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Pre-Paid Debit Who Offers Them and Why

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Pre-Paid Debit Who Offers Them and Why Powered By Docstoc
					    ICUL Service Corporation
and INTECH Evolutionary Partners
        for EFT Services



   September 17, 2009
Topics of Discussion

   Evolution of Debit
   How Consumers are Utilizing Debit
     PIN. –vs.- Signature (ONLINE vs OFFLINE)
     Consumers Driving Usage
     Debit Issuer Trends
     Today’s Debit
     Options for your Credit Union
         The Evolution of Debit
   Early Days        Early ‘90s              Mid ‘90s               Future
    No real time     Terminalization        Mass advertising      Usage fuels
     authorization    Processor              Lower processing       growth, not cards
    Slow              capabilities            costs                 Checks and cash
     settlement       Fee revenue            Increased              continue to decline
    Limited           focus                   functionality         Growth in bill
     acceptance       Universal retail       Mass “upgrades”        payment,
    Quasi-Credit      acceptance                                     eCommerce, and
                                              Critical mass of
     product                                                          small ticket
                      Elimination of          cards
                       warning bulletins                             PINless and other
                                              PIN pads migrate
                                                                      forms of payments
                      PIN pads grow in        to other segments
                                                                      emerge
                       supermarkets




1980's    1990                        1996                         2005          Future
Personal Consumption Expenditure

      PCE By Payment Type                                         Estimated Brand
              (%)                                                Share of GPC Debit


                         Credit
                          27%                                       Interlink
                                                                      14%
      Checks
                                                               Debit MC
       24%                                                                           Visa Check
                                                                 17%
                                       GPC Debit                                        Card
                                         15%                                            47%
                                                                    Shared
                                                                   Networks
           Cash                                                      22%
           20%                 Other
                               11%       2%
                                       Proprietary Prepaid
                                         and EBT Cards

 2007 Purchase PCE = $7.6 trillion                           2007 GPC Debit = $1.2 trillion
         Source: Nilson #915                                          Source: Nilson #902, 906
          PIN POS Share Evolution

                   Share of Transactions                                       Share of Transactions
                    Accel (March 2003)                                             (March 2008)
                    3.2%                              Others
                    15.8M                              5.6%
                                                      27.7M                              Pulse
                                                                                        10.7%
                                                                                        108.1M    NYCE
                                                                                                 10.1%    Accel
                     Pulse                                                                                4.6%
                     9.6%                                                                        102.0M
                                                                                                          46.5M
                     47.5M
                                                                                Star
                                                                               30.0%                       Others
                NYCE                                                           303.0M                       4.8%
                10.0%                           Star
                                                                                                           48.5M
                49.5M                          56.1%
                                               277.9M

                      Interlink                                                           Interlink
                       15.5%                                                               39.8%
                       76.8M                                                               402.0M




                 495.3 Million In-Network                                     1,010 Million In-Network
                      Transactions                                                 Transactions


Source: ATM & Debit News EFT Data Book, Sept. 2009 and Sept. 2004
Online POS in-network transactions excludes gateway and on-us transactions.
 Industry Debit Volume Growth
Growth in Offline and Online Volumes continue to converge
Offline vs. Online Volume at the POS
Trillions                                                                                                            Debit
                                                                                                                     YOY
                                                                                                                     Growth
                                                                                                               15%

                                                                                                         18%         Online
                                                                                                   23%
                                                                                                                     Growth

                                                                                             20%
                                                                              22%
                                                                  24%
                                                      25%                                                            Offline
                                          36%
                              38%                                                                                    Growth
                  42%




Source: The Nilson Report issues #879 & 902 and Visa estimate for 07 Online debit industry
Includes consumer and small business.
 Sources of Growth for Debit Cards
Most debit card growth came from increases in spending by debit card
users; however, 37% of the growth came from shifting from other payment
types of which over 50% was from checks and nearly 26% from cash

                Total Growth 2006 to 2007                                            Shifting to/from Debit Cards
                              37.0%




