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									   TRENDS IN
CAMPUS COMMERCE
  CACUBO 2009


 Welcome!
TouchNet Information Systems, Inc.

 ● In business since 1989
 ● Focused on Higher Education
 ● Privately held, profitable
 ● US-based, home-grown
 ● Focused on strategic partnerships
   The driving force behind trends
● Over the past 3-5 years, it‟s been all about
  security…PCI
    Today, PA-DSS is a driving factor
    Security is continues and ever changing
● Today (W.I.N.)
    It‟s all about cutting cost and saving money
     ■   Save money
     ■   Make money
     ■   Manage money
        Is Innovation on hold?

● Despite the economy and security
  concerns, technology (and expectations)
  continue moving forward…
    iPhone
    Facebook
    Twitter
    Google
    Amazon
Billing Expectations
Not so simple…
  Trend in Payment Consolidation

● Comprehensive set of tools for you
  merchants to use…
● Aka, a Commerce Management System
                           ePayments
Business Applications with Payments
               PCI Certified DataCenter


                                  S
      SIS      $     Payments
                                  e
                      Certified   c   Certified
                    Commerce      u   Payment
                   Applications   r   Gateway
                                  e

    Alumni     $     PaymentsAPIs
                             APIsC
                                  h
                                  a
                                  n
                                  n
                                  e
     Parking
               $     Payments     l
                                  s
Centralized CMS
Business Operations
 Command Center
Trends in Payments: “Alternative Payments”




    Javelin Research
            Debit Opportunity

                             ATM / PIN
Signature                     Debit
  Debit

                 BIN File
                Management
        What is PINless Debit?
● The use of your PIN-based ATM Debit card
  over the internet
● Limited to specific “billing” merchants
    Utilities, Education
● Alternative method of authentication
    PIN number is never entered over the internet
    End-to-End Certification Required
● Growing number of schools live in the US, but
  still very limited
Intelligent Routing w/Opt Out
State College
      PINless Report from a School




DEBIT
  Type # of Txn           Amount
PIN           10,903       $7,333,330.09
PINless           5,489    $4,735,236.47
Debit Example: Average of $736.25
  Jan. 01 – Nov. 05 (10 months)

  Fee                            Sig. Debit   PIN Debit
  Interchange (Issuer)             .80%       ~.50 (cap)
  Acquirer (Merchant Bank)        0.25%         $0.10
  Merchant Service Provider       0.25%          N/A
  Processor Fee                   0.25%          N/A
  Sub-Total (weighted avg.)       1.55%       ~.60 Cents
  Cost Per Transaction            $11.41        $.60
  Cost Savings per Transaction                  10.81
  Total Projected Cost Savings                $177,227
  (16,392 transactions)
            Electronic Checks
● NACHA Payment Types
   Traditional ACH
   Trend to watch
    ■   Secure Vault Payment (SVP)
       ACH Transaction Flow
Originator                ODFI     Operator    RDFI

              Receiver




       International ACH Transaction (IAT) - ???
             Secure Vault Payments (SVP)
University of Georgia
University of Georgia
University of Georgia
University of Georgia
             Secure Vault Payment
           Con‟s for ACH                       Pro SVP
●   No real-time Auth            ●   Real-time Verification of
●   Batch system                     Funds
●   Not very portable            ●   No sensitive information
●   Requires a “shared secret”   ●   Portable
●   Challenging for ecommerce    ●   “shared secret” already
    situations                       established
                                 ●   Available for ecommerce
         Con‟s for SVP               situations
● It‟s New and limited
       Trend in Payment Strategy
          - Convenience Fees -
● 25% of schools surveyed in „07
● The trend did not slow down in „08
● 99% are using a % fee with out VISA
● Statistics support the model is working,
  online payment remain steady
      Drastic growth in Alt. Payments

  NACUBO 2007 Student Financial Services Survey
                  Convenience Fee Matrix


 Flat Fee                                          X                          X             X   X
 Tiered (Scale)                                                               X             X   X
 Percentage                                                                   X             X   X
 Required for all
 Pmt Types                                         X                         X*
 Permitted in 3rd
 Party Services                                                               X             X   X
 Allows In-line
 Payments                                                                    X*             X
* Mastercard current program is making an exception for this. Certain restrictions apply.
      Total Online Payments

Pre Conv. Fee                             After Conv. Fee
                  Total Payments Online



                                • 50% of these are
       MC                           Debit Cards
                               • 89% have a
                                 checking account    ACH
                               • Avg. American
                                 has 6/7 cards


      Visa


                ACH
                                  < 10%
Case Study: 4 Year, Public, Southeast, 16,000 FTE
                      Fall Yr1        Spring Yr1    Fall Yr 2       Spring Yr2
                                                                         PHASE II
                                                      PHASE I     PayPathTM Service
                                                       $25 Fee          2.75% Fee
Convenience Fee        NONE             NONE          CC Only             CC Only

Total tuition $$      $35,294,991     $29,433,555   $38,239,994      $33,523,195
% of Total Pmts via
Web                           58%            67%           62%                66%
% of Total Pmts CC          100%            100%           62%                15%
% of Total Pmts ACH              0%            0%          38%                85%
Merchant Fees            $450,000        $435,000     $193,000                   0

  ● Total web payments held steady
  ● Merchant Fees decreased to zero (from about 1 million per/yr)
     Trends in Alternative Credit

● Convenience Fee Strategy limits access to
  a popular form of credit
● Offer an alternative form of credit, in the
  form of a payment plan
    There‟s a better way to finance education
     ■   Payment Plan Options
          – Manual / In-house
          – Out source
          – Automate
 Installment Plans and Collections

