1. NetcomPaySystem Introduction
Bankcard 101

2. Agenda Company Overview Credit Card History Evolution of Processing
Process Flow
Merchant Services 101
Merchant Processing Expense
Marketing/Prospecting
Statement Review
Back Office Procedures

3. Welcome! Netcom PaySystem
Thank you for your interest in becoming a Netcom PaySystem Regional Sales Agent.
Our company has been in the electronic payments industry since 1987 and our portfolio consists of over 4,000 merchants. We are a newly formed public company out of a new IPO with United eSystems. We have a wide variety of products to offer our merchants to make a progressive package at competitive pricing.

4. Where are we! 980 Canton Street Suite D Roswell, Georgia 30075
Phone:
Fax:

5. Your Team and Operations
Mike Plummer- President
Amy Plummer – Finance Coordinator
Amy will help out with statement analysis as needed.
Sam Spiezio- Vice President of Sales Development
Contact Sam for sales development and marketing questions.
Scott Wegert and Robert O’Brien- Accounts Managers
Contact Scott and Robert for all day-to-day operations and application management.

6. Products and Services
At Netcom PaySystem we constantly monitor changes in the Point of Sale industry with an emphasis on improved service to our Clients.
Credit/Debit Processing
ACH Retail or Internet
Recurring Billing
Check Services including;
Check21
ECC
Check by Phone
Check by Web
Free Check Recovery
InStor BillPay Services Including:
SameDay BillPay
Load all Debit
Load all Wireless
International Wire Transfer
Gift and Loyalty Programs
Merchant Advance
Age and ID Verify or MSB’s
ROAMpay Wireless

7. What Makes us Different?
Customer Service
9-6 M-F
Help Desk 24/7/365
Talk to a live representative
2%-4% Attrition Rate
NO Contracts
NO Exit Penalties
NO PCI Fees

8. Bankcard 101 Credit Card History Overview
First card introduced in 1920’s
First universal card 1950’s by Diners Club
American Express hit the market in 1958
Bank Americard first state wide issuance in 1959
System licensed in other states in 1970

9. Evolution of Processing
There are two types of banks that you need to be aware of in this industry:
Issuing Banks are those banks that issue credit cards to the public.
Acquiring Banks are those banks that set up the merchant to accept credit cards from their patrons
Since the 1950s there have been essentially only four steps to processing a customer’s credit card.

10. Types of Transactions
Manual - The merchant was presented a plastic card that had embossed on the front the name, account number, and expiration date. The merchant made a manual imprint of the card, filled out the sales draft, had the customer sign and then checked a weekly mailer to see if the card was on the unacceptable list. After accepting the days’ transactions, the merchant “batch” them together and take them to the bank. Often the bank would wait up to two weeks for the funds to be made available to the merchant.
Voice Authorization – Everything was very much the same as “Manual” except the authorization process. Voice authorization did away with the mailer by having the merchant call into a central hub to obtain approval from a live voice operator. The merchant was then given an approval code that was written on the sales draft. Following the same deposit methods as with manual system; each night the merchant would take the receipts to the bank as usual.

11. Types of Transactions (Cont.)
Point of Sale Authorization – This was the first time the magnetic strip on the back of the cards came into play. The magnetic stripes are with the cardholders account and bank routing number information. By swiping the card thru the terminal the merchant sends the information via the telephone lines to a central system that authorizes payment. The merchant then batches as usual and takes the drafts to the bank for deposit.
EDC (Electronic Data Capture) - This is the process that we use today. By swiping the card the merchant gets the P.O.S. authorization; however the merchant does not have to make a physical bank deposit. At the end of the day, the merchant electronically batches the information held within the terminal and the deposits are made automatically to the merchant’s checking account within 2 business days.

12. Types of Transactions (Cont.)
Note: With the EDC system there are two kinds of processing:
Host Capture – the transaction is authorized automatically by the processor. This is used for all types of business where the transaction is completed and nothing is left open.
Terminal Capture – is a type of EDC that allows a transaction to stay open, such as needed in the hotel and restaurant industries. An amount of money is entered into the terminal in order to capture this money from the cardholder’s line of credit. The hotel then closes out the transaction at check out and the exact amount is entered into the terminal. The transaction then gets batched and the company receives their funds within two business days.

13. Process Flow

14. Authorization Process
Cardholder presents credit card to pay for purchase
Merchant swipes card, enters the dollar amount, and transmits an authorization request to the merchant bank.
Merchant bank automatically sends authorization request to the Processor (or other platform)
Platform routes the request to cardholder issuer
Issuer approves or declines the transaction.
The Processor forwards the Issuer’s response to the Merchant.
Merchant Bank forwards the response to the Merchant.
Merchant receives the authorization response and completes the transaction accordingly.

