Card Acceptance Best Practices to Manage Rates and Minimize Risk

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1 Card Acceptance Best Practices to Manage Rates and Minimize Risk Kim Jackson VP, Transfund Merchant Services April 23, 2014

2 BOK Financial is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: We have registered with the Texas State Board of Public Accountancy as a CPE sponsor. This registration does not constitute an endorsement by the Board as to the quality of our CPE program.

3 Objectives Learn about TransFund Merchant Services Expand Card Acceptance Share Merchant Benefits available with TransFund Review Current and Emerging Processing Solutions Understand Basic Merchant Fee Reduce Fraud Minimize Risk Review Bankcard Industry Tools and Resources

4 TransFund Merchant Services TransFund, founded in 1976, is an EFT business unit based in Tulsa, OK Merchant Services unit for BOKF Serving 200 financial institutions 7,200 merchant locations nationwide $2 Billion in net sales 13 million transactions

5 Card Acceptance Visa MasterCard Discover American Express Pin Debit Cards Electronic Benefit Cards (EBT) Gift Cards

6 Benefits Dedicated account managers Full gross amount of batches deposited (not net) Processing fees are collected at month-end (not daily) Free help desk support M-F, 8-5 CST (no additional charge) Optional 24/7 technical help desk (additional fee, if needed) Free online reporting and free terminal supplies No penalties for early termination No long-term contracts No annual fee

7 Benefits (continued) Convenience for paying customers Immediate sales of products and services Larger sales on credit cards hour availability of funds via direct deposit Reduce day receivables

8 Processing Solutions TouchTone Phone good option for low-volume merchants Smart Phone suitable for small to mid-size enterprises and sole proprietors who are mobile or with workers in the field who have work issued phones ( ex; plumbing, heating contractors, etc.) Add an audio jack reader and load a payment application into your Iphone, Ipad, Android phone or tablet. Point-of-Sale Terminals ideal for retail card present environment or mid-size mail/telephone order merchants Virtual terminal fits well when the card is not present. Supports recurring billing and unlimited users. Input sales on a secure internet gateway. Website Processing easy integration of bankcard processing into websites Software solutions industry partnerships allow a wide array of connections

9 Emerging Technology NFC (Near Field Communication) cell phones/chip cards (EMV) Contactless payments using tap-n-pay technologies Wallet technology such as the Google Wallet

10 Merchant Fee Basics Components: - INTERCHANGE (Card Issuers Fees) - Dues & Assessments and Brand Fees (Card Association Fees) - Processing Fees (transaction fees processors charge for services) INTERCHANGE typically the largest portion of card acceptance expense. Paid directly to the card issuing bank to offset expense, risks, rewards, etc. Varies by card brand, type of card (rewards, corporate etc.) and acceptance method. Processing Fees fees for authorizing, exchanging transactions with members, monitoring, compliance, reporting, processing/settling card transactions.

11 Merchant Fee Example Visa Emerging Market Debit (keyed or swiped) $ Average Ticket 0.65% VS's I/C Rate for Transaction 0.65 VS Interchange 0.15 VS's Item Fee for Transaction 0.11 VS's Dues & Assessments 0.30 TransFund's Item Fee 0.15 POS Authorization Charge $1.36 Total Fees per Avg. Ticket 1.36%

12 Merchant Fee Example Visa Emerging Market Consumer Credit (keyed or swiped) $ Average Ticket 1.43% VS's I/C Rate for Transaction 1.43 VS Interchange 0.05 VS's Item Fee for Transaction 0.11 VS's Dues & Assessments 0.30 TransFund's Item Fee 0.15 POS Authorization Charge $2.04 Total Fees per Avg. Ticket 2.04%

13 Merchant Fee Example Visa Keyed Consumer Regulated Debit (keyed or swiped) $ Average Ticket 0.05% VS's I/C Rate for Transaction 0.05 VS Interchange 0.22 VS's Item Fee for Transaction 0.11 VS's Dues & Assessments 0.30 TransFund's Item Fee 0.15 POS Authorization Charge 0.83 Total Fees per Avg. Ticket 0.83%

14 Tips to Reduce Merchant Fees Close batches daily to meet interchange fee requirements Swipe the card whenever possible to include the entire contents encoded on the magnetic-stripe Key entered transactions may require AVS (address verification) and order number on consumer cards Purchase card transactions should include Level II or Level III invoice details

15 Reduce Fees - Continued Be aware of special industry interchange programs. - Large Ticket > $5, Emerging Markets (College, Utility, Tolls, Charitable Organizations, DayCare Centers, Fines, etc. ) - Small Ticket < $15.00 (Parking lots, movie theatres, convenience store, restaurants, taxi-cabs, local commuter, etc.) Consult with an experienced TransFund Account Representative for more details. Receive a FREE analysis/quote by faxing or ing (3) current card processing statements to You can statements to the attention of Bank of [email protected]

16 Minimize Risk Card Not Present Transactions - (AVS) Address Verification Service - (CVV2) Card Verification Value o NOTE: CVV2 should never be saved, stored, or requested in written form - Verified by Visa/Secure Code by MasterCard (for online transactions) - Suspicious Transactions o Code 10 Authorizations alert issuers to the suspicious activity without alerting the customer o Contact TransFund

17 Learn to Recognize Fraud Scams First time shopper Larger than normal orders Orders that include several of the same item Orders made up of big ticket items Rush or Overnight shipping or FREIGHT FORWARDING Shipping to an international address Note: Address Verification Service (AVS) for U.S., UK and Canada Transactions with similar card numbers

18 Fraud Scams - Continued Shipping to a single address with transactions placed on multiple cards Multiple transactions on one card over a short period of time Multiple transactions on one card or similar cards with a single billing address but multiple shipping addresses Multiple cards used from a single IP address for online transactions Orders from Internet addresses that make use of free mail services TDD hearing impaired scam

19 Avoid Chargebacks (Customer Disputes) Cardholders have 120 days from the date of the purchase or expected delivery of service or goods to chargeback an item to the business Protect your business with these best practices: - Properly disclose return and defective merchandise policies - Provide and review the policy in advance with TransFund - Have controls in place to avoid duplicate billing errors - Follow proper shipping/billing procedures. Bill cards only when goods are shipped. Custom orders are an exception. - Respond to bankcard requests for information in a timely manner as all issues are time sensitive. Failure to respond can result in financial loss.

20 PCI Data Security Standards Payment Card Industry (PCI) Data Security Standard (June 2001) Prevent identity theft of consumer information Protect business reputation Protect the integrity of the payment card industry Prevent financial losses to business and financial institutions

21 Bankcard Industry Tools & Resources TransFund and your dedicated Merchant Account Officer

22 For More Information Janie Perry, VP Tim Brown, VP Merchant Services

23 QUESTIONS?