Why Is This So Difficult? Taking Payments the Easy Way Tuesday, June 2 10:20 12:00 2 CPE Moderator: Speakers: Cheryl Pa*elli, City of Boulder, CO Robert Gongwer, Wells Fargo Joe Helmy, MasterCard Rebecca Villareal- Mayer, City and County of San Francisco
GFOA Best PracRce: Electronic Payment and CollecRon Systems o Types of Electronic CollecRon Methods Fedwire, ACH, Credit Cards, Electronic Check Conversions o Advantages Accelerate receipts and availability of funds. Ease of payment and customer convenience. Reduce cashiering and accounts receivable costs. Enhance bank reconcilia@on. Reduce return check processing cost. o Disadvantages Paring electronic collec@on systems with A/R systems. Internal controls moves to informa@on technology controls. Many small banks may not offer the level of sophis@ca@on necessary for electronic receipts.
GFOA Best PracRce: Electronic Payment and CollecRon Systems o GFOA Recommends Governments Perform Cost/Benefit Analyses, Implement Safeguards and Frequently Evaluate Systems and OpportuniRes on All Aspects of Electronic Payment Systems.
GFOA Best PracRce: AccepRng Payment Cards and SelecRng PC Providers o Many Benefits o Establish Payment Card Acceptance Program Compliant with federal, state and local laws Establish scope of program needed Evaluate Costs/Benefits Fee Structures KEY component Understand all of the FEE structures associated with a program Discount rate, interchange fees, bank fees, administra@ve fees Program structures differ with each type of payment card vendor Know all issues related to using third party payment provider o Use RFP Process to Select Card Processing Service Providers
Robb Gongwer
Discussion Topics o Growing Payment Segments o From Windows to Windows AccepRng Payments in Person and on Devices o ACH vs. Debit Card vs. Credit Card o Steps to Consider When StarRng or Revamping Your Electronic Payment Receivables Program PCI Billing to Cash approach o EMV Update
Impact of Gen Y Growing Payment Segments 79 Million Gen Y consumers First Genera@on IMMERSED in technology Use Social Networking to vet decisions Technology is an expecta@on, not a benefit
2014 TSYS Consumer Payment Study Growing Payment Segments
InnovaRon is driving change Growing Payment Segments trend Mobile trend ApplificaRon trend Social Shopping trend T- Commerce trend Cashless Society
Not just retailers anymore Growing Payment Segments Insurance Healthcare U@li@es Governments Non- Profits Property Management Educa@on Child Care Membership Organiza@ons
Why the shi]? Growing Payment Segments 1) Mail- in payments declining 2) Biller direct is preferred 3) Card payments s@ll growing 4) The underbanked need alterna@ves 5) Finally embracing e- bills
Comparison ACH vs. Debit Card vs. Credit Card ACH Debit Card Credit Card Request for funds WEB/TEL/PPD/CCD Business to Business Addenda records included for certain types More cost effec@ve Ideal for bill payments Auth captures funds if available Consumer driven Interchange capped by Durbin Amendment Ideal to accept cards at lower costs Auth holds funds Consumer driven Level 2 data/level 3 data More costly Ideal for general/retail purchases
Steps to Consider: Electronic Payment Receivables Program What is PCI DSS? o Payment Card Industry Data Security Standards o Industry tools and measurements to ensure the safe handling of sensirve informaron o Applies to all merchants and third party service providers
Steps to Consider: Electronic Payment Receivables Program When does PCI & PA- DSS apply? Processing Storing Transmidng
Steps to Consider: Electronic Payment Receivables Program Remove payment informaron off of your network COST OF NON COMPLIANCE : If a Level 3 merchant is found to be non- compliant they can be fined up to $25,000 per month. COST OF BREACH : Merchants bear the cost of all card replacements and card holder no@fica@ons. Cost per breached record: between $100 and $300. COST OF CUSTOMERS: The price of your ins@tu@on's damaged reputa@on is difficult to quan@fy... COST OF NON COMPLIANCE
Steps to Consider: Electronic Payment Receivables Program Common goals Reduce: Consolidated reporrng Cost Complexity Risk Single integraron for mulrple channels POS IVR Web Mobile ERP MOTO
Steps to Consider: Electronic Payment Receivables Program A different perspecrve: Billing to Cash accounts receivable order deliver bill deposit match post ereceivables Print Services Online Bill Presentment Payment Gateway Merchant Services ACH Mobile
The Right AR Track
Steps to Consider: Electronic Payment Receivables Program OpRmizing Accounts (electronic) Receivables Collect more quickly and efficiently Apply cash receipts faster Reduc@on in Past Due Reduc@on of manual interven@on 19
Steps to Consider: Electronic Payment Receivables Program OpRmizing Accounts (electronic) Receivables Slow track Aging Technology Fast track Advanced $$$ Independent Cost to process Payment channels $ Integrated Time to process ReacRve CommunicaRon ProacRve