15. Typical On-Line Authorization Process, Internet Payment Device

16. Authorization through an Internet Application
Card information (e.g., card type, account number, expiration date) is entered into the Internet application by the cardholder in a secure environment using Secure Socket Layer (SSL) technology
The agency's Internet application, which automatically links to an Internet payment gateway, transmits the encrypted information to the selected gateway. 
The gateway accepts the encrypted data via the Internet, decrypts the information, reformats the information to Processor's specifications and transmits it to Processor’s over a leased-line.
The Processor's system recognizes the authorization request as being for a Visa, MasterCard, American Express or Discover card.  In the case of Visa or MasterCard, the request is transmitted to the appropriate association, which, in turn, routes the request to the member bank which issued the card. If the authorization request is for an American Express or Discover card, the Processor transmits the request to American Express or Discover respectively.

17. Authorization through an Internet Application (Cont.)
The card issuer (a Visa or MasterCard issuing bank or American Express or Discover) verifies that the cardholder's account is valid, and that the amount of the transaction is less than their remaining credit limit (if such a credit limit exists).  The approval (with authorization number) or declination is transmitted directly back to the Processor for American Express and Discover transactions and indirectly back to the Processor through an association for Visa and MasterCard transactions.
The Processor sends the authorization response over the leased-line to the gateway.
The gateway encrypts the authorization response and forwards the response over the Internet to the agency's Internet application.
The cardholder is made aware of the response, and, if approved, is typically provided a confirmation number.  If declined, customers are typically afforded the opportunity to use another card.

18. Valid Credit Card Transactions
There are 3 components to every credit card transaction that must be present in order for a transaction to be valid. If any of these three components is missing, then the cardholder has the opportunity to contest the transaction.
Proof the card was presented at the time of the transaction. There are only two forms of proof that the card is present.
A manual imprint of the card or
Card swiped in Point-of-Sale terminal
Signature on the Sales Draft. Every draft must be signed by the cardholder in order to be valid.
Promised goods and services must have been delivered at the time of the sale. In other words the cardholder must have received the services or goods that they were promised.

19. How do the Issuers/Processor’s make their money?
Pricing:
There are many different aspects of pricing in our industry. This section will focus on the basic pricing structures. This is the ongoing cost associated with processing cards for the merchant.
Discount Rate: For the vast majority of merchant, this is the single most important element to their pricing structure. The discount rate is a percentage of money the processor keeps out of every transaction. These monies are distributed to all of the entities involved in processing the transaction. Naturally, all merchant should be concerned that they have competitive discount rate.
Example: If a merchant is being charged a 2% discount rate based on a $ ticket; the cost on this particular sales would be $2.00. Merchant would keep $98.00 for that sale. In addition to any other fees that may be associated with the transaction.

20. How do the Issuers/Processor’s make their money? (Cont.)
Generally speaking the processor will give the merchant one of two choices as to when they want the charges to be debited to their account.
Month End Discount : Monies are deposited into merchant’s account within hours from the time they batch out. Then at the end of the month, all fees are collected and debited from merchants account. Primary benefit to the merchant is having access to more of their money longer.
Daily Discount : Monies are deposited into merchants account within hours as with month-end-discounts; however, instead of the fees being taken out at the end of the month. The fees are debited before being deposited.
To eliminate bookkeeping nightmares on the part of the processors, it is suggested that the emphasis be on “Month End Discounting”

21. How do the Issuers/Processor’s make their money? (Cont.)
 Swiped Transaction: This type of transaction is for the merchant who business is primarily face-to-face; having the ability to swipe the card present through his processing terminal. This method is the most secured way of accepting the transactions, greatly reducing the risk for fraud; therefore, the merchant receives the lowest possible discount rate available for his type business.
Keyed Transaction: This rate is for transactions that do not have the card present at the time of sale. Or perhaps the merchant’s processing terminal is unable to read the magnetic strip on the back of the card (which holds all of your information). Therefore, there is a need to “key in” the credit card number, expiration date, and with the new Address Verification System (AVS), you will also be prompt to enter in billing address and zip code.
Due to the card and customer not being present at the time of sale, the rates are higher to cover the increased risk of fraud. In order for them to qualify as a swiped account, they must accept at least 80% of their sales face-to-face, with only 20% keyed. The reverse is true for keyed accounts.

