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Manage Your Customer's Payment With Speed, Accuracy, Reliability and Savings

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Manage Your Customer's Payment With Speed, Accuracy, Reliability and Savings, 2014 CreditScape, Western Region Credit Conference Seminar Slide Deck, sponsored by Credit Management Association. More information: www.creditmanagementassociation.org

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Manage Your Customer's Payment With Speed, Accuracy, Reliability and Savings

  1. 1. © 2010 UTA, All Rights Reserved TM MMaannaaggee YYoouurr CCuussttoommeerr’’ss PPaayymmeennttss WWiitthh SSppeeeedd,, AAccccuurraaccyy,, RReelliiaabbiilliittyy aanndd SSaavviinnggss
  2. 2. WWhheerree aarree wwee ggooiinngg wwiitthh aallll ooff tthhiiss?? © 2010 UTA, All Rights Reserved
  3. 3. Is this the NEW reality? © 2010 UTA, All Rights Reserved
  4. 4. Payment Changes © 2010 UTA, All Rights Reserved
  5. 5. TThhee EEFFTT TTrreenndd © 2010 UTA, All Rights Reserved
  6. 6. WWhhaatt iiss EEFFTT?? EDI (Electronic Data Interchange) - usually used by large companies for large payments Reduce deduction codes and standardize file formats WIRE Transfers - usually used for same day payment - international payment Broader standardization of process and remittance - final payment ACH (Automated Clearing House) - universal usage Broader standardization of process and remittance Credit Card - primarily used for smaller payments - customer convenience - ‘perks’ © 2010 UTA, All Rights Reserved
  7. 7. Scheduled Payment © 2010 UTA, All Rights Reserved Entry TTrraannssaaccttiioonn ## 664466005555 16354 084000084 156564163 (OPTIONAL) ABC Plumbing $5525.50 Apply transaction to invoice # 1165339
  8. 8. Scheduled Payment © 2010 UTA, All Rights Reserved Entry
  9. 9. TTrraannssaaccttiioonn RReeppoorrtt © 2010 UTA, All Rights Reserved 123450000 Lonardo Food Services Goodstein’s Crown Molding Inc. Halpern Industries Fountain’s Fence, LLC 94156
  10. 10. Sample Website © 2010 UTA, All Rights Reserved
  11. 11. ACH Payment Entry © 2010 UTA, All Rights Reserved TTrraannssaaccttiioonn ## 664466005533 16 084000084 156564163 (OPTIONAL) 995 997 999 $1001.50 $100.00 $500.50 ABC Plumbing Apply transaction to invoice # 1165339 Deduct late fees on all invoices No. of Invoices: 3 Amount: $1602.00
  12. 12. Credit Card Entry © 2010 UTA, All Rights Reserved TTrraannssaaccttiioonn ## 664466005533 16 1525 SW 33193 ABC Plumbing 41111111111111 995 997 999 $1001.50 $100.00 $500.50 Apply transaction to invoice # 1165339 No. of Invoices: 3 Amount: $1602.00 Miami 4141
  13. 13. ePay Online™ Point. Click. Pay. An exact copy of your invoice or statement is presented. © 2010 UTA, All Rights Reserved Link your invoice or statement to scanned documents like Purchase Orders, Bills of Lading, POD with signature capture and more…
  14. 14. 123450000 $ © 2010 UTA, All Rights Reserved $ $ $ Fleet Pride, Inc.
