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The Trend is your friend in Campus The Trend is your friend in Campus Payments:
Introductions and Agendag
Topics
Card Regulation Update Card Regulation Update– Wall Street Reform 2010– Card Act 2009
– How Debit cards can affect your businessHow Debit cards can affect your business… Mobile
– Stats, predictions, corporate examples, applying to campus
W ll St t R f d Wall Street Reform and Consumer Protection Act[ Dodd-Frank Act - 2010 ]
• 533 new regulations• 60 studies• 94 reports
Dodd-Frank Summary
Fi i l i d t h l Financial industry overhaul “Too big to fail” Regulation of financial instruments Consumer protection agency AND…
The “Durbin Amendment”
Senator Richard Durbin (D-IL)
“Where the money goes”…(i.e. Interchange)
…where have you heard this before?
Where the Money Goes
Sources: GAO (analysis); Art Explosion (images).
The Hidden Credit Card Fees
44%
35%35%
Fee Summary (US)
PIN Debit– Average $0.35 to $1.50 per transaction
D ti i t PIN d bit ith Dramatic increases to PIN debit with some networks removing their caps
Signature Debitg– 1.4% of the transaction value
Credit Card (Visa and MasterCard)( )– 1.6 to 2.4% of the transaction value
http://www.federalreserve.gov/pubs/feds/2009/200923/200923pap.pdf
A M tt f Vi P i tA Matter of View Point
IDebitDebit = PIN Debit= PIN Debit CreditCredit = Signature Debit= Signature Debit
Issuers“Banks”
I t li kI t li k
• Rewards!
• No PIN Required• Lower Fees
$$$$$$InterlinkInterlink
& Maestro& Maestro
No PIN Required
• No Added Txn Fee
• Zero Liability*
• Less Risk w/PIN
• Fewer Chargebacks
$$
Merchants“Schools”
Consumers
“Students
1.4%1.4%$.50$.50
“Students”Merchant are forced to raise the cost of all goods
National Retailers Association estimates it cost the average American Family $427 per/year in higher retail prices
Example of PIN Debit PricingLARGEST POS DEBIT NETWORKS Rate % Per Item Fee Cap
Switch Fee
Market ShareNETWORKS Rate % Per Item Fee Cap Fee Share
Interlink (Visa) 0.75% $0.1500 No CapNo Cap $0.0350 40.5%
Star 0.75% $0.1500 $0.65 $0.0425 28.7%
Pulse 0.65% $0.1000 No Cap $0.0700 11.6%NYCE 0.65% $0.1000 $0.65 $0.0375 9.8%
The four largest POS debit networks (Interlink, Star, Pulse, and NYCE) process 91% of alland NYCE) process 91% of all ATM POS transactions.
Durbin Amendment TimelineSection 1075 of Dodd-Frank Act
Key Components of Durbin for Merchants
1 Federal Reserve to control debit interchange1. Federal Reserve to control debit interchange2. Requires 2 unaffiliated Networks on Cards3 M h t h i ht t t t ti t3. Merchant has right to route transactions to
the network of least cost4 Min / Max for credit card acceptance4. Min / Max for credit card acceptance 5. Discount for “cash-like” payments
1. Fed to Set Debit Interchange Proposed cap (from Dec 2010) Proposed cap (from Dec. 2010)
– $.07 - $.13– Risk/SecurityRisk/Security– Final Ruling April 21
Banks fighting hardg g
There is an exception for Issuers with assets under $10 billion, as well as Government Issued Cards,
and General Purpose Re-loadable Cards.
2. Two Unaffiliated Networks
Requires 2 unaffiliated Networks on Cards Addresses VISA’s monopolistic moves with
I t li kInterlink
3. Merchant Routing
Merchant have the right to route transactions to the network of least costT ki th ti i t f th h d f Taking the routing issue out of the hands of consumers, who are influenced by carrots, and putting it in merchants controland putting it in merchants control
4. Minimum / Maximum Amount for CC
Merchants can refuse cards for transactions under $10
Food courts with low average tickets might not accept credit cards as the cost average per/transaction may be too highbe too high
Allows merchants to set a maximum dollar amount for which a card will be acceptedamount for which a card will be accepted
Schools might accept credit cards up to $100, then redirect the rest to a convenience fee service
5. Discount for Cash
Allows merchants to discount Allows merchants to discount for cash-like payments (even in the same channel)the same channel)– Cash-like payments may include:
Signature and PIN Debit ACH Checks Cash Student ID Cards
Discount Price: $1,000*
“Discount for Cash” Price for Tuition Regular Price $1,020
Cash-like payments options:– ACH/Debit– Checks/Cash
g $ , Discount-4-Cash Not Applied Continue here to Pay by
Credit Card…– Student ID Cards– (Or) Click here for Regular
Price/Credit Card
– Visa– Mastercard– Discover– American Express
* Price reflects a “Discount” for using a Cash-like Payment Methods.
