the convergence of payments drivers and solutions
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The Convergence of Payments Drivers and Solutions. John M. Curtis, AAP Vice President and Senior Product Manager Bank of the West. The Convergence of Payments. Agenda Industry Overview Drivers Solutions Considerations Emerging Technologies. 2. Industry Overview. Electronic Payments - PowerPoint PPT PresentationTRANSCRIPT
©2007 Bank of the West. Member FDIC
The Convergence of PaymentsDrivers and Solutions
John M. Curtis, AAPVice President and Senior Product Manager
Bank of the West
The Convergence of Payments
Agenda
Industry Overview
Drivers
Solutions
Considerations
Emerging Technologies
2
Industry Overview
Electronic Payments 2004
Integration of ARC (Accounts Receivable) Check Conversion
Electronic Payment Volume exceeded Paper Check Volumes
Commercial Electronic Payments grow by 23.7%
2005
Online Banking Customers grew by 27% to nearly 40MM
Bill Payment use increased by 36%
2008
Over 18.2 Billion ACH Payments = $29 Trillion
First full year for BOC (Over 78 million payments)
WEB volume increased 19.7% to 2.1 billion payments
B2B payments exceeded 1 billion addenda records
Addenda Record growth represented a 14.6% increase over 2007
3
Industry Overview
Paper Checks
2003 - 2006
The number of checks paid decreased 6.4 percent per year
Paper check volume decreased 6.7 billion by the end of the period
Average Value of Checks Paid increased from $1,104 in 2003 to $1,366 in 2006.
Paper check volumes continue to decline
Although still in circulation, checks are going the way of the . . .
Gee, Thanks!
4
Industry Overview
Image Exchange
Federal Reserve consolidated all Paper Check Processing to Cleveland Office in February 2010.
Check Images processed in Atlanta
Remote Deposit Capture has grown 8 times in market size from 2006 – 20081
Many municipalities have adopted a hybrid of Remote Deposit Capture and ACH Conversion
1 – Global Concepts Study (June 2008) 5
Industry Overview
Commercial Cards Government prepaid applications offer substantial global opportunity with
recent estimates placing the total opportunity at $284 billion1
Government usage of prepaid cards has become one of the fastest-growing segments of prepaid in recent years2
The average Travel Card rate of expected increase of 2011 over 2008 spending levels is 4.7% for Government and Not-for-Profit segments.
PIN Debit Card usage now exceed Credit Card usage Three Primary Government Opportunities:
Social Benefits and Entitlement
Employee Payroll and Incentives
Government Business and Operations
Consider your ‘Un-Banked’ partners and constituents.
2-Boston Consulting Group, May 2008. Research commissioned by MasterCard
1-Study by CPI6
Payment Drivers
Business Drivers - Innovators
Mostly Private Industry / Large Billers
Telecom (Phone / Internet / Cable)
Credit Card Companies
Encouragement to Go Green!
Payment Providers
PayPal
OBO Pay
E-Wallets
Bank Issued Credit Cards
Capitalizing on Consumer Safety Regulations and Products
Points Programs = More Usage = More Revenue
7
Payment Drivers
Consumer Drivers / Adopters
Why is this happening and who’s making it happen?
Consumers want:
Ease of Use
Security
Rewards
Confidence – Comes from regulations
Regulation E
Credit Card Warranties
8
Payment Drivers
Government (ABA Newsbytes: April 20, 2010)
Treasury Goes Green & Saves Green
Broad New Initiative Will Increase Electronic Transactions, Save More Than $400 Million, 12 Million Pounds of Paper in First Five Years Alone
WASHINGTON – With Americans poised to celebrate the 40th anniversary of Earth Day this week, the U.S. Department of the Treasury today announced a broad new initiative to dramatically increase the number of electronic transactions that involve Treasury and millions of citizens and businesses, a move that is expected to save more than $400 million and 12 million pounds of paper in the first five years alone. In addition to greatly reducing costs, enhancing customer service and minimizing Treasury's environmental impact, the move from paper to electronic transactions will increase reliability, safety and security for benefit recipients and taxpayers.
Full Article: http://www.treas.gov/press/releases/tg644.htm
9
Payment Drivers
So many drivers . . . WHY?
Consumers and businesses want multiple payment choices
Checks? (Yes! Checks!)
ACH Debits
Card Payments
In the end it’s all money!
Ease of use
Cost
Safety / Security
Added benefits10
How many are dropped in the mail at 11:59 PM each April 15th?
Solutions
You’re telling me I have to accept ALL of these payment types?
How am I supposed to manage this process?
