u.s. bank payment analytics overview. payment fraud trends 2 reference: association of financial...
TRANSCRIPT
U.S. Bank Payment AnalyticsU.S. Bank Payment Analytics
Overview
Payment Fraud Trends
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Reference:Association of Financial Professionals (AFP), 2011 Payments Fraud and Control Survey
55%
68%72%
71% 71% 73% 71%
0%
20%
40%
60%
80%
2004 2005 2006 2007 2008 2009 2010
Percent of Organizations Subject to Attempted or Actual Payments Fraud
A majority of organizations have experienced payment fraud
Organizations are seeking tools to mitigate their risks from fraud
Payment Fraud Trends
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Reference:Association of Financial Professionals (AFP), 2011 Payments Fraud and Control Survey
93%
25% 23%15%
4% 4%
0%
20%
40%
60%
80%
100%
Checks ACH Debit ConsumerCards
CommercialCards
ACH Credits Wire
Vehicles for Payment Fraud
Commercial cards have built-in fraud controls:Restrict card use to specific types of merchantsEstablish spending limits for specific timeframesSet purchase and transaction limits Run reports that track and monitor expenses
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Commercial Cards: the Benefits Commercial cards have become the
payment tool of choice for all types of business-related expenditures
• Enhanced Control– Set and control spend categories
and transaction limits
– Help ensure compliance with company policies
• Increased Efficiency– Replace cumbersome paper-based
processes with an automated payment solution
– Reduce cost, time and resources needed to procure and pay for goods and services
Commercial Cards: the Challenge Organizations plan to expand commercial card
usage over the next three years• Reduce check usage by more than half
• Double use of commercial cards
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More Time &People
MoreSpend
MoreTransactions
MoreReview
MoreReports
How do you efficiently and cost-effectively monitor transactions for employee fraud and misuse?
Risk within a Card Program Perception: Risk of
loss is quite high Reality: Actual dollar
loss is much lower
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Program Size $100 MM
Average Transaction Size1 $315.00
Total Transactions per Year $317,460
Estimated Amount of Fraud and Misuse
Rate2 $2.38
Amount per Year 20%
Estimated Amount ofPolicy Violation
Rate2 $60 per $1 MMin spend
Amount per Year $60,000.00
Total Amount per Year $140,000.00
References:1, 2 2010 Purchasing Card Benchmark Survey Results, Palmer & Gupta3 2009 U.S. Bank survey of commercial card clients
79% of organizations have allowed perceived risk to be a barrier for card growth3
Cost of Manual Audits High cost to manually
audit transactions• Labor Intensive
• Inefficient
• Error-prone
Program Size $100 MM
Average Transaction Size1 $315
Total Transactions per Year $317,460
Cost to Audit per Transaction2 $2.38
Audit Sample Size 20%
Number of Audits Annually 63,492
Annual Cost of Audit per Year $151,111
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References:1 2010 Purchasing Card Benchmark Survey Results, Palmer & Gupta2 NAPCP Understanding the Processing Costs and Related Costs
How to Mitigate These Issues?
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Reign in your audit costs?
Reduce your risk exposure?
Grow your commercial card program?
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U.S. Bank Payment Analytics
What is Payment Analytics?
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Enhances auditing practices by providing 100% commercial card transaction monitoring• Rules Management: Compares
each transaction to your customized rules to identifyout-of-policy spend
• Case Management: Gives program managers timely information and tools to audit and resolve out-of-policy transactions
Moving from Reactive to Proactive
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Val
ue
of
Act
ion
Time
Detects
relationshipsbetween transactions over time
Event(s)
Proactive Reactive
Issue(s) Problem(s) Loss(es)
$
$$$
How Does Payment Analytics Work?
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Payment Analytics
TransactionAlerts
Cases
RULES
The “Brains” behind Payment Analytics Defined templates contain logical arguments
(i.e., rules)• WHEN THEN statements
Client assigns parameters to the rules• WHEN a transaction meets all
the conditions of the rule,THEN create a response
– Alert: Notifies stakeholdersvia email when ruleviolations occur
– Case: Allows users totrack progress towardsresolving an issue andviolations over time
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Available Rule Templates Unauthorized Merchant Category Code (MCC) Alert Merchant Watch List Alert Transaction with a Non-Preferred Merchant Alert Split Transaction Alert Split Purchase Alert Transaction Close to Single Purchase Limit Alert Large Spend Increase over Average Spend Alert Excessive Use of Convenience Checks Alert Excessive Cash Withdrawals Alert Corporate Travel Card Purchase in Cardholder’s Postal Code Alert Weekend/Holiday Purchase Alert Account Opened/Maintained with Limits Exceeding Standards Alert
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BenefitsImprove Compliance: Manage out-of-policy spend anddetect fraudulent activities
Enhance Control: Audit 100% of transactions versus arandom sample
Reduce Risk: Route flagged transactions to the appropriate personnel for review
Increase Efficiency: Streamline the audit process with rules thatare consistently and continually applied across all transactions
Boost Cost Savings: Automate routine audit tasks
Broaden Visibility: Record all case details in one central database
Expand Revenue Share Opportunity: Realize growth incentives by identifying spend leakage
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Questions and Next Steps
Contact your Account Coordinator or ServicePoint to get signed up with Payment Analytics
©2011 U.S. Bank National Association. All trademarks are property of their respective owners. CPS 1062 (R-11/11)