Presentation is loading. Please wait.

Presentation is loading. Please wait.

Visa Confidential Commercial Payments Overview Oct 2014 Orson Morgan Sr. Account Executive Public Sector.

Similar presentations


Presentation on theme: "Visa Confidential Commercial Payments Overview Oct 2014 Orson Morgan Sr. Account Executive Public Sector."— Presentation transcript:

1 Visa Confidential Commercial Payments Overview Oct 2014 Orson Morgan Sr. Account Executive Public Sector

2 Visa Confidential 2 Agenda Commercial Payments  Visa at a glance  Commercial Payments Trends  Fraud/Risk Mitigation  Tokenization  Regulatory update  RPMG study

3 Visa Confidential| U.S. Local Government Stats & Facts | March Visa at-a-glance Visa is the world’s largest electronic payments network and provider of tailored payment solutions; driving business growth by streamlining procure-to-pay processes, while delivering enhanced control, transparency, and insight 2.2 billion Visa cards 1 (as of June 30, 2013) 14,600 Financial institution clients 1 88 billion Total transactions 2 Visa settles the majority of volume from public sector credit card programs, and has relationships with most issuers competing for public sector business. 3 83% of GSA is Visa-branded 4 41 of 49 states are Visa-branded 76 prepaid programs in 40 states $6.9 trillion Total volume 2 36 million Acceptance locations 175 Currencies Processed Note: Figures are rounded, exclude Visa Europe and are as of September 30, 2013 unless otherwise noted; figures from 4Q13 operational performance data except number of financial institutions and ATMs. Source: 1 Based on payments volume, total volume, number of transactions and number of cards in circulation; 2 Includes payments and cash transactions; U.S. Commercial Card Market Update, Mercator Advisory Group; 4 GSA website, 2013

4 Visa Confidential 4 Current Economic and Fiscal Situation

5 Visa Confidential 5 U.S. Commercial Opportunity Commercial Consumption Expenditure (CCE) spend capture opportunities exist across business segments 5 Year CAGR = 4.8% 2012 U.S. CCE Distribution 100% = $22.8T USA 20% Europe 27% Asia Pacific 36% CEMEA 8% LAC 7% Source: Visa Commercial Consumption Expenditure Index; Economist Intelligence Unit (EIU) modeling and analysis, September Global CCE index data sources include Bureau of Economic Analysis (BEA), U.S. Census Bureau, Organization for Economic Cooperation and Development (OECD), STructural ANalysis (STAN) Database, EuroStat Database, General Government Accounts from the National Accounts of OECD Countries, United Nations Statistics Division National Accounts Main Aggregates Database, EIU proprietary databases, government data and EIU model estimates where government data was unavailable. Large contracted defense spending not included in CCE index. Note: Figures updated September 2013 $ Trillions Large Market $11.4 Government $1.6 Small Business $5.5 Middle Market $4.4 Segmentation By Revenue Small: <$25M Medium: $25M-500M Large: >$500M $ Trillions

6 Visa Confidential 6 Anti-fraud and security measures continue to be top- of-mind for companies, even with fraud rates on the decline Purchasing and Prepaid are primary drivers of U.S. product growth Traditional Corporate Card volumes will benefit from strong business travel levels Mobile innovation and reporting/auditing tools will be two key options for growth outside of classic card benefits Green and Eco-business Initiatives are at the forefront of successful product strategies U.S. Markets show greatest opportunity, but Emerging Markets will play a key role in growth U.S. Commercial Card Growth is Greater than Small Business and volume growth will be led by Visa Large/Middle Market Trends U.S. Commercial Payment Card Purchase Volume by Type Large and Middle Market Trends $Billion USD Source: Packaged Facts, December 2012 Visa Commercial Payments Overview 2014

7 Visa Confidential 7 “State and local government fiscal conditions have improved dramatically, but not as much as the overall economy. Subnational government contributions to GDP growth were essentially flat in 2013… The recovery has continued into 2014, particularly in state hiring.” -Dan White, Moodys

8 Visa Confidential 8 GF Spending Expected to Grow for 4 th Straight Year, Although Below Average 36-year historical average rate of growth is 5.6 percent *Fiscal 2014 numbers are enacted Source: NASBO Fall 2013 Fiscal Survey of States

9 Visa Confidential 9 GF Spending Exceeding Pre-Recession Level Source: NASBO Fall 2013 Fiscal Survey of States *Fiscal 2014 numbers are enacted

10 Visa Confidential 10 State employment declined 161,000 from Aug – Jan – State government employment declined by 6,000 positions in January Local employment declined 574,000 from July 2008 – Jan – Locals reduced positions by 11,000 in January State and Local Employment Cuts State and local employment has declined 735,000 from the start of the recession through January 10 Source: Bureau of Labor Statistics

11 Visa Confidential 11 Revenues improving, surpluses expected Enacted net tax cuts in 2 of the last 3 fiscal years State and local sector is contributing (some) to GDP growth rather than detracting Improvements to the State Fiscal Environment