  15. 15. Sample XML 20022 NEW All payment options, credit card and ACH © 2010 UTA, All Rights Reserved
  16. 16. Sample XML 20022 NEW All payment options, credit card and ACH © 2010 UTA, All Rights Reserved
  17. 17. Sample ePay Credit Card All payment options, credit card and ACH © 2010 UTA, All Rights Reserved
  18. 18. CCaannaaddiiaann PPAADD © 2010 UTA, All Rights Reserved
  19. 19. CCrreeddiitt CCaarrdd MMeerrcchhaanntt SSeerrvviicceess RReedduuccee yyoouurr pprroocceessssiinngg ffeeeess aanndd tthhee ccoosstt ooff aacccceeppttiinngg ppaayymmeennttss bbyy ccrreeddiitt ccaarrdd.. © 2010 UTA, All Rights Reserved
  20. 20. Ecosystem ooff aa ccrreeddiitt ccaarrdd ttrraannssaaccttiioonn © 2010 UTA, All Rights Reserved Three key entities manage the payment system. Issuers <Others>  Issue cards  Assume buyer’s credit risk  Generate reports  Provide customer service Acquirers  Sign up merchants  Underwrite merchant risk  Provide processing – Authorization – Capture/Settlem ent  Generate reports  Provider customer service Networks <Others>  Provides systems/operations  Develops products  Provides risk management  Provides advertising and promotions  Sets standards and rules
  21. 21. EEccoossyysstteemm ooff aa ccrreeddiitt ccaarrdd ttrraannssaaccttiioonn © 2010 UTA, All Rights Reserved
  22. 22. LLeevveell II,, IIII aanndd IIIIII DDaattaa RReeqquuiirreemmeennttss Data Type Level 1 Level 2 Level 3 Merchant Name x x x Transaction Amount (Total) x x x Date x x x Tax Amount x x Customer Code (16 Char) x x Merchant Postal Code x x Tax Identification x x Merchant Minority Code x x Merchant State Code x x Item Product Code x Item Description x Item Quantity x Item Unit of Measure x Item Extended Amount x Item Net / Gross Indicator x Item Tax Amount x Item Tax Rate x Item Tax Identifier x Item Discount Indicator x Ship from Postal Code x Freight Amount x Duty Amount x Destination Postal Code x Destination Country Code x Alternate Tax Amount x © 2010 UTA, All Rights Reserved Level-I and Level-II data elements can be transmitted via a standard credit card point of sale terminal. Level-III line item detail requires greater system capability, which is provided via UTA/Vantiv partnered payment processing applications.
  23. 23. SSaammppllee TTrraannssaaccttiioonn CCoossttss:: IInntteerrcchhaannggee EExxppeennssee Visa Purchasing Card: $500 transaction Purchasing B2B Rate (Level I): 2.10 + .10 $10.60 Purchasing Level II Rate: 2.05 + .10 $10.35 Purchasing Level III Rate: 1.95 + .10 $ 9.85 14% reduction in cost by processing Level III versus Level I data MasterCard Purchasing Card: $500 transaction Purchasing Data Rate I (Level I): 2.65 + .10 $13.35 Purchasing Data Rate II (Level II): 2.40 + .10 $12.10 Purchasing Data Rate III (Level III):1.80 + .10 $ 9.10 32% reduction in cost by processing Level III versus Level I data © 2010 UTA, All Rights Reserved Interchange only -- Not showing all interchange categories
  24. 24. SSaammppllee TTrraannssaaccttiioonn CCoossttss:: IInntteerrcchhaannggee LLaarrggee TTiicckkeett EExxppeennssee Visa Purchasing Card: $7500 transaction • Standard Rate 2.95 + .10 $221.35 • Business Electronic 2.75 + .10 $206.35 • Business Card Not Present 2.65 + .10 $198.85 most commom • Purchasing Level II Rate: 2.05 + .10 $153.85 • Purchasing Level III Rate: 1.95 + .10 $146.35 • Large Ticket 1.45 + .10 $108.85 Effective Rate 1.45% 46% reduction in cost by processing Level III versus Level I data © 2010 UTA, All Rights Reserved Interchange only -- Not showing all interchange categories
