BANK CARD CONNECTIONS

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1 FIRST Edition 2014 BANK CARD CONNECTIONS Small Merchants Most Susceptible to Card Data Breach Merchants everywhere are paying attention to PCI compliance. 50% more businesses are compliant today than this time last year. Yet small merchants remain unconvinced they are vulnerable to data breaches. Most simply aren t paying enough attention to security. The Payment Card Industry Data Security Standards (PCI DSS) were created in an effort to lower the incidence of identity theft and fraud, and increase security of credit card systems in general, says Jeff Vulgamore, senior account manager for Century Payments. Hackers are targeting small merchants based on the theory that these businesses are not investing in data protection. This merchant sector can be most devastated by a breach. According to a survey published by securitytechnology vendor ControlScan Inc., just 5% of respondents said they suffered a breach. Of these victims, half said the impact had been either medium or high, with high meaning the compromise had nearly forced the merchant out of business. Despite the risks, most small merchants are hedging their bets, not investing time or money on bring their business within PCI compliance. They are failing to purchase new technology, perform system scans or upgrade terminals or web carts. Any organization involved in the processing, transmission, or storage of credit card holder data must be PCI complaint, Vulgamore adds. If cardholder data is stolen and the business is found at fault it could incur fines, penalties or lose the right to accept payment cards. Century Payments can guide your merchants to understand potential risk and manage PCI compliance. For more information, contact Chris Wilson via phone or chris.wilson@centurypayments.com, or Jeff Vulgamore via phone or jeff.vulgamore@centurypayments.com.

2 A Letter from The Bank Card Manager In 2013, BBOK Bank Card focused on continuing to improve our credit, debit and merchant programs. Credit changes included more income to banks, business rewards and new cardholder promotion test groups. Our customers were given several education and user group opportunities in conjunction with our debit partner, STAR. Our merchant provider, Century Payments, added new payment processing solutions and remains focused on educating merchants. Christy Simonsen In 2014 successes will be built upon. Expect activation and usage offers to existing credit card holders, promotion and marketing tools for banks and continued product enhancements on the credit side. Newly available are enhanced business card functionalities. Business customers now have the option of consolidated or individual billing. A business can choose to have the full credit line available to all employees or assign a special line to each employee. Enhancements to mycardstatement. com give one contact person at the business the ability to see all employee cards and balances on one screen. We are pleased to be working with several new debit processing banks this year. We look forward to including these banks in our user group discussions by phone and in person. Sharing best practices and getting questions answered in a small group setting is an incredible benefit to banks of all sizes. We hope all of our First Data debit banks will join us for these shared think tanks. Many changes are on the horizon in the payments industry. With EMV mandates from Visa and MasterCard and fraud liability shifting to the party with the least secure processing methods in the near future it is a time of education and preparation for merchants and issuers. Our merchant provider, Century Payments, is actively educating businesses about their options for the most secure payment technology available, while delivering fast, inexpensive and efficient processing. As new payment technologies become available, rest assured the BBOK Bank Card team is here to help you make choices to help your customers succeed. For specific solutions, feel free to contact one of our team members or myself.

3 Prepaid Card Resources are a Click Away Prepaid cards are increasingly prevalent in customer s wallets. Convenient Cards, BBOK s gift and prepaid card provider, has an online resource to help banks successfully provide prepaid cards. CC Studio Launch Page, at provides information about each of the four card programs available in our Convenient Visa prepaid card suite: Access Cards, Gift Cards, TravelMoney Cards and Incentive Cards. On the launch page you ll find: Comparison charts for reloadable versus non-reloadable programs Answers to frequently asked questions regarding CC Studio A user-friendly guide to determine the best card program for a customer Marketing materials Links to prior issues of The Convenient Quarterly To begin offering prepaid cards to your customers, contact Michelle Mollenkopf at We ll get you started with minimal paperwork and help you order your first round of plastics. CONGRATULATIONS TO THE FALL PROMOTION WINNERS Each fall, banks have the opportunity to participate in the ICBA/Visa annual acquisition promotion. This year s theme was Get Your Winner s Face Ready. More than 30 banks competed for the top spot and coveted prizes. This year s top bank performers were CornerBank and Farmers and Drovers Bank. These banks each won a $250 Visa gift card. Breakroom baskets were awarded to Cottonwood Valley Bank and United Bank & Trust. The top individual prizes, Nikon Coolpix S3500 digital cameras, were awarded to Kelly Linnens and Dalton Rilinger. Congratulations to all of the winners. Gennifer Brown, Jill Smith and Kathi Hawkins (all from CornerBank and all winners!)

4 Emerging Bank Card Technologies As retailers look for new ways to conduct business, they are experiencing the competitive advantage of being able to conduct sales in a number of places. Many businesses have already discovered the flexibility to accept credit card payments wherever the merchant is located simply by attaching an encrypted magnetic strip reader to an Apple or Android mobile device. The way Americans pay for purchases is also ever-evolving. Mobile is king for savvy consumers. The internet and smartphones have changed the nature of payments. According to Mobile Payments Today s 2014 Mobile Payments State of the Industry Report, acceptance of the technology that enables payments through mobile devices is growing steadily but it will take at least two more years for the emerging technology to take hold with consumers. It is vital for banks to stay abreast of new payment options as non-bank competitors continue to fight for a piece of the payment pie. NFC PAYMENTS Near Field Communication (NFC) is here to stay. The technology, which powers a secure and temporary short-range connection between two devices through a simple tap, is being used to share everything from sharing images, syncing games or scanning a product s QR code. Consumers need to get comfortable with the security of the technology before NFC as a mobile electronic payment technology takes off. DIGITAL WALLETS Consumers have used PayPal for years to make secure online payments without entering credit card information with each transaction. The number of digital wallets available is growing rapidly. V.me by VISA and Google Wallet are the latest services that allow consumers to pre-register credit and debit cards into a digital wallet app. Consumers can make a purchase online simply by inputting a password. Payment is made without sending specific card details to the online retailer. In the future, watch for digital technology to combine with NFC to allow consumers to use smartphones at brick-and-mortar locations to make payments, replacing the need for a physical wallet. The reality for bankers is that consumers will continue to embrace new technology, intermingling payment methods more than ever. Banks need to help their business customers process the many ways consumers will want to pay: cash, checks, plastics, NFC payments and digital wallets. BEST PRACTICES TO KEEP YOUR VISA PRODUCTS TOP-OF-MIND FOR EMPLOYEES AND CUSTOMERS Refresh your product knowledge when needed training is available. Use the card. All bank employees & directors get a special employee rate of 3% + Prime! Include credit card brochures or applications in your standard business account information. Offer a credit card application whenever you open a new checking, savings or loan account. Post your unique credit card application links on your customer facing website. Spotlight your credit card product in a branch or loan sales meeting. Reward employees for referring credit card applicants reporting available. Register to participate in BBOK s new account acquisition promotion next year.

5 Credit card industry trends point to continued increase in credit and debit cards as a primary payment source. As of 2012, plastics accounted for 49% share of spend while cash and checks combined for merely 33%. BBOK s credit purchase volume in our universal portfolio is strong. Consumers are making purchases with your bank credit cards in all spending categories including fuel, grocery, restaurants and retail. The banks with the most successful card programs have top management support and a planned, ongoing approach to track and monitor success. Younger consumers, especially students, are more likely to make payments electronically (using both debit and credit) than with other payment forms. Marketing to this demographic segment is essential and creates a relationship point that can grow into other services students need as they embark on financially significant life stages. Getting paid to use a card through rewards is growing in popularity. On average credit card consumers have 4.4 credit cards. Credit products are a convenient solution for consumers needing to make a small purchase or business customers needing short term access to funds. first Edition 2014 Credit and Debit Payments Overtake Traditional Payment Methods INDUSTRY TRENDS U.S. PAYMENT METHOD SHARE OF SPEND SHARE OF CONSUMER SPENDING IN THE U.S Check (-15%) Credit (+4%) Debit (+5%) Cash (-2%) Other (+11%) Q 3Q12 Source: Visa Inc., Payment Panel, 3Q12, Private Label Credit not depicted WHY SHOULD BBOK BANKS PROMOTE THEIR CARD PROGRAM? Every time your customer uses your bank credit card, it puts your brand top-of-mind and reminds the customer that the bank is just a branch visit, phone call, , or text message away should they need any bank service. Promoting your plastic products provides direct financial benefit to your bank. In BBOK s universal program, agent banks receive $25 for each approved application and 5%-20% of the interchange revenue generated from cardholders. With external pressures on other types of loan revenue, the ability to increase non-interest income is a real positive. The process of adding cardholders is easy. Banks simply provide their application to customers and supply a bank reference. All documentation, compliance, risk review, reporting, and service are provided by BBOK leaving your valuable employee resources free to handle larger deposit and loan needs. Credit card products are familiar to most employees so promoting this product can be extremely helpful for banks beginning or re-energizing a sales culture. Teaching employees about the product and how to position it with other bank services could create cross-selling opportunities. BBOK s Bank Card staff is available to support you. Contact Lea Gubitz, Bank Card Marketing Representative at for more information. 29% 21% 20% 18% 12% CURRENT INDUSTRY TRENDS 26% of consumers with both types of cards increased reliance on debit, while 23% are using credit cards more.* 54% of U.S. Credit Card consumers pay their balance in full each month. 84% of students have credit cards and the average age to first adopt a card is 20.8 years. Cash point-of-sale purchases are expected to drop from 27% to 23% by Credit card point-of-sale purchases are expected to grow from 29% to 33% by *Source:

6 555 N. Woodlawn, Building 5 P.O. Box Wichita, KS fax Member FDIC WELCOME ARIANNA BLAKE Arianna has joined the Bank Card team as our new accounts representative. Arianna has been in banking for three years, and has previous experience in financial services and money management. She is currently working on her business degree with a minor in finance. Welcome, Arianna! PRSRT STD U.S. Postage PAID Wichita, KS Permit #431