                              63.0%




                                                                                         Rewards Credit

                                                                  READ: Of debit cards’ growth from shifting, 52 percentage points of this growth occurred
                                                                  because people shifted payments from checks to debit cards, but was offset by -24% because
Source: Visa Payment Panel Study, all panelists available, 2006   people shifted from debit cards to rewards credit cards.
to 2007. Ref: Appendix C
              VCC Geographic Performance*
              (3 Months Ending June 2009)
     In 2Q09, States in Blue have growth above the system normalized average
      of -1.5%, and states in Gold are below

                               -2.5%                                   -4.9%                                                          -6.6%
                                                      2.2%
                                                                                      -0.1%                                   -5.5%
                                                                                                                                              -2.0%
                                                                                                -1.5%
                               -6.3%                                   4.0%
                                            -6.6%         -4.5%                                             3.0%                  4.9%
                                                                                      2.4%
                                                                         -0.2%
                                                                                                                           -1.9%
                                                                                                 2.3%           0.9%
                                       -2.5%
                                                 -9.1%        -2.0%
                                                                            -3.2%        -5.5%                         6.1%
                                                                                                            0.4%
                                                                                                                         -1.5%
                                                                               1.1%                     -5.3%            -4.1%
                                                 -4.9%                                   0.9%
            1.0%                                             -5.1%
                                                                                                                   -5.6%

                                                                           0.8%




                                                                                                                                Top States by Volume:
                                                                                                                                • California – 9%
                                  0.7%                                                                                          • Texas – 8%
                                                                                                                                • Florida – 6%
                                                                                                                                • New York – 4%
                                                                                                                                • Virginia – 4%

                                                                                                                                Note: International Volume was 1.0%
Source: VisaNet Base II excluding Prepaid, Cards issued in US and acquired in states shown                                      of volume and growth was -6.7%
Visa system growth rates normalized to exclude effects of major issuer brand conversions
*Card Present transactions only
Offline Debit – Industry Growth
Estimate MCC Growth Summary as of June 2009
In comparison to prior quarter, Retail (held up by Supermarkets and Drug Stores) and Healthcare & Services
remained flat; Bill Pay and QSRs growth slowed; and Gas growth, although negative, appears to have picked up
after hitting the bottom

                                   Share of      Growth        Growth       Growth       Growth
          Segment                  Volume        3Q2008        4Q2008       1Q2009       2Q2009
 Retail Face-to-Face                  32.8%          3.4%          0.7%         2.6%         2.5%
 Bill Pay                             13.8%        15.7%         15.0%        15.2%        12.6%
 Restaurants                          10.9%          8.2%          5.6%         7.1%         6.6%
 Gas                                  10.4%        25.4%        -20.3%       -34.7%       -29.9%
 Healthcare & Services                 6.6%        15.6%         16.7%        15.7%        15.1%
 Emerging Segments                     5.9%        13.2%         10.8%        12.5%        13.1%
 T&E                                    6.7%         5.3%          3.2%         5.6%         6.7%
 QSRs (Fast Food)                      5.9%        20.8%         19.9%        18.0%        16.5%
 Retail CNP                             4.6%        18.8%        14.9%         14.9%        12.0%
 Direct Marketing                       2.3%        -4.3%         -4.6%        -3.5%        -3.3%
 Offline Debit (excl.
                                       100%         11.1%         3.1%          2.5%         1.9%
 Prepaid)
Check Card Sales Volume Growth
(3 Months Ending June 2009)

Non-discretionary segments (Supermarkets, Bill Pay, QSRs) and Healthcare showed
strong growth this quarter, while Gas continued to drag down overall growth