● Software and technology have enabled
  schools to rethink payment plans
● Self Service Models have changed the
  “administrative” effort
● Revenue model is clear
● Installment plans can be used internally for
  collections
● RISK factor…who has your money?
                       Case Study UNC-C

● $254,000 enrollment fee revenue
● $11,000,000 in payments collected
● Over $5,000,000 in scheduled pmts
      These were all “hands off” transactions.
        ■ Student did touch
        ■ Administration did not touch



 * Figures based on 2008 (one full year)
Expectations: Keeping up with the
         Trend Setters…
● iPhone generation
● Twitters and Tweeters
● Everything mobile
   Anytime, anywhere access to everything
   Online vs. Mobile Banking Users




Juniper Research
     Mobile commerce examples
           for you campus
● Billing and Payment
    Notifications, Inquiries, Authorizations,
    Presentment and Payments
● Mobile Shopping and Purchases
    Downloadable items (or) items mailed to your
    physical location
● Security
    Two Factor Authentication / Alerts and Warnings
    Stages of “Mobile” Growth
● Email to SMS (one way)
   Training Wheels
● SMS Gateway
   Two way
● Mobile Web (WML)
● Applications
● Contactless
     “One-way Text Messaging”

● The most commonly used data application
  on mobile phones is SMS text messaging
   74% of all mobile phone users are active
   “texters”
   The average users sends 2.6 SMS text
   per/day*



                                      * source Informa 2007
       More text then calls!




*Nielson Mobile, a service of The Nielson Company
  Most Common Text uses Today

● Chat/Text Messaging
● News Updates
● Voting
● Instant Alerts
   Weather, sports, airlines, financial,
   emergency
● Mobile coupons and discount offers
     “Two-way (SMS) Messaging”

● NOT only sending and receiving text
  messages…but reacting
    “Actionable Messages” – responding to a text
    message request
    Uses an SMS Gateway vs. Email
● SMS Rules and Regulations
    Opt in
    Very tightly controlled / serious fines
    Per transactions fees apply
   Two-Way Messaging Examples

● What is my balance…
● When is my next due date…
● Score
    Real-life Corporate Examples

● AT&T Text-2-Pay
    “Amount Due” text is received
    Response of “Total” is sent to pay
● PayPal Text2Buy
    You see “Text to Buy” in an ad
    Text the item code to the number shown
● Chase – Credit card alerts, inquiries, and more
    Text “chase” with the phrase “bal”
    Receive back your current card balance
       “Mobile Web Access”
● “Mobile Access” to existing web
  applications
● Keys
    Mini web pages that load very fast
    Limited or no graphics
    Limited text
    Optimized for small screens
    Works on all web enabled devices
    Able to run under HTTPS
        Mobile Access Examples

● Bank of America
   Over 1 million mobile banking
   users (in less then a year)
   Today, over 2 million!
    ■ Balance Lookup
    ■ Transactions History
    ■ Pay Bills

● Many other Banks and
  Brokerages have followed
ImageNet – Mobile Check Deposits




  Again, Bank of America has adopted this technology too
          “Mobile Applications”
● Programs designed for a specific device
  or operating systems
    Blackberry
    Windows mobile
    Symbian         E*trade Ad
                 Black Berry Only
    Palm, etc.
    Java (JME)

● Challenge to keep up with all of the
  various platforms and new phone
   Other Apps in the Real World
● Scan Life - Bar Codes
● Examples
   Paperless Boarding Passes are
   emailed to passenger's cell
   phones and appear as a Bar
   Code
    ■ Delta
    ■ Continental

   Ralph Lauren
      Juniper forecasts that over 400 million mobile subscribers
     worldwide will use their mobile phones for ticketing by 2013.
            “Contactless”
● RFID/NFC technology embedded in to
  payment devices, used to “Tap-n-Pay”
● Merchant infrastructure is being built now
● Examples
    McDonald‟s, Arby‟s,
    Jack-in-the-Box, etc.
    CVS
Contactless migration to the Handset

 ● Two formats: NFC/RFID
     Processors
     ■   First Data/RFID
     Carriers and Handset Makers/NFC
     ■ Sprint – SD Card
     ■ AT&T - SIM Chip
     ■ Others – NFC Built into the
       handset (Nokia)
     Some examples on campus

● Many are doing one-way SMS notifications
    Security/Athletics/Schedules/Mobile Coupons
● A few are doing contactless
    Slippery Rock
     ■   25 in various stages
     ■   Mobile Access and Payments
● A few are doing mobile access for ERP
    Drexel
Account Status


State College
      Additional Business Office
          Mobile Functions


● Current Activity
● Make a Payment
● Payment History
● Access Payment Plans
● Refunds
  Bar codes can quickly link users to
       products in Mobile Stores

 Register for this Event
         NOW!




www.stateu.edu/m
            Marketing Mobile Bills

  View and Pay your
Student Bill NOW with
     you Phone!




www.stateu.edu/m
                 Trend Summary

● Consolidated Payments
     Commerce Management System
● Payment Methods: “Payment Alternatives”
     PINless Debit
     ACH/SVP
● Alternative Credit
     Automate Payment Plans
● Payment Strategy
     Convenience Fees
● Expectations
     Mobile: Anytime, Anywhere
              Questions?

                 Thanks!

John McElroy, Business Development
TouchNet
jmcelroy@touchnet.com
(913)599.6699

								
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