Visa/US - Debit Overtakes Credit- 2010 Stats -
Debit (Signature and PIN)– Total purchase volume up 7.9%– Accounts open up 22.3%
Credit– Total purchase volume down 7.3% – Accounts open down 11.6%
Debit Cards the Big Winner (’09)
For the first time since the Fed started tracking payment trends, debit cards surpassed checks as the most used non-cash payment option in America Debit card usage increased by 14 8% per year over the course ofused non-cash payment option in America. Debit card usage increased by 14.8% per year over the course of the study and accounts for nearly 35% of all non-cash payments. That represents an annual increase of 12.8 billion transactions from the last study, which was released in 2007.
What the Future Holds for Debit? Regulatory Changes:Regulatory Changes:
– Limitation on Overdraft Fees (Regulation E)– Fed controlled Interchange Capg p
Unintended Consequences (Banks will…)– Push “Opt-in” to overdraft “protection”
So they can continue to collect over draft fees
– Free checking will be harder to findD bt d ill di i i h– Debt rewards will diminish
– Possible per transaction fee to cardholders on all debitdebit
Expand Debit Acceptance
Suggested Debit Strategy Expand Debit Acceptance
– Revisit agreements with commerce (software) providers
Unbundle Signature Debit from Credit – In your processing contracts
More important now to be on a “Cost Plus” pricing model More important now to be on a Cost Plus pricing model NO MORE BUNDELD PRICING.
– In your payment applications – In your reconciliation and reporting
Revisit Convenience Fees ArgumentT f t tili i C F ’ N Vi– Top reason for not utilizing C-Fee’s…No Visa
Apply the “Durbin Factor” to C-Fees Visa (Debit) becomes a viable payment Visa (Debit) becomes a viable payment
option again– In the past 70% of card payers (i e Visa) had to– In the past, 70% of card payers (i.e. Visa) had to
make alternative arrangements– Now 55-60% of those (i.e. Debit) will have a free
option All Signature Debit cards will be re-directed
f C i F iaway from Convenience Fee service– VISA Debit will be accepted on your site, using your
Merchant AccountsMerchant Accounts
C dit C d A t bilit R ibilit Credit Card Accountability, Responsibility, and Disclosure Act of 2009
“Credit CARD Act”– Transparency
A t bilit– Accountability– Mutual
ResponsibilityResponsibility
Signed by President Barack Obama on May 22 2009Signed by President Barack Obama on May 22, 2009
Summary -- Credit CARD ACT of 2009 Phase 1: Aug. 20, 2009
– 45-day advanced notice of any rate increase– Right to cancel card prior to any rate increase– If you cancel, original interest rate used to payoff balance– Statements must be mailed 21 days prior to due date
Phase 2: Feb. 22, 2010– Rates can not be increased on existing balance for one yearg y
Retroactive rate increases are now prohibited– Improved disclosures
Statements must include a box that shows how much you’ve paid in interest and fees
Must clearly explain the consequences of making only minimum payment Must show what your monthly payment must be to pay off in three years Clearly show the due date (due date must be the same each month) Clearly show the due date (due date must be the same each month)
Key Provisions Which May Apply to Campus
– Are you a card issuer?y Do you partner with an issuer?
– Card issuers should not impose excessive fees on cardholdersexcessive fees on cardholders Overdraft/NSF Fees (Reg. E - Debit) Over credit limit fee (CARD Act)
Limits credit cards to teens w/out– Limits credit cards to teens w/out parental consent
– Strict limitations on marketing to t d tstudents
– Must disclose everything and submit contracts to the Federal Reserve Bank
CARD Act Spotlight on Higher Ed Marketing relationships in Question
– NY AG reviewing more then 300 contracts– Parallels drawn to Student Loan Probe
http://www.insidehighered.com/news/2010/10/13/debit#Comments
• CBS Money Watch
Media attention has been growing…
• Time
• Reuters
• USA Today
• Washington Post • Denver Post• Denver Post
• Seattle Post
• Oregoniang
• Fox News
• Dave Ramseyhttp://www.washingtonpost.com/wp-dyn/content/article/2010/10/03/AR2010100304352.html?hpid=topnews
Next Topic(time check?)
Mobile Mobile…
New Technology called the “cell phone.”
R i i i
A Look Back at Mobile Phones
Reminiscing...
Bag Phone To Car Phone To “hand held” To Mobile Phone To Smart Phone
Smart Phone Predictions Smart Phone Predictions (3 Year Range)
Virtually all phones sold Virtually all phones sold will be smartphones
Smartphones will out-sell plaptops, netbooks and PC
M ill t More users will connect to the Internet via mobile
Game changing real-time g gcommerce platforms and cloud-based services will emergeemerge
http://chronicle.com/article/Colleges-Search-for-Their/126016/
Percentage of Students Who Use Percentage of Students Who Use Mobile Device Daily to Access the Web
SOURCE: Educause Center for Applied Research
How Do You Use Your Smartphone Today?