think Billing to Cash ReporRng Presentment Vehicle Payment Types Government / InsRtuRon Lockbox WFPG Automated Receivables Manager WFPG API WFPG Manual Print Services E- Bill (WEB) Mail E- Bill (WEB) Customer Ecommerce Sites (WEB) Phone (TEL) POS Payment Gateway Card Card and ACH Card and Mobile Payer
think Billing to Cash ReporRng Presentment Vehicle Payment Types Government / InsRtuRon Lockbox WFPG Automated Receivables Manager WFPG API WFPG Manual Print Services E- Bill (WEB) Mail E- Bill (WEB) Customer Ecommerce Sites (WEB) Phone (TEL) POS / Mobile Device Payment Gateway Card Card and ACH Card and Mobile Payer
think... Billing to Cash ReporRng Presentment Vehicle Payment Types Government / InsRtuRon Lockbox Automated Receivables Manager Applica@on Program Interface Manual Pull Print Services E- Bill (WEB) Mail E- Bill (WEB) Customer Ecommerce Sites (WEB) Phone (TEL) POS / Mobile Device Payment Gateway Card Card and ACH Card and Mobile Payer
Steps to Consider: Electronic Payment Receivables Program The Rme for change has come and the deadline is October 2015 Eurocard MasterCard Visa Has reduced card present fraud by 84% in Europe 1 Liability for counterfeit card transacrons will shi] to merchants not supporrng new EMV standards 1 Visa and EMVCo studies 24
Joe Helmy
Card Acceptance: Pricing and Fee Structure o Pricing Models Interchange Plus Tiered Subscrip@on/Membership o Fees Interchange Reimbursement Fees and Assessments Sta@c Fees Payment Gateway Fees PCI Fees Terminal Fees Networks Others: Monthly Fees, Minimum Fees, Online Repor@ng, IRS Repor@ng Fees, Statement Fees, Early Termina@on Fees
Credit vs. Debit Shared Benefits o Next day funds, where available o Consumer sarsfacron, preferences are leaning towards cards o Ease of integraron online and mobile Credit Debit o Interchange Rate: 1.55% + $0.10* o Interchange Rate: Regulated: 0.05% + $0.22* Unregulated: 0.65% + $0.15, capped at $2.00* Example: $1000 Charge Interchange Only $15.60 * Consumer Cards, as of May 2015 Example: $1000 Charge Regulated Unregulated $0.72 $2.00
Outlook o EMV What is EMV? EMV chip technology is becoming the global standard for credit card and debit card payments. Named aler its original developers (Europay, MasterCard and Visa ), this technology features payment instruments (cards, mobile phones, etc.) with embedded microprocessor chips that store and protect cardholder data. This standard has many names worldwide and may also be referred to as: "chip and PIN" or "chip and signature." Liability shil date is October 1 st! 121 DAYS! o Contactless Payments: Apple Pay and Samsung Pay o ewallets: MasterPass, Google Wallet, Visa Checkout, Serve o Millennials: Entering the workforce and becoming tax- payers and homeowners
Rebecca Mayer
What We Do At TTX The Office of the Treasurer & Tax Collector serves two basic funcrons for the residents of the City and County of San Francisco: The collec@on of taxes and other CCSF revenue in excess of $2 billion annually The conserva@on and oversight of monies before disbursement. TTX manages all city funds including inves@ng in the City s porsolio of pooled funds
Credit Card Fee Structure o FIS Global Taxpayer Pays Convenience Fee Business Taxes 2.55% Credit Cards (American Express, Discover, MasterCard, Visa) $3.95 Flat Fee Debit Cards Free Electronic Checks Property Taxes and Delinquent Collec@ons 2.25% Credit Cards (American Express, Discover, MasterCard, Visa) $3.95 Flat Fee Debit Cards Free Electronic Checks o Over the Counter POS Processing TTX Absorbs Fees Delinquent Collec@ons Limited Golf Cards Water Payments
Payment Behavior 7/1/13-6/30/14 ACH/WIRE 13% Over the Counter 8% Mail Remi*ance 79%
Break Outs Over the Counter Break Out Other Break Out Paper Check, 412 Credit Card, 7827 ACH / Online, 158,231 Secured Wire, 1554 Cash, 33,228 Check, 59,326 Mail - Check, 1,002,518
Online Payment Break Out MasterCard, 9,447 Discover Card, 682 Pinless Debit, 2,297 Visa, 29,711 echeck, 56,460 American Express, 8,867
Choosing the Right SoluRon
Robust Remi*ance Engine
Robust Remi*ance Engine Proposed Workflow Singles & Multi s August 12, 2014 CUS Job (background) p1load Data Completion Balance amounts wth Name and Address Amount Due = Check(s)? Yes Mark amount as paid And Kill lookup to verify amounts Name Address Amount assignment No Mark amount as paid And Kill Yes Anything on the memo line to indicate taxpayer intent? (AFE) Exceptions Yes Amt Due < checks? No Reject No Proposed Workflow Exceptions Client August 12, 2014 Load Into Exceptions Client Revalidate The MS Field Item Missing Stub That Wasn t Sent In Or Inserted? No Does The Item Have A Donation Amount But MS Was Not Set? No Does The Item Appear To Be A Commingled Payment? No Reject Yes Yes Yes Insert Stub Insert Art Fund Document Send To Commingled Client Kill
Roadmap A mix of remivance improvements and credit card expansion Summer 2015 Requirements Remivance Improvements Discovery Credit Card Expansion Fall 2015 Remivance Tes@ng Credit Card Equipment Upgrade Winter 2015/2016 Remivance Enhancement Go Live Credit Card Over the Counter Expansion
QuesRons
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