  25. 25. SSaammppllee TTrraannssaaccttiioonn CCoossttss:: IInntteerrcchhaannggee LLaarrggee TTiicckkeett EExxppeennssee Visa Purchasing Card: $25,000 transaction • Standard Rate 2.95 + .10 $737.60 • Business Electronic 2.85 + .10 $687.60 • Business Card Not Present 2.65 + .10 $662.60 most common • Purchasing Level II Rate: 2.05 + .10 $512.60 • Purchasing Level III Rate: 1.95 + .10 $487.60 • Large Ticket 1.45 + .10 $362.60 • VLPA .60 + 52.50 ($25k pricing) $202.50 Large Ticket Effective Rate 1.45% VLPA Effective Rate .81% 45% reduction in cost by processing Level III versus Level I data 64% reduction in cost by processing VLPA versus Level I data © 2010 UTA, All Rights Reserved Interchange only -- Not showing all interchange categories
  26. 26. VVLLPPAA -- CCrreeddiitt CCaarrdd IInntteerrcchhaannggee RRaatteess – Ticket Size Rate – $10,000 or less 1.95% + $0.10 – $10,000 - $25,000 0.70% + $49.50 – $25,000 - $100,000 0.60% + $52.50 – $100,000 - $500,000 0.50% + $55.50 – Greater than $500,000 0.40% + $58.50 © 2010 UTA, All Rights Reserved 26
  27. 27. Breakdown of Cost Total Cost = $12.46 Interchange represents 85% of the cost of this transaction. *Based on Average Ticket currently qualifying for the Visa Commercial B2B (Purchasing, Business, Corp) rate © 2010 UTA, All Rights Reserved
  28. 28. Can I pass the cost of the credit card processing along to my customer in the form of a fee? No, Visa and MasterCard regulations do not allow you to charge a fee or pass back the interchange to the cardholder for accepting their card for payment. UUNNTTIILL NNOOWW……………… © 2010 UTA, All Rights Reserved THE Question
  29. 29. Changes to No SSuurrcchhaarrggiinngg OOppeerraattiinngg RRuulleess…… ccoonnttiinnuueedd Effective January 27, 2013 (this is not a comprehensive guide) • Will permit surcharging of Credit Card transactions only • Does NOT permit surcharging for Debit Card transactions • Surcharge based on brand level (i.e. MC or VISA) o OR surcharge based on product level (i.e. World Card, Signature Card) o Cannot surcharge at brand and product levels o Cannot surcharge at card issuer level (i.e. Wells Fargo, Citibank ) • Surcharging practices are subject to a competitive ‘level playing field’ (complex) • Surcharged amount will be capped at “cost of acceptance” of applicable card • Disclosure of surcharge policy at ‘point of entry’ and ‘point of sale’ • 30 day advance notification of intent to surcharge must be given to Acquirer • Several states have laws currently prohibiting or restrict surcharging. CA, CO, CT, FL, KS, ME, MA, NY, OK, TX, (many others considering) • Strongly encourage that you visit the VISA/MC websites to obtain surcharging guidelines PRIOR TO implementation. © 2010 UTA, All Rights Reserved
  30. 30. FFEEDDEERRAALL CCOOUURRTT RRUULLIINNGG Effective December 13, 2013 (this is not a comprehensive guide) • Federal Court Ruling becomes law • $6.05 Billion reduced by 25% for merchants who opted out of the settlement o Merchants who accepted V/MC in the US between Jan 1, 2004 and Nov 28, 2012 • Part 2 - .10bp for 8 months is expected to equal $1.25 Billion o Merchants who accepted V/MC as of Nov 28, 2012 • Claims Forms are not yet available (see www.paymentcardsettlement.com) • Preregistration is optional but recommended (see www.paymentcardsettlement.com) • Jan 2, 2014 appeals have been filed by retail companies • State laws prohibiting surcharging - CA, CO, CT, FL, KS, ME, MA, NY, OK, TX, UT (many others considering). o Virtually no case law exists o Virtually no guidance expected from the card networks regarding legal issues • Strongly encourage that you visit the VISA/MC and www.paymentcardsettlement.com websites to obtain surcharging guidelines PRIOR TO implementation. © 2010 UTA, All Rights Reserved
  31. 31. Why EMV Chip? • Chip is an underlying foundation/infrastructure for future innovations • Chip is key in controlling/reducing counterfeit fraud • EMV is the global standard for payments © 2010 UTA, All Rights Reserved 31 *Visa – EMV chip Overview