Keep p ith the ne s Keep up with the news Listen to our favorite podcast
T ti kid Texting your kids GPS or Google Maps Alerts and notifications Keep tabs on the social networks Calendars
what about tomorrow? …what about tomorrow?
In Store Price ComparisonIn-Store Price Comparison
ShopSavvy | ScanLife | RedLaser | Barcode ScannerShopSavvy | ScanLife | RedLaser | Barcode Scanner
A St t Ph t B kApp Store-to-Phone-to-Bank
Mobile Banking Usage Increasing
19% f U S h d t d b ki 19% of U.S. consumers have conducted banking transactions on a mobile device
– Compared to only 9 percent just 18 months ago.*p y p j g
13.2 million people accessed bank accounts from mobile sites during the month of April, 2010, a 70% increase over a year ago **increase over a year ago.**
* KPMG's fourth annual Global Consumers and Convergence surveyg y** A recent study by comScore
Mobilizing the Bursar’s OfficeBank of America Student
Students/Parents
Bank of America Mobile Model
Student Accounts
Students/Parents View Bills Check Balances Make Payments Make Payments View Payment
History Receive AlertsReceive Alerts
Information Alerts and Warnings
87% of schools use text messaging emergency alerts.On average 48.9 percent of students sign up.
-- Campus Safety magazine 2010 poll
2 W “A ti bl ” T t2-Way “Actionable” Text
Bank of AmericaBank of America
CitiCiti
ChaseChase
And more…
Live Example: text the short code "22551“:• "bal" (as in balance)
Try it Try it now!now!
•“trans” (as in transfer).now!now!
If They Text Your School If They Text Your School, Will It Text Them Back?
Student Account Bal One Card Bal Due Date Reg. Dateg Refund Date Refund DueRefund Due Game Time
B th A & B > $1 Billi Both Amazon & eBay > $1 Billion (in Mobile Commerce)
Amazon announced that it has sold more than $1 billion worth of products through
bil hmobile phones eBay is aiming for $1.5 billion in mobile sales
after rackingafter racking up $600 millionmillionin 2009
http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=132597
Mobilize Campus CommerceAmazon/eBay Campus eCommerceAmazon/eBay Mobile Model
Campus eCommerce
Near Field Communications (NFC) Near Field Communications (NFC) and Mobile Device
• Visa and MC
• Discover w/AT&T, Verizon, T-Mobile,
• Sprint
NFC Transition: Card | Sticker | Phone
Over 150,000 retailers from 20 top brandsfrom 20 top brands accept Visa payWave payments, and the list is rapidly growing.
Nokia C7Nokia C7
Quick Response (QR) Codes MoviesMovies Advertising Tickets Tickets Boarding Pass Ordering Ordering RSVP Car Rental Car Rental Downloads
Campus Portals Release Mobile Versions Open SourceOpen Source
– MIT http://mitmobileweb.sourceforge.net/
– University of Oxford http://sourceforge.net/projects/mollyproject/
C i l Commercial– Blackboard
SunGard/Datatel/Oracle– SunGard/Datatel/Oracle
Example of a Mobile Portals•Campus maps •Campus calendar•Campus calendar •Campus news •Campus directory •Indiana University web site search •Status of key university IT services •Access to some LMS content•Access to some LMS content•Campus classified ads •Emergency contacts •Bus schedules •Campus alerts, including emergency alerts
The ERP’s Release Mobile
Starter applications
Mobile Connection
pp “m-Apps” Course
calendarscalendars News Feeds Grades
More ERP’s Release Mobile
Access to courses, contacts, events, notifications, news,
dand maps.
eLearning Leveraging Mobile
Apps in the Classroom
Live Session Evaluation
Send a textto “22333”
http://www.polleverywhere.com/multiple_choice_polls/MTM5NDM4NjIyMQ
POD Casting / Anywhere On-Demand Learning
http://www.acu.edu/technology/mobilelearning/conferences/summit/2009/podcasts.htmlhttp://www.acu.edu/technology/mobilelearning/conferences/summit/2009/podcasts.html
Gi i / D tiGiving / Donations
Alumni Relations Text to join…Text to join… Text to give…
QLess at UT Dallas
Eliminates lines P id t ti Provides set time Saves time and increases student
satisfactionsatisfaction
Final Session EvaluationSend a Text to 22333
Questions?Questions?QQ
Thanks!Thanks!
Jeff Rapp TouchNet913.599.6699
Come Again!g
Tha ksThanks