22. How do the Issuers/Processor’s make their money? (Cont.)
Mid-Qualified Transaction: This is when a merchant who is set up as a swiped account, accepts a keyed transaction. Or a card not present transaction, which includes the billing address being passed for an authorization or sale transaction. The discount rate for this transaction is higher than the discount rate for a Qualified transaction. For the increased risk of a keyed transaction, typical industry price can average anywhere from .65% to 1.5% of the keyed transaction, higher than is charged for a swiped transaction.
Non-Qualified Transaction: This is a charge that applies to transactions that carry the most risk. Typical reasons are: International Cards, Failure to close out a batch in a timely manor (24 hours), commercial cards, and lack of information about a transaction. Most of the time it is lacking the billing address information from a keyed transaction.
However, with today’s technology and proper processing, the merchant can avoid some of these charges. With newer updated equipment that prompts your merchant for this information; the cost of upgrading can many times pay for itself, in addition to reducing the risk of fraud.

23. How do the Issuers/Processor’s make their money? (Cont.)
Transaction Fee: In addition to the discount fee, there is a cost per transaction for processing credit cards. Depending on the processor this fee can be called many different things and be located in several different locations within the body of their monthly billing statement.
Authorization Fees
Watts Fees
Per Item Fees
Transaction Fees
The set range for this fee is anywhere from $0.00 (due to much higher discount rates), to as much as $!.00 per transaction. The industry average is $.20 to $.40 per transaction. As with discount rates, typically speaking, the per transaction fee for keyed transactions accounts is higher than swiped. Again, this is due to higher risk.
Example: If each transaction cost the merchant $.20 and they performed 400 transactions per month, their transaction fee cost would be $80.00, in addition to the discount rate and any other fees that may apply.

24. How do the Issuers/Processor’s make their money? (Cont.)
Statement / Service fee: Similar to most financial services, this is a monthly fee for receiving the statement summary of the account, as well as the service the 24 hrs / 365 days a year, service that the merchant receives. This is an area where in some cases you’ll find hidden fees being charged to the merchant.
Industry average is from $5 to $20, although $10.00 is what’s typically seen on most merchant statements.
  Monthly Minimum: This is the monthly total processing cost. The merchant will be billed whichever is greater, the sum total of discount rate and transaction fees, or the minimum, whichever, is greater.

25. How do the Issuers/Processor’s make their money? (Cont.)
Batch –
A collection of credit card transactions saved for submitting at one time. Usually each day. Batch fees are charged to encourage a merchant to submit his or her transactions at one time, rather than throughout the day.
Batch Settlement –
An electronic bookkeeping procedure that causes all funds from captured transactions to be routed to the merchants acquiring bank for deposit.
Card Validation Code (CVC) or Card Validation Value (CVV or CVV2) –
Tool used by MasterCard or Visa to prevent fraud. It requires that a number usually located on the back of the card above the mag-stripe be entered in to verify the card is the present and authentic. When the card is not present at time of sale.

26. How do the Issuers/Processor’s make their money? (Cont.)
Chargebacks
If goods and services are unsatisfactory delivered or preformed and the cardholder notifies the bank within a specific period of time after the transaction, the merchant might receive a chargeback, which means the money is taken from their account and returned to the cardholder. The steps for the chargeback are as follows:
Customer notifies their issuing bank to refund a transaction.
Issuing bank notifies the acquiring bank to provide proof the card was present.
Acquiring bank notifies merchant to provide proof.
(a) if merchant can’t provide proof, the checking account is debited.
(b) if merchant provides the proof, the case then may go to arbitration.

27. Dealing with Interchange Fees
What's the reason for the interchange fee? Interchange compensates card issuing institutions for their risk and the expenses they incur to process transactions.
The conditions under which you accept credit cards and process transactions all affect how high the fee will be.
The interchange fee is determined by the nature of your business and the processing procedures you follow.
Hence the interchange fee for a face-to-face transaction will be less
While MOTO or ecommerce transaction will be higher
For example, a customer makes a $200 purchase, using a Visa card, at a retail store. The interchange category for this Visa transaction is CPS Retail. The discount rate is 1.95 percent. If all procedures are followed -- if the card is swiped, electronic authorization procured and transaction settled within two days -- there are no additional charges, and the fee is $3.90 to the merchant. However, if the card is hand-keyed instead of swiped, there's a 1.00% percent penalty, making your bill $5.90 instead.

28. What is a Basis Point?
Investopedia explains Basis Point - BPS The relationship between percentage changes and basis points can be summarized as follows: 1% change = 100 basis points, and  0.01% = 1 basis point. So, a bond whose yield increases from 5% to 5.5% is said to increase by 50 basis points; or interest rates that have risen 1% are said to have increased by 100 basis points.

29. On-line vs. Off-line debit
Online (Pin-based):
When the customer enters pin number at time of sale, the transactions are subject to only a set transaction fee regardless of the size of the ticket. The merchant has no liability for a fraud based charge back.
Normally per transaction
Off-Line (Signature based):
Transactions are processed as credit cards and subject to discount rates, transactions fees. The transactions are subject to the same rules and regulations of credit cards.