  32. 32. Chip vs. Magnetic Stripe • Chip – Highly secure – Cannot be cloned – Prevents skimming – Pin to prevent fraud – Data encoded in chip – Unique key – Sensitive data never leaves the chip © 2010 UTA, All Rights Reserved • Magnetic Stripe – Less secure – Easily Cloned – No protection against skimming – Pin to prevent fraud – Data encoded in magnetic stripe – Sensitive data can be compromised 32
  33. 33. Chip Card Environments • Retail, ATM, Mobile, and Online Applications • Online Applications – Must use OTP device – One Time PIN or USB reader connected to PC – For use both in the merchant environment and the online banking environment (deters phishing) • Mobile Applications – EMV standards will be the basis for mobile application development in the future © 2010 UTA, All Rights Reserved 33
  34. 34. 1122 PPootteennttiiaall SSiiggnnss ooff CCNNPP © 2010 UTA, All Rights Reserved FFrraauudd Keep your eyes open for the following indicators. When more than one is true during a card-not-present transaction, fraud might be involved. Follow up, just in case. 1. First-time shopper: Criminals are always looking for new victims. 2. Larger-than-normal orders: Because stolen cards or account numbers have a limited life span, crooks need to maximize the size of their purchase. 3. Orders that include several of the same item: Having multiples of the same item increases a criminal’s profit 4. Orders made up a “big-ticket” items: These items have maximum resale value and therefore maximum profit potential. 5. “Rush” or “overnight” shipping: Crooks want these fraudulently obtained items as soon as possible for the quickest possible resale, and aren’t concerned about extra delivery charges. 6. Shipping to an international address: A significant number of fraudulent transactions are shipped to fraudulent cardholders outside of the U.S. Visa AVS can’t validate non- U.S., except in Canada and the United Kingdom.
  35. 35. 12 Potential SSiiggnnss ooff CCNNPP FFrraauudd ((ccoonntt’’dd)) 7. Shipping to a single address, but transactions placed on multiple cards: Could involve an account number generated using special software, or even a batch of stolen cards. 8. Multiple transactions on one card over a very short period of time: Could be an attempt to “run a card” until the account is closed. 9. Multiple transactions on one card or a similar card with a single billing address, but multiple shipping addresses: Could represent organized activity, rather than one individual at work. 10. In online transactions, multiple cards used from a single IP (Internet Protocol) address: More than one or two cards could definitely indicate a fraud scheme. 11. Transactions with similar account numbers: Particularly useful in the account numbers used have been generated using software available on the internet (e.g., CreditMaster) 12. Orders from Internet addresses that make use of free e-mail © 2010 UTA, All Rights Reserved services: These e-mail services involve no billing relationships, and often neither an audit trail nor verification that a legitimate cardholder has opened the account.
  36. 36. rrcceerrvvaanntteess@@uunniitteeddttrraannzzaaccttiioonnss..ccoomm rrffoouunnttaaiinn@@uunniitteeddttrraannzzaaccttiioonnss..ccoomm © 2010 UTA, All Rights Reserved RRaaffaaeell CCeerrvvaanntteess ((778866)) 551122--22996622 RRuuddeett FFoouunnttaaiinn ((4004)) 338866--99558866 MMaannaaggee YYoouurr CCuussttoommeerr’’ss PPaayymmeennttss WWiitthh SSppeeeedd,, AAccccuurraaccyy,, RReelliiaabbiilliittyy aanndd SSaavviinnggss

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