                                                                     Share of
                 Sales Volume:
            Share by Merchant Group         Segment          Growth Total VCC
                                                                    Growth *
                                           Retail - Face to
                                                              2.5%      12.5%
                                           Face
                                            Supermarkets      9.6%       N/A
                                           Bill Pay          12.6%      24.5%
                                           Restaurants        6.6%      10.7%
                                           Gas              -29.9%       N/A
                                           T&E                6.7%       6.7%
                                           Healthcare &
                                                             15.1%      13.7%
                                           Services
                                           Emerging
                                                             13.1%      10.9%
                                           Segments
                                           QSRs (Fast Food) 16.5%        13.2%
                                           Retail - CNP      12.0%        7.9%
                                           Direct Marketing -3.3%         N/A
                                           TOTAL             1.9%       100.0%
DEBIT Issuer Trends
• Improvements in activation and usage now fueling debit growth
   – Large issuer penetration rates averaging in high 80’s
• New acceptance creating usage opportunities (e.g., small ticket, bill pay,
  emerging segments)
• Rewards programs are proliferating with varying objectives:
   – Higher usage
   – Signature preference
   – DDA growth
   – Enterprise-wide loyalty/cross-sell
• Cardholder segmentation strategies increasingly utilized and refined for
  marketing effectiveness and efficiency : Prepaid and Traditional Debit join
  forces
• Portfolio performance - benchmarking and data analysis important in
  competitive market
    Today’s Debit for Credit Unions
   Largest payment method – Annually Debit transactions continue to
    grow over all other payment types.
   Debit Card programs are the CORE Relationship product.
   Consumers (Merchants) driving both Signature and P.I.N.
      CU ‘s need one card and one platform
      CU’s need ONLINE REAL TIME ACCESS
   Prepaid is out growing Traditional Debit Usage
      CU’s need to compliment Traditional Debit with PREPAID
   Members and Credit Union providers looking for Added Benefits
           Surcharge Free access
           Rewards
ICUL Service Corporation’s


 INTEGRATED EFT TOTAL
      SOLUTION

      IT’S FOR YOU!!
What is IT’S ?

       Combined ATM and Debit Platform
       Integrated Databases for Authorizations and Card
        Production
       Cost Effective Online Authorization Options for ALL size
        CU’s
       Newest Technology for ATM Driving: VPN, Internet,
        wireless
       Complete Fraud Monitoring and Loss Prevention Tools
       ICUL Network Package and Suite of Products and
        Services
  ICUL and IT’S
Network Packages
ICUL Suite of Networks:


 CU has option to join VISA, MasterCard and Discover and
   up to 5 ATM National ATM Networks of their CHOICE:

    PULSE, STAR, CIRRUS, Plus, Interlink, ETC…

              all Include for 1 fixed priced!
ICUL SUITE OF SURCHARGE FREE NETWORKS:




   CO-OP, All point, Alliance One, Money
    Pass
ICUL DEBIT PRODUCTS:
   Traditional Debit
     ONLINE – INTECH USERS
     Batch
   Prepaid Products – CUSTOM and AGENT
     Gift Cards
     Travel MONEY Cards
     General Purpose Cards
     Payroll Cards
     Family Cards* 2010
ICUL’S Integrated EFT Total
Solution
IT’S ATM Processing Services
IT’S Comprehensive ATM Driving Solution

 7X24 Monitoring      Card
     System        Management           Welcome to
                                              IT’S ATM


   Authorization     Reports
     Services
                                    Welcome




      Pin           Settlement &
   Processing      Reconciliation      Cash         Deposits



                   Adjustment
                   Processing
IT’S ATM Features and Functions

 •   Bilingual screens              • Packaged graphics
 •   Card Activation                • PIN Change Capability
 •   Customized screens             • Remote Key
 •   Fast cash options                Distribution
 •   Four denomination dispense     • Stamps/coupon
 •   Multiple surcharging options     dispensing
 •   Overdraft to DDA               • Touch screen support
 •   Optional receipt               • Multiple account
                                      access
                                    • Voice Guidance - ADA
IT’S ATM Monitoring

  • ATM’s monitored 24/7/365
  • Voice Response Unit used for automated dispatching
    and follow - up for first and second line maintenance
  • Client Profile Database
     – Contact Data
     – Hours of Operations and Holidays
     – Service Providers by Device
  • Comprehensive reports including quality tracking
  • Contacts customer with equipment and supply problems
IT’S Back Office Support
           IT’S Back-Office Support
24/7/365 Lost Stolen Servicing
Client Relations
Consumer Servicing
Dispute Processing
Education Services
                                  IT’S Got it ALL!
Fraud Services
Plastics Design and Production
Product Development
Rewards Program
Settlement: Single Point
Various Telecom Options
Training
Marketing Support
Ongoing Product and Regulatory Updates
IT’S Plastic Services