30. Debit vs. Credit - The Bottom Line
Example: Compare the fees on a $ sale for a merchant with a 1.85% rate and a .25 transaction fee for credit card transactions
Online Offline
(Requires a Pin Pad) Signature based, (No Pin)
Transaction Fee $ Transaction Fee $.25
Network fee. Included $ Discount 1.85% = $1.85
Total Cost Savings of 42% Total Cost
$0.85
$2.10

31. Making the Choice
Both forms of debit acceptance let merchants offer payment flexibility to their customers, which in turn can capture impulse buying, generate higher-ticket purchases and improve customer loyalty. But PIN-based debit transactions offer added advantages, such as:
The option to provide cash back to customers, which increases store traffic.
A fast way to move shoppers through the checkout line.
Virtual elimination of chargebacks and fraud.
Higher transaction approval rates.
Potential for additional revenues from surcharges.

32. Prospecting Cold Calls Phone Solicitation Networking Socials
Associations
Lead/Referral Sources
Observational

33. Cold Calls/Tele-Sales
Know who you are calling on and why!
Get past “The Gatekeeper”!
Establish Trust!
Be prepared!
Stop thinking like a salesperson!
Start thinking like a customer service rep!
Remove any expectations.
HAVE FUN!

34. Example – Cold Calling
(ask for the owner by name if possible) Hi my name is __________. I work as a Merchant Advisor and am tasked with the responsibility to talk to each of the Merchant’s in this area with regards to PCI regulation, the erroneous fees being charged by processor, and how it effects your business. I do not have time now, as I have an appointment with Jim down the street. However, I was running early and out of consideration for your time. I wanted to schedule a few minutes for me to review your current situation and show you how you can eliminate the fees, become compliant and stay compliant at NO CHARGE TO YOU. Does that make sense? Set the appointment! Note: If they hesitate, assure them you are not there to sell them any, but rather make suggestion based on your findings. Be very a matter of fact, and non threatening.

35. Example - Tele-Sales
(ask for owner by name if possible) Hi my name is __________. I do not mean to bother you, but I’m making a customer service call. Is now a good time to talk? I work as a Merchant Advisor and am tasked with the responsibility to talk to each of the Merchant’s in this area with regards to PCI regulation, the erroneous fees, being charged by processor, and how it effects your business. I wanted to schedule a time, when it’s convenient for you, so that I may review your current situation and show you how you can eliminate the fees, become compliant and stay compliant at NO CHARGE TO YOU. There is NO Charge for our service, and shouldn’t take up too much of your time whatsoever. SET APPOINTMENT!

36. Networking Socials BNI – Business Network International
1. Professional Marketing Organization that helps members build business via word of mouth referrals.
2. Only one person from each professional specialty is permitted to join.
3. Because giving referrals is the cornerstone of membership, everyone becomes a virtual sales team for the members.
4. Increased exposure to many people and business, because the relationships are built on trust. You not only meet other members, you gain access to their contacts as well.

37. Networking Socials Local Chamber of Commerce 2. Networking Functions
1. Integrity – Positive perception by local members, as well as a positive impact on the community.
2. Networking Functions
a. Luncheons for Women
b. Business after 5 meetings
c. Industry Luncheons
d. Golf Tournaments
e. Home Shows
3. Marketing Opportunities
a. Monthly News Letters
b. Radio Advertizing
c. Hot links to our website via business directories

38. Associations 2. Referral Opportunities
Trade Association
1. Integrity – Positive perception by local members, as well as a positive impact on the community.
2. Referral Opportunities
a. Work with other like operators/ business owners with similar interest
b. Develop a reputation
c. Have them calling you
3. Marketing Opportunities
a. Monthly or quarterly trade publications
b. Local events

39. Key Target Associations
Dental/Medical Associations
Home Owners Association or HOA
Small Business Associations
American Business Women’s Association
National Association for the Self Employed
National Association Convenient Stores or NACS
American Rental Association
National Association for College Stores
American Accounting Association
American Association of Attorneys – CPA’s
American Institute of Professional Bookkeepers
Credit Union National Association or CUNA
Independent Community Bankers of America
Apartment Associations of America
Internet Merchants Association

40. Lead/Referral Sources
Pre-Paid Legal
ADT
Local Bulletin Boards
Merchant Circle
YouTube
Linkedin
FaceBook
Blogs
Hoover, SalesGenie and Proposal Portal, etc
Other Business Professionals/Business Owners
Commercial Property Managers
IT and Web Designers

41. Observational
Sales opportunities are everywhere, if you look for them. Even when you are at lunch, at a traffic light or just driving down the street. Keep a digital recorder with you at all times.
Coming Soon
New construction – strip malls and office parks
New location
Local auto repair shops
Local eateries
a. Electricians
b. Plummer’s
c. Any other mobile service vehicles