UMB Bank
UMB Bank Evaluating Purchasing and Travel Cards As Part Of Your Payments Program
Evaluating your Card Program • Introductions:
UMB Bank, Ron Sager and Whit Brown
• Quick Updates • • •
UMB Background State of Mississippi Card Product Offerings State of Mississippi Purchasing and Travel Cards program results
• Understanding the Card Purchasing Process • Why use cards? • • • •
Cost efficiencies Technology, Reporting and Enhanced Controls Security Flexibility
• Are you keeping up with your peers? • 3 Common myths debunked • Questions 2
Quick Updates
UMB Bank • Experienced government Purchasing and Travel Card partner. • 1969 – became one of the original issuers of bankcards • 1995 – entered into first state partnership. UMB currently processes card programs for 5 states • 2010 – Entered into partnership with the State of MS
• Will process over two billion in commercial card volume in 2017. 50% coming from government and educational entities.
3
State of MS Card Product Offerings Program
Purpose
Features
Benefits
Visa Purchasing Card
Efficient and flexible method to pay for business to business transactions
Carded and cardless central accounts with pre-set monthly limits, account controls, multiple billing options, widely accepted Corporate Liability Waiver Auto Rental CDW coverage, Travel Accident Insurance
Multiple purchases with one payment by the agency Convenient access to make purchases while eliminating non-value added procedures. Data availability for analysis.
Contract Accounts
Efficient and flexible method to pay for business to business transactions with vendors on a State Contract
Cardless accounts with pre-set monthly limits, account controls, multiple billing options, restricted to specific vendors on contract
Travel Card Accounts
Efficient and flexible method to pay for travel related expenses
Carded accounts, few restrictions, Visa 911 travel benefits, Auto Rental CDW, Travel Accident Insurance
SET/Declining Balance Accounts
Efficient and flexible method to pay for infrequent traveler expenses, special purpose transactions
Carded with pre-set monthly and time limits, account controls, widely accepted, can be instant issue ,Corporate Liability Waiver, Auto Rental CDW coverage, Travel Accident Insurance
4
Quick Updates State of Mississippi Purchasing, Travel Card and EEF Programs Purchase Volume History State Agencies and Governing Authorities
5
Quick Updates State of Mississippi Purchasing, Travel Card and EEF Programs Purchase Volume History State Agencies and Governing Authorities
Calendar 2017 year to date results Transactions – 223,980 Purchase Volume – $26,955,000 Accounts/cards – approx. 38,000 Estimated Total 2017 Volume - $39,500,000
6
The Card Purchasing Process •
•
•
•
EMV chip is refreshed with a new offset value. Approval providedtransaction $$