Determine your strategy
Make use of available tools
11
Solutions
ACH Check Conversion vs. Image Exchange
What is the difference?
12
ACH Check Conversion Image Exchange
ACH Network Check Clearing Network
ACH Rules Check 21 Law
Authorization Required No Authorization Required
Opt-Out Provisions / Bus Check Limitations No Opt-Out or Business Check Limitations
Only Sends Data Transmits Images with Data
Generally 100% Next Day Availability Availability Varies
What are the dollars running through your unit?
The benefit of funds availability is stronger than you think.Ask yourself two questions:
What are the cost differences?
Solutions
Multi-Channel Payment Platforms
Accept payments via:
Integrated platform to your Web Site
ACH Payments
Card Payments
CSR
IVR (Interactive Voice Response)
Lockbox (Bank Provided / In-House)
Convert Checks to ACH
13
County of QuahogHow To Pay Property Taxes Payments can be made by the following methods: Mail - P.O. Box 001 Quahog, RI 90058Please make checks payable to:Stuart Griffin, Quahog County Treasurer Phone - Call (213) 555-1212 (Credit card only)Online (Credit card or e-check) Electronic Funds Transfer (EFT) In Person
Solutions
Multi-Channel Payment Platforms
What payment channels are available?
Web Payments
ACH
Credit Card
Check
Converted to ACH
Image Exchange
14
Solutions
Multi-Channel Payment Platforms
How do I know the payment is good?
Identity Verification
Account Validation
Payment Acceptance Databases
Offered by both private companies and financial institutions
Use caution with private companies, you could be taking a gamble
15
Solutions
Here’s a question for you:
Do I care if the payment is good?
What is the service being offered?
Is this a product walking out of the door?
Can I turn off the service?
What are the chances of collection?
What is the true risk?
Can I charge penalties for returned payments?
How much can I charge?
What does my bank charge?
What is the difference?
Is this a revenue opportunity?
16
Solutions
Online Bill Pay
Large volumes from Bill Pay Providers?
FIS
Fiserv
Online Resources
iPay
Consider Consolidated Receivables
One file from all Bill Pay providers
Single ACH Credit
17
Solutions
$
Mike’s Bank
$
Phil’s Bank
$
Tammy’s Bank
CheckFree
FIS
$
John’s Bank
$
Natalie’s Bank
Metavante
Fiserv
$
Taryn’s Bank
$
Nick’s Bank
Princeton eCom
iPay
Current Non-Electronic Bill Pay Flow 18
Solutions
$
Your Bank
$
Mike’s Bank
$
Phil’s Bank
$
Tammy’s Bank
CheckFree
FIS
$
John’s Bank
$
Natalie’s Bank
Metavante
Fiserv
$
Taryn’s Bank
$
Nick’s Bank
Princeton eCom
iPay
Bill Pay Flow with Bill Consolidator19
Considerations
What are my current Payment Challenges?
Do I have a Payments Strategy?
If I change my payment strategy: What is the True Benefit?
Cost Savings
Hard Dollar - Immediate
Efficiencies – Over Time
Expedited Availability
Can I leverage the strategy throughout multiple departments? What will it cost to implement? How will this be funded? What is my ROI? How will training be conducted? How will I track my success? Who is my Payments Czar?
20
Emerging Technologies
The Future is Now!
I’m telling you Marty, paper is out, electronic is on its way out,Your kids will be making Wireless Payments !
21
Emerging Technologies
Kiosk Payments
Constituents can pay their bills through kiosks located at your offices, convenience stores all over the country, or delegated to your region.
Scan Bill, Enter Account or Lookup
Pay by ACH or Swipe Card
Convenience Fee Revenue
22
Emerging Technologies
Mobile Payments
ACH or Card
Multiple Uses
Pay Utility Bills
Send funds to Students
Pay your share for Dinner
No more “I left my wallet at home”
You will remember your phone before your wallet!
23
Emerging Technologies
The Future
Same Day ACH
Federal Reserve expects deployment Q2 2010
No changes to ACH Rules – Only number of processing windows
Financial institutions must opt-in with one another
Faster Returns = Reduced Risk
Same Day Settlement
More Mobile Technology
Pay Merchants by Phone
RFID – (Radio Frequency Identification)
Multiple Payment Options
24
Emerging Technologies
Some Vision – Where are we headed?
Why carry a wallet?
Your cell phone may contain all of this on a SIM Card:
Driver’s License with Picture, Thumbprint, Vehicle Registrations, SSN
All Payment Cards
All Bank Accounts
Blood Type
Donor Information
Complete Medical Records
The name of your Big Brother born in 1984
25
The Convergence of Payments
Questions
26