12 Visa Confidential 12 Tighter Resources Debt and Pension Liability State Revenue Infrastructure Federal Cuts Challenges: Long Term

13 Visa Confidential 13 Stable rating outlook for states currently Fitch (Dec. 2013): The financial position of most states has noticeably improved since the recession. Standard & Poor’s (Dec. 2013): State governments come into 2014 with revenue and spending better aligned Moody’s (Dec. 2013): US states sector is supported by broad and diverse economies, low debt burdens… State Debt/Ratings Outlook

14 Visa Confidential 14 Fraud Awareness, Prevention and Mitigation

15 Visa Confidential 15 Fraud, Abuse, & Misuse: Definitions  Fraud – The theft card information by fraudsters Abuse – Intentionally or unintentionally violating policies and procedures for personal gain Misuse – Intentionally or unintentionally violating policies and procedures for work related gain  Account takeover (information change)  Mail thefts  Counterfeit cards  Lost/Stolen cards  Mail order/telephone order  Skimming  Database Hacking  Franchise Software Hacking  Sniffing  Phishing

16 Visa Confidential 16 A layered approach Build and enhance stakeholder trust in Visa as the most secure way to pay and be paid Our Strategy Trust and Partnership ADVANCE Execute risk strategies for emerging products and channels PREVENT Minimize fraud in the payment system PROTECT Protect vulnerable account data RESPOND Monitor and manage events that occur

17 Visa Confidential 17 RESPOND Monitor and manage events that occur PROTECT Protect vulnerable account data PREVENT Minimize fraud in the payment system EMV chip Verified by Visa Visa Advanced Authorization Visa Consumer Authentication Service Dynamic Authentication Intelligent Authorization Data Security Data Elimination Breach Response Cardholder Empowerment Shrink Zone of Impunity Non-storage Encryption, tokenization PCI standards Payment gateways Proactive Alerts (CAMS) Transaction Alerts Law enforcement support Chargeback & Fraud programs Global Brand Protection programs A layered approach Our Strategy: We have the Tools A layered approach

18 Visa Confidential 18 Visa U.S. EMV roadmap Technology Innovation Program (TIP) Acquirer Chip POS Processing Mandate POS Liability Shift U.S. domestic and cross-border Acquirer Chip ATM Processing 1 Mandate AFD Liability Shift ATM Liability Shift U.S. domestic and cross border October 2012April 2013 October 2015 October 2017 Note: POS = point of sale; AFD = automated fuel dispenser 1 Requirement for third-party processors only

19 Visa Confidential 19 EMV deployment status 1 Visa data as of end December 2013 Visa – U.S million EMV cards issued 520,000 merchant outlets EMV enabled 8% of U.S.-issued cross-border transactions are chip-on-chip Visa – Global 1 1 billion chip cards issued 43% of all POS transactions originate from chip terminals 54% of all ATM transactions originate from chip ATM terminals Industry Status Based on EMVCo Q data combined from American Express, Discover, JCB, MasterCard, UnionPay and Visa (does not include U.S.) 2.3 billion EMV cards have been issued globally 36.9 million EMV terminals have been deployed globally

20 Visa Confidential 20 Losses from Misrepresentation and Internal and External Frauds Source: RPMG Purchasing Card Benchmark Survey 2012

21 Visa Confidential 21 Tokenization

22 Visa Confidential 22 Payment Token Standard at a glance… Payment Token Standard A Payment Token is a “non-financial identifier” that can be used in place of an original payment credential to initiate a payment transaction. Tokens replace sensitive data with a surrogate value that is not mathematically reversible while encryption scrambles information into an unreadable format which is reversible only with the right key.  Global & Multi-Channel  Able to be passed through or routed by existing and new payment ecosystem players  Distinct and identifiable in system  Deployable as static or dynamic (limited use, time limits)  Compatible with existing payment technologies (Web, NFC, POS standards)  Supports all regulatory obligations (e.g. routing decisions)

23 Visa Confidential 23 Regulatory update

24 Visa Confidential 24 Surcharging Frequently Asked Questions What will it take for a merchant to be able to surcharge? How will the process be regulated? What can a client do if they feel a merchant should not be surcharging? How does surcharging notification work? Are Purchasing Cards considered Credit Cards? Does this impact Debit Cards? How many merchants have already signed up to surcharge?

25 Visa Confidential 25

26 Visa Confidential 26 Settlement Update – “Check-Out Fees” The card networks (Visa and MC) and several bank issuers have reached a preliminary agreement on the interchange lawsuit filed by merchants. The lawsuit was brought in 2005 by merchant plaintiffs alleging that banks and card payment networks restricted competition on interchange rates. With the preliminary agreement, Beginning Jan 27, 2013, merchants will be able to add “checkout fees” (surcharge fees) for Visa & MasterCard credit card transactions per the terms of the settlement agreement. The terms apply to all Visa and MasterCard credit cards. Debit and Prepaid cards cannot be assessed “checkout fees”. 10 U.S. states have surcharging restrictions including California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