     • Visa/MasterCard certified
     • Complete card service design
     • Best Volume Discounts
     • Top quality Cards
     • Design Consultants
     • Litho, Laser, Custom Cards
     • Designs for Credit, Debit, ATM,
           Prepaid, Government, etc
     •   Regional Logo Printing
     •   Cost Effective Generic –
           “STANDARD” Cards Available
     •   Cards Comply with ALL Standards
           and Network Compliance Rules
                     IT’S Card Issuance

• Certified Visa/MasterCard Production Center       Shipping Via


• Plastics can be customized both front and
   back utilizing thermal printing with a rainbow
   of tipping and logo colors to choose from.

• Generic, Custom and Photo Card production
   available

• Over 12 million custom and Generic plastic
   cards in vault


• Built-in Quality Monitoring

• Custom Activation Labels, Inserting, Carriers,
   etc
# 1 Option for Intech Credit Unions–
Authorize and Post All Transactions Online

   Authorize and Post ATM transactions online
   Authorize Signature ONLINE and Post
    ONLINE
   DP used by FI to reconcile with transactions
    posted from your online posting journal
              IT’S Settlement Options
• Funds Movement - next day settlement using a single net settlement
amount through the Automated Clearing House (ACH) and/or US
Central to include fees where applicable

• Single Point Settlement - FI establishes end of business day for
settlement (prior to 6pm eastern standard time) and IT’S provides
consolidated totals and settlement for CU

• Auto-Reconciliation – IT’S reconciles with individual
Regional/National Networks directly and manages adjustment
reconciliation on behalf of FI

• Reporting – IT’S provides Cardholder and Terminal Settlement
Reporting and Visa/MC Quarterly Reporting as a service or a report for
an FI doing their own reporting to the associations

• Transaction History - 180 days of online transaction history
IT’S Risk Management
                  IT’S Risk Management

Authorization Risk Controls              Other Risk Management
o   Account Status Verification
o   Account Verification                    3D Secure:     VbV & MasterCard
o   Address Verification Service (AVS)       SecureCode
o   Authorization Name Matching*            Accounts Blocked Real-time
o   Check Digit Calculation
o   CVV/CVC Validation (PIN and Sig)
                                            Best Practices
o   CVV2/CVC2 Validation                     Recommendations
o   Excessive Use Parameters                Card Activation Options
o   Expiration Date Verification                1st PIN
o   PIN Verification
                                                ANI (Phone number identifier)
                                                VRU
Neural Network                                  Operator Assisted
o Falcon
                                            Cardholder Select PIN
                                            Risk Blocking by Country
                                             Code, MCC, etc.
IT’S Risk Management Fraud Solutions
   Lost & Stolen Card Processing
   Fraud Detection
   Fraud Analysis & Challenge
   Chargeback Processing
   Affidavit Processing
   Secure Debit Program NOW Available too!
   Fraud Consulting
   Identity Theft Detection and Protection Service
IT’S Comprehensive Reporting

       Daily                             Monthly
          Settlement                        Cardholder
          Transaction Detail (by            Interchange Income
           terminals, cards, etc...)         Completion Summary
          Interchange Income                Billing
          Card Management                   ATM Monitoring
          Disputes/chargebacks           Card Association
          First Time Used                   Visa
          Off-line Debit Usage              MasterCard
          ATM Monitoring                    DISCOVER
    IT’S- Integrated EFT Total Solution
   One Relationship that Integrates:
   The BEST Processing Platforms optimizing CU Data Processor
    and ONLINE Technology
    The BEST Network Relationships
   The BEST Practices and Fraud Detection and Monitoring
   The BEST Customer Service and Training Options
   The BEST Marketing Support
   The BEST COMBINED NETWORK Pricing Solutions
   All at the BEST from a Partner Committed to your Credit Unions’
    success!!
ICUL’S Integrated EFT Total
          Solution
    for INTECH User’s



   Truly has it ALL!!!

				
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