Out with the Chip, In with Online Flexible Spending Presented By Joel L. Weidner April 13, 2005...
-
Upload
brian-wolden -
Category
Documents
-
view
212 -
download
0
Transcript of Out with the Chip, In with Online Flexible Spending Presented By Joel L. Weidner April 13, 2005...
Out with the Chip, In with Online Flexible Spending
Presented By Joel L. WeidnerApril 13, 2005
Online Transaction
Introduction
• Session Objectives:– Outline the reasons behind Penn State’s decision
to switch from smart cards to an online flex account
– Present case study on the implementation of the new flexible spending program
• Innovation– Leveraging of existing Blackboard Transaction
System and departmental technical infrastructure• Results/Outcomes
– Increased program participation, revenue, and customer satisfaction
LionCash Chip Program History
• Started using smart chips for stored value in 1997 with residential laundry.
• Added chips to University Park IDs in 1998 (~50K cards). – Added vending, copiers, and off-campus
points of sale
• Two additional campus locations added to the chip program in 1999.
• Approx. 400 terminals were deployed.
LionCash Chip Program Results
• Program peaked at $2 million in annual sales in 2002– $847,000 Laundry– $318,000 Copiers– $297,000 Vending– $539,000 Points of Sale (on- and off-
campus)
LionCash Program Challenges • Card cost and reliability• Small average point of sale transactions
amounts• Self imposed $99 purse limit excluded
higher end merchants• Offline program administration efforts• Contracted provider, Diebold Inc., exited
business in 2002.• Schlumberger technology was aging with
no strategic replacement plan
Impetus for Change
• Ended contract with service provider (Diebold Inc.) in 2003– Inherited technical infrastructure that did
not appear to have much of a future.
• University decision to replace SSN would probably require the re-issuance of new ID cards sometime in 2004– If things were going to change, now was
the time to do it.
Overview of Events
• Sept 2002 - Discussion paper floated• July 2003 - Project Team begins regular
meetings• Dec 2003
– Proposal for program transition presented to Sr. VP for Finance & Business – (concept approved)
– Bulk equipment purchase (year-end incentives)
Overview of Events (cont.)
• Jan 2004 – Project team roles up their sleeves (sub-groups gets moving on details)
• May 2004 – start marketing new program at freshman orientation
• May-Aug 2004 – installation of laundry, off-campus merchants, pilot vending
• Aug-Sept 2004 – copier installations & full-scale role-out of program
Proposal Development and Approval
• Nine page document delivered to Sr. VP on December 9th, 2003
• Outlined program history and justification for moving to online system.
• Included 5 year projections on costs, cost savings, and revenue streams.
• Outlined benefits and risks of new program.
• Critical for achieving high level support.
Risks of moving to an online flexible spending account
• Opening Diners Club ($3.5 M debit program) to off-campus businesses
• Bleeding of A La Board ($18 M debit on-campus food services only) funds to off-campus businesses– Although funds would be restricted to on-
campus, students have the option to change meal plan levels at any time during the semester.
Purchase of Blackboard Equipment
• Original time-table called for reader purchases in April 2004
• Blackboard stepped forward with year-end proposal offer that “we could not refuse”
• Last minute hustle to determine equipment numbers, find funding, and cut the PO.
• Large PO issued on 12/22/2003
Technical Infrastructure PlanningSystem Configuration
• Wiring• Location/Reader configuration• Account/Privilege setup• FDI Interfaces• MDT modem pool and merchant
terminals• Settlements
Location/Reader Infrastructure (three campus locations)
• 140 Laundry controllers– 55 IPCs for networking
• 100 Copier readers (IP based)• 170 Vending readers (IP based)• 5 VTS units
Account/Privilege Setup • Rolled optional dining account, Diners
Club, into new flexible spending account ($3.5 M annual sales)
• Maintained 5 privs for on-campus debit meal plans
• Added 5 additional privs for new account– Merchants, Copier, Laundry, Vending, and
Deposits
• Linked on-campus meal plan to new flex account
Interfaces and MDTs
• Barnes & Noble on-campus bookstore serial FDI in multiple stores
• The Student Bookstore (off-campus) Sequoia TIA
• Got Used Books (off-campus) Nebraska Books TIA
• Setup MDT modem bank with 5 rack-mounted modems, fronted ended with 800 number for campus locations.
Settlement System
• Setup Optim Extract• Built web-based merchant settlement
system– Decision to offer daily, weekly, or monthly
settlements (no commission differential)– Automated ACH records sent to central
accounting– Emails sent to merchants with settlement
statements
Administrative Planning
• Operating policies
• Merchant application and agreement
• Cardholder disclosures
Operating Policies
• Administrative merchant account setup procedures
• Settlements
• Balance limits
• Regulation E legal review
• Acceptable use & restrictions
Merchant Application, Agreement, and Support
• Verifone terminal setup procedures
• Verifone terminal operating procedures
• Commissions/settlements
• Dispute procedures
• Refunds
• Accounting/technical support
Cardholder Disclosure
• Statements/transaction history
• Spending limits
• Refunds
• Liability
• Errors/disputes
• Inactive accounts
Marketing & Communications
• Internal Politicking• Customer communications• Program promotion• Merchant acquisition
Internal Politicking
• SSN Steering committee– Some confusion about why we were
implementing this new program before the new card was issued
• Libraries– What else do I need to say?
• Food Services– Director of food services was part of our
LionCash+ implementation team
Customer Communications
• Freshmen communications – only the new program
• Upper Classmen & Faculty/Staff – conversion from chip to stripe
• Program name confusion – LionCash to LionCash+
• More name confusion – Diners Club to LionCash+/Diners Club
• Collegian articles and newspaper ads
Merchant Acquisition
• Meetings with Downtown State College Improvement District (DID)
• DID helped us sponsor meetings for interested Merchants to introduce new program
• Challenges to speaking to new merchants and former LionCash (chip) program merchants
• Merchant Packets/Web Site tab
Merchant Packet also included:
• Application form *• Merchant Agreement (contract) *• Cardholder Disclosure *• LionCash+ Accepted here sticker• Business Cards for id+ office
* Also available online at www.idcard.psu.edu
LionCash+ Rewards Program
• Co-sponsored by id+, Downtown State College Improvement District, and participating merchants
• Eight merchants per month donate prizes valued at approx. $50
• Eight winners are chosen at random from list of transactions at merchant locations during the month
• Collegian adds, store posters, and web site promote program
Results – Off-Campus Merchants
• 47 Off-campus merchant locations, including
• McDonalds• Pizza Hut• Sheetz• Subway• UniMarts
• 2 independent bookstores
• CVS Pharmacy• Dominos Pizza• Jimmy Johns
Results – Funds Pool(first 9 months of program)
• Average monthly fund balance is up over 48%– Last year chip program and optional Diners
Club average balance - $834 K– Current year online LionCash+ average
balance - $1.2 M
*includes $140K in residual chip funds
Fund Balance
Monthly Fund BalancesOld Program vs. New Program
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Th
ou
san
ds
Month
Fu
nd
Bala
nce
2003/04
2004/05
Fund Balance
Monthly Fund BalancesOld Program vs. New Program
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Th
ou
san
ds
Month
Fu
nd
Bala
nce
2003/04
2004/05
Results – Sales(first 9 months of program)
• Period sales are up over 36%– Last year chip program and optional Diners
Club program sales were $4.5 M*– Current year online LionCash+ sales at
$6.1 M*
* 12 months last year compared to 9 months of new year.
Program Sales
Monthly Sales ComparisonOld Program vs. New Program
-
200
400
600
800
1,000
1,200
Th
ou
san
ds
Month
Sale
s 2003/04
2004/05
Program Sales
Monthly Sales ComparisonOld Program vs. New Program
-
200
400
600
800
1,000
1,200
Th
ou
san
ds
Month
Sale
s 2003/04
2004/05
LionCash+ Net SalesJuly 1, 2004 - March 31, 2005
Bookstore, $655,145.94
Clothing/Retail, $33,826.01
Concessions, $43,424.08
Convenience, $559,166.83
Copying, $83,874.17
Food, $3,569,138.76
Health & Fitness, $1,575.59
Laundry, $778,361.90
Miscellaneous, $21,195.61
Ticketing, $2,845.75
Vending, $11,310.77
Sales by Category
LionCash+ Net SalesOn-Campus vs. Off-Campus
Off-Campus, $1,145,322.51
On-Campus, $4,614,542.90
Sales On vs. Off-campus
Results – Impact on Diners Club
• Merging Diners Club into new LionCash+ program and opening up funds to off-campus did not impact program negatively
• Year-to-year comparison of debit sales in same food service units up 7.7% ($235 K) over same period for last year
LionCash+ vs. Diners ClubLionCash+/Diners Club
Sales by Day
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
Th
ou
san
ds
Date
Sale
s
2004 - LC+/DC
2004 - DC
2003 - DC
Results – A La Board Plan
• New LionCash+ and related off-campus sales did not impact primary meal plan program negatively
• Year-to-year comparison of debit sales in same food service units up 6.1% ($890 K) over same period for last year
A La Board 2004 vs 2003A La Board Meal Plan
Sales by Day
$0
$20
$40
$60
$80
$100
$120
$140
Th
ou
san
ds
Date
Sale
s
2004
2003
What could have been done better? - Timing
• Copier implementation that should have taken place during the summer of 04, actually happened after fall arrival.
• Vending implementation was delayed as well due to lead time in wiring buildings
• Our goal was to have chip readers totally phased out before the start of fall semester, but we didn’t quite make it.
What could have been done better? - Resources
• Program did not receive the administrative attention it deserved during the fall semester due to other projects– SSN conversion project– November re-carding project
• Marketing and merchant acquisition efforts were not as intensive as they should have been
What does the future hold?
• Program is off to a great start, but there is much potential to increase deposits, sales, and revenue
• We have the technology (transaction processing/settlement)—now we just have to leverage it with increased volume
New Marketing Efforts
• Freshman orientation– Last year we were not sure what we were
marketing– This year we have a great program to sell
• Faculty/Staff– Expanded number of locations makes
program more attractive– Looking at payroll deduction
On-Campus Expansion
• Barnes & Noble Bookstores – will be activating FDI at all 23 campus bookstores for this fall
• Vending just getting cranked up– Looking to expand at 4 other campus
locations this summer
• Considering building Web application that will interface via TIA to allow any campus office to debit account with existing administrative PCs
Off-Campus Expansion
• New merchant acquisition efforts• Recently added merchants
– Sheetz– Subway– Dominos Pizza (contract, but not active)
• Campus location merchants (Sheetz in Altoona was our first remote campus MTD)
Closing
• Online Resources Available:– www.idcard.psu.edu
• Follow up Contact(s):– Joel L. Weidner, [email protected]– Cindy Kellerman, [email protected]
• IF YOU ONLY REMEMBER 2 THINGS:– Learn from your mistakes– Steal shamelessly from others who proceeded you