27 Visa Confidential 27 Settlement Update – “Check-Out Fees” Check-Out fees are being imposed solely at the merchant/supplier discretion. A merchant/supplier must disclose the check-out fee at the point of sale (or online check out screen). Also, merchants/suppliers are required to provide a separate line item on the receipt that shows the dollar amount of the fee. (example provided on next slide) Each merchant will determine how much the “checkout fee” will be if they decide to charge one, however, no merchant may charge more than 4% of the transaction amount. Merchants are required to disclose the amount of the surcharge before you make a purchase; look for signs at the store entrance and at the cash register or point of sale. U.S. Merchants that intend to surcharge must complete a notification form with Visa or MC 30 days in advance of charging the fee

28 Visa Confidential 28 Settlement Update – “Check-Out Fees” Client Questions and Disputes Clients can access information from Visa directly: Follow the links below for additional information: Visa: charging-faq-by-merchants.pdf charging-faq-by-merchants.pdf If a cardholder believes that a charge is questionable (they were charged more than 4% or the fee was not disclosed upfront), they should contact Visa. Follow the link below in order to report a merchant violation: Visa Customer Assistance Center: Report a Merchant Violation Online Form: https://usa.visa.com/checkoutfees/contact.js p https://usa.visa.com/checkoutfees/contact.js p

29 Visa Confidential 29 RPMG 29

30 30 Purchasing Card Spending in North America (in $ billions) Actual Expected Source: 2014 Purchasing Card Benchmark Survey, RPMG Research

31 31 Purchasing Card Volume Growth Across all respondents, the percentage growth in (27%) was higher than the previous six years. Source: 2014 Purchasing Card Benchmark Survey, RPMG Research

32 32 Key Benchmarks Source: 2014 Purchasing Card Benchmark Survey, RPMG Research Spending per Transaction, Monthly Transactions per Card, Spending per Card,

33 33 Current P-Card Spending by Category (in $ billions) Source: 2014 Purchasing Card Benchmark Survey, RPMG Research

34 34 Purchasing Card Wallet Share Transactions under $2,500 The percentage of under $2,500 transactions have been increasingly shifting to purchasing cards, largely shifting from paper checks. Percent of Transactions Under $2,500 Paid with Card Source: 2014 Purchasing Card Benchmark Survey, RPMG Research * In 2003, the capture category was under $2,000

35 35 The percentage of $2,500 to $10,000 transactions have been increasingly shifting to purchasing cards from paper checks. Purchasing Card Wallet Share Transactions $2,500- $10,000 Percent of Transactions $2,500-$10,000 Paid with Card Source: 2014 Purchasing Card Benchmark Survey, RPMG Research * In 2003, the capture category was $2,000-$10,000

36 36 Visa Confidential Key Purchasing Card Benefits Cost per transaction Cycle Time Process Simplification PER TRANSACTION Traditional paper- based PO format Plastic purchasing card $90.20 $20.38 Savings of $69.82 DAYS Traditional paper- based PO format Plastic purchasing card Savings of 8.0 MANAGER APPROVALS Traditional paper- based PO format Plastic purchasing card Source: 2014 Purchasing Card Benchmark Survey, RPMG Research

37 37 Achieving High Performance Organizational policy, internal processes, and program controls are fundamental components of the architecture of a Best Practice program. Process ControlPolicy Source: 2014 Purchasing Card Benchmark Survey, RPMG Research

38 38 Policy Best Practice Areas Leading organizations adopt best practices in five key card policy areas. Source: 2014 Purchasing Card Benchmark Survey, RPMG Research

39 39  Ensure optimal card distribution  Regularly evaluate policies related to allowable spend categories and update as needed  Mandate card use for all eligible categories of purchases  Foster ongoing senior management support of the purchasing card program  Implement rewards related to purchasing card program performance Policy: Client Checklist of Best Practices Source: 2014 Purchasing Card Benchmark Survey, RPMG Research

40 40 Control Best Practice Areas Leading organizations adopt best practices in three control related areas. Source: 2014 Purchasing Card Benchmark Survey, RPMG Research

41 41  Revisit transaction and monthly spend limits to ensure maximum utility from the card program  Conduct regular data mining to ensure effective control and compliance  Evaluate and optimize card issuance criteria Control: Client Checklist of Best Practices Source: 2014 Purchasing Card Benchmark Survey, RPMG Research

42 42 Process Best Practice Areas Leading organizations implement best practice processes to optimize purchasing card use and use p-cards as an innovative tool to improve business processes Source: 2014 Purchasing Card Benchmark Survey, RPMG Research

43 43  Quantify and track purchasing card program cost savings.  Implement an electronic accounts payable (EAP) solution to augment the purchasing card program  Implement a virtual card solution to augment the purchasing card program  Conduct regular spend analyses and policy and procedure reviews to ensure program optimization  Integrate and automate card program data in the ERP system Process: Client Checklist of Best Practices Source: 2014 Purchasing Card Benchmark Survey, RPMG Research

44 Unanswered Questions?


Download ppt "Visa Confidential Commercial Payments Overview Oct 2014 Orson Morgan Sr. Account Executive Public Sector."

Similar presentations


Ads by Google