[Thomas E. Uher] Programming and Scheduling Techni(BookFi.org)
Credit Card Processing & Controlling Costs February 10, 2015 © 2014 Wells Fargo Bank, N.A. All...
-
Upload
maia-brodell -
Category
Documents
-
view
214 -
download
0
Transcript of Credit Card Processing & Controlling Costs February 10, 2015 © 2014 Wells Fargo Bank, N.A. All...
Credit Card Processing & Controlling Costs
February 10, 2015
© 2014 Wells Fargo Bank, N.A. All rights reserved. Member FDIC.
Paul Uher
SVP, Regional Sales Manager
Topics
Card processing 101
Trends in the consumer bill payment space
Innovation focused on bill payment & mobile
2
3
Different Fee TypesHigh Level Summary
Service Fee Convenience Fee Surcharge (New)
Convenience Fees •Additional charge to customer
for “convenience “of paying via alternate channel (online ). • Must be applied to all payment
types: CC, Debit, ACH• Principal and Fee combined in
one transaction. • VISA: Fee is fixed / flat rate
with cap; MC: Fixed or Variable
Ex: Monthly Parking payment- Parking Fee = $100- Convenience Fee = $2.00Total cost to Customer = $102 online
• Targeted late 2013 for WFPG
Service Fees• VISA Term (MC uses:
Convenience Fees)• Applies to Govt /
Educ segment MCCs only• Covers 3rd party costs to
process transaction • Principal and Fee must be sent
as two separate transactions.• Debit permitted • May be applied to all payment
channels: Card Present, MOTO, Online, F2F accepting VISA• Fee permitted to be variable• Targeted Q3 2013 for WFPG
Surcharge• Optional Merchant program,
all MCCs, similar to Conv Fee• All payment channels• Applies on CC only• Principal and Surcharge
combined in one transaction• New consumer disclosure reqs• Cap of 4%• 10 states prohibit Surcharging• No timing at this point for
support on WFPG
4
Merchant cannot assess bothService / Convenience Fees and Surcharges
Merchant 101 - 4 components of cost
4
NetworksAssessment Fees
VS - .11%MC - .105%DS - .105%
Network Access Fees
VS - $.0195MC - $.0185DS - $.0185
Issuing Bank
450+ Interchange Rates/Categories
ex. 2.95% + $.10Interchange gets
paid to issuing bank. Wells Fargo
can help you manage this cost.
ProcessorService charge fee
required to authorize, settle, fund and
service your account.
ex. IC + .30%IC – Interchange rate charged by issuing
bank.30% - service charge
fee charged by WF5% 90% 5%
5
What is the 4th component?
6
Reduce cost,
complexity and risk POS Web
IVR Mobile
ERP MOTO
Single integration for multiple
channels
Consolidated reporting
Common Goals
Source: United States Federal Trade Commission, Consumer Sentinel Network July 12th, 2014
Credit card fraud continues to grow
37%incurred by merchants mainly at point of sale from counterfeit cards
$399 average amount of loss
10% of all Americans have been a victim of credit card fraud
7
2013 2014
Recent data breaches (# accounts compromised)
In the last year, millions of accounts have been compromised
Target Corp. 40 million
November
Home Depot 56 million
September
Neiman-Marcus 1 million
October
Source: need attribute here8
Eurocard
MasterCard
Visa
The time for change has come – and the deadline is October 15, 2015
Has reduced “card present fraud” by 84% in Europe1
Liability for counterfeit card transactions will shift to merchants not supporting new EMV standards
1Visa and EMVCo studies 9
An EMV card has embedded chip with encrypted information
Transmitted when in close proximity of EMV reader
Nearly impossible to counterfeit
10
Fraud Management Decision Manager
Protect e-commerce profits with fraud protection tools Evaluate transactions in real-time
Develop a comprehensive fraud protection strategy
Spend less time on manual reviews
TransArmor
Securely process credit card data with tokenization
11
Layer 1EMV
Chip technology adds security at the exact time the card is being authenticated by the terminal (card present only)
Layer 2Encryption
Secures transaction data as it is sent for authorization
Layer 3Tokenization
Tokenization replaces sensitive payment card transaction data in the merchant environment
TransArmor solution
In the meantime, Mobile Wallet is changing the way people pay
Near
Field
Communication
Only a small percent of merchants have upgraded to NFC terminals
The growth potential is large
12
How Mobile Wallet works
* * * *Enter
Password
...choose pay method
...hold close to NFC reader
...data transfers
Mobile wallet
13
All data and transmissions are
encrypted
Smart phones can be password protected,
GPS located and disabled if lost
or stolen
17263748484946*********
This technology increases security…
14
****
…reduces fraud risk…
EMV and NFC transactions can enforce additional security if PIN entry is used
Apple Pay integrates fingerprint biometrics as other manufacturers work to add voice and face recognition
15
Consumer Behavior is Changing
16
2012 2015E
$36
$130
U.S. mobile payments(Billion $)
>50%CAGR
16% of smartphone
owners have made
a mobile bill payment
One Billion
smart phones sold in 2013
Half of all e-bills
were delivered via abiller website or mobile app
Nearly
50% of businesses plan
to optimize their mobile
commerce site
Sources: First Data, Carlisle & Gallagher Consulting Group, Square, Intuit, internal analysis
With SmartPhones being the catalyst
of Smart Phone users have enabled a Mobile Wallet application20%
iPhone iTunes account owners are now Apple Pay™ eligible800MApple Pay enabled devices projected in use in U.S. by end of decade
70M
of installed credit card terminals are currently NFC compatibleand yet… 2%
Sources:Apple statistics: www.theverge.com/2014/9/9/6084211/apple-pay-iphone-6-nfc-mobile-payment Other statistics: www.businessinsider.com/two-in-five-americans-will-use-mobile-wallets-by-2017-2014-1
Mobile bill pay is exploding
18
Mobile bill pay more than doubled from 2012 to 2013.
16% of households paid a bill with their smartphone in 2013, compared to 8% in 2012
Source: Mobile bill payment surge, Fiserv, February 2014. 18
Last minute payment
Not near computer
Easy to do
Saves time
Anytime access
Convenience
29%
30%
46%
49%
55%
70%
Why consumers use mobile to pay bills
Quick Response (QR) codes
2D barcodes read by smartphones or tablets
Codes are printed on paper bills
Bill recipients use smart phone apps to “read” codes
Can redirect to biller’s homepage, biller’s bill payment
site, or a bank’s online banking site
Most popular amongst 25-44 year olds (55% of scans)
Utilized by various billers and bill aggregators
19Source: DST Output 2012
20
Technology for the Next Generation
IBM 5100 portable computer
55 lbs.
.000064 GB
$20,000
Apple iPhone 6
6 oz.
128 GB
$500
Over the years…
1978 2014
21
Some things have undergone massive change
Uses for Mobile apps and payments
Parks & Rec payments and gift cards
Tax payment collection by field agents or installment
payments
DMV appointment scheduling and payment
Parking & citation payments
Hearing scheduling
Hunting and fishing permit purchases
Utility payments
22Source: DST Output 2012
Thank You
Paul Uher
SVP and Regional Sales Manager
Treasury Management
704.383.4149| [email protected]
© 2014 Wells Fargo Bank, N.A. All rights reserved. For public use.23