Payments: Introductions and Agenda

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1 The Trend is your friend in Campus Payments: Introductions and Agenda Topics Card Regulation Update Wall Street Reform 2010 Card Act 2009 How Debit cards can affect your business How Debit cards can affect your business Mobile Stats, predictions, corporate examples, applying to campus

2 Wall Street t Reform and Consumer Protection Act [ Dodd-Frank Act ] 533 new regulations 60 studies 94 reports

3 Dodd-Frank Summary Financial i industry overhaul Too big to fail Regulation of financial instruments Consumer protection agency AND

4 The Durbin Amendment Senator Richard Durbin (D-IL) Where the money goes (i.e. Interchange) where have you heard this before?

5 Sources: GAO (analysis); Art Explosion (images). Where the Money Goes

6 The Hidden Credit Card Fees 44% 35%

7 PIN Debit Fee Summary (US) Average $0.35 to $1.50 per transaction Dramatic increases to PIN debit with some networks removing their caps Signature Debit 1.4% of the transaction value Credit Card (Visa and MasterCard) 1.6 to 2.4% of the transaction value

8 A Matter of View Point Debit = PIN Debit Credit = Signature Debit Issuers Banks Lower Fees Less Risk w/pin Fewer Chargebacks $.50 Interlink & Maestro 1.4% $$$ Rewards! No PIN Required No Added Txn Fee Zero Liability* Merchants Schools Consumer s 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

9 Example of PIN Debit Pricing LARGEST POS DEBIT Switch Market NETWORKS Rate % Per Item Fee Cap Fee Share Interlink (Visa) 0.75% $ No Cap $ % Star 0.75% $ $0.65 $ % Pulse 0.65% $ No Cap $ % NYCE 0.65% $ $0.65 $ % The four largest POS debit networks (Interlink, Star, Pulse, and NYCE) process 91% of all ATM POS transactions.

10 Durbin Amendment Timeline Section 1075 of Dodd-Frank Act

11 Key Components of Durbin for Merchants 1. Federal Reserve to control debit interchange 2. Requires 2 unaffiliated Networks on Cards 3. Merchant has right to route transactions ti to the network of least cost 4. Min / Max for credit card acceptance 5. Discount for cash-like payments

12 1. Fed to Set Debit Interchange Proposed cap (from Dec. 2010) $.07 - $.13 Risk/Security Final Ruling April 21 Banks fighting g hard There is an exception for Issuers with assets under $10 billion, as well as Government Issued Cards, and General Purpose Re-loadable Cards.

13 2. Two Unaffiliated Networks Requires 2 unaffiliated Networks on Cards Addresses VISA s monopolistic moves with Interlink

14 3. Merchant Routing Merchant have the right to route transactions to the network of least cost Taking the routing issue out of the hands of consumers, who are influenced by carrots, and putting it in merchants control

15 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 high Allows merchants to set a maximum dollar amount for which a card will be accepted Schools might accept credit cards up to $100, then redirect the rest to a convenience fee service

16 5. Discount for Cash Allows merchants to discount for cash-like payments (even in the same channel) Cash-like payments may include: Signature and PIN Debit ACH Checks Cash Student ID Cards

17 Discount for Cash Price for Tuition Regular Price $1,020 Discount-4-Cash Not Applied Continue here to Pay by Credit Card Visa Mastercard Discover American Express Discount Price: $1,000* Cash-like payments options: ACH/Debit Checks/Cash Student ID Cards (Or) Click here for Regular Price/Credit Card * Price reflects a Discount for using a Cash-like Payment Methods.

18 Visa/US - Debit Overtakes Credit 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%

19 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 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.

20 What the Future Holds for Debit? Regulatory Changes: Limitation on Overdraft Fees (Regulation E) Fed controlled Interchange Cap 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 find Debt rewards will diminishi i Possible per transaction fee to cardholders on all debit

21 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 NO MORE BUNDELD PRICING. In your payment applications In your reconciliation and reporting Revisit Convenience Fees Argument Top reason for not utilizing i C-Fee s No Visa

22 Apply the Durbin Factor to C-Fees Visa (Debit) becomes a viable payment option again 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 away from Convenience Fee service VISA Debit will be accepted on your site, using your Merchant Accounts

23 Credit Card Accountability, Responsibility, and Disclosure Act of 2009 Credit CARD Act Transparency Accountability Mutual Responsibility Signed by President Barack Obama on May 22, 2009

24 Summary -- Credit CARD ACT of 2009 Phase 1: Aug. 20, 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 year 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)

25 Key Provisions Which May Apply to Campus Are you a card issuer? Do you partner with an issuer? Card issuers should not impose excessive fees on cardholders Overdraft/NSF Fees (Reg. E - Debit) Over credit limit fee (CARD Act) Limits credit cards to teens w/out parental consent Strict limitations on marketing to students t Must disclose everything and submit contracts to the Federal Reserve Bank

26 CARD Act Spotlight on Higher Ed Marketing relationships in Question NY AG reviewing more then 300 contracts Parallels drawn to Student Loan Probe

27 Media attention has been growing CBS Money Watch Time Reuters USA Today Washington Post Denver Post Seattle Post Oregonian Fox News Dave Ramsey

28 Mobile Next Topic (time check?) New Technology called the cell phone.

29 A Look Back at Mobile Phones Reminiscing... i i Bag Phone To Car Phone To hand held To Mobile Phone To Smart Phone

30 Smart Phone Predictions (3 Year Range) Virtually all phones sold will be smartphones Smartphones will out-sell laptops, netbooks and PC More users will connect to the Internet via mobile Game changing g real-time commerce platforms and cloud-based services will emerge

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32 Percentage of Students Who Use Mobile Device Daily to Access the Web SOURCE: Educause Center for Applied Research

33 How Do You Use Your Smartphone Today? Keep up with the news Listen to our favorite podcast Texting your kids GPS or Google Maps Alerts and notifications Keep tabs on the social networks Calendars what about tomorrow?

34 In-Store Price Comparison ShopSavvy ScanLife RedLaser Barcode Scanner

35 App Store-to-Phone-to-Bank t t

36 Mobile Banking Usage Increasing 19% of U.S. consumers have conducted d banking transactions on a mobile device Compared to only 9 percent just 18 months ago.* 13.2 million people accessed bank accounts from mobile sites during the month of April, 2010, a 70% increase over a year ago.** * KPMG's fourth annual Global Consumers and Convergence survey ** A recent study by comscore

37 Mobilizing the Bursar s Office Bank of America Mobile Model Student Accounts Students/Parents View Bills Check Balances Make Payments View Payment History Receive Alerts

38 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

39 2-Way Actionable Text Bank of America Citi Chase And more Live Example: text the short code "22551 : "bal" (as in balance) trans (as in transfer). Try it now!

40 If They Text Your School, Will It Text Them Back? Student Account Bal One Card Bal Due Date Reg. Date Refund Date Refund Due Game Time

41 Both Amazon & ebay > $1 Billion (in Mobile Commerce) Amazon announced that it has sold more than $1 billion worth of products through mobile phones ebay is aiming for $1.5 billion in mobile sales after racking up $600 million in

42 Mobilize Campus Commerce Amazon/eBay Mobile Model Campus ecommerce

43 Near Field Communications (NFC) and Mobile Device Visa and MC Discover w/at&t, Verizon, T-Mobile Sprint

44 NFC Transition: Card Sticker Phone Over 150,000 retailers from 20 top brands accept Visa paywave payments, and the list is rapidly growing. Nokia C7

45 Movies Quick Response (QR) Codes Advertising Tickets Boarding Pass Ordering RSVP Car Rental Downloads

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47 Campus Portals Release Mobile Versions Open Source MIT University of Oxford Commercial Blackboard SunGard/Datatel/Oracle

48 Example of a Mobile Portals Campus maps Campus calendar Campus news Campus directory Indiana University web site search Status of key university IT services Access to some LMS content Campus classified ads Emergency contacts Bus schedules Campus alerts, including emergency alerts

49 The ERP s Release Mobile Mobile Connection Starter applications m-apps Course calendars News Feeds Grades

50 More ERP s Release Mobile Access to courses, contacts, events, notifications, news, and maps.

51 elearning Leveraging Mobile

52 Apps in the Classroom

53 Live Session Evaluation Send a text to

54 POD Casting / Anywhere On-Demand Learning

55 Giving i / Donations

56 Text to join Text to give Alumni Relations

57 QLess at UT Dallas Eliminates lines Provides set time Saves time and increases student satisfaction

58 Final Session Evaluation Send a Text to 22333

59 Questions? Thanks! Jeff Rapp TouchNet

60 Come Again! Thanks