    Websites
Payments                                                   • Conduct Online
                                                           • Complete Transaction
                                                             at the POS
Contact-less Payments

  – Payments made in the
    physical world using a mobile
  – 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
Contact-less Payments

 Benefits for Public Sector         –Piloted in 2008 in Spokane, WA
   – Can brings the speed and
     convenience of contactless
     transactions to customers
   – Customers can make
     payments faster and easier
     than having to fumble for
   – Customers today are
     frequently busy and want fast
     and convenient payment

   Why Kiosk?
   Applications for Kiosk
   Placement Opportunities
   Features, Advantages, Benefits

 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.
 Applications                      Benefits
    – Bill Payment
                                      – Operational cost reduction
            • DMV
                                      – Alleviate lines at customer
            • Tax Payment
                                        service centers
            • Tuition
    – Prepaid Cards                   – Convenient method for
            • Single Use
            • Payroll Card                • 24/7 payment acceptance
    – Check Cashing                   – Real-time credit to account,
            • Payroll                   avoiding late fees and shut off
            • Government                of services
            • Personal                – Ability to generate
                                        convenience fees for walk-up
 Placement Opportunities               payments
    – Government service centers
    – Prison commissaries
    – Social service agencies
    – Tax collection points
                 Questions ?

                  Thank You!

Kenyatta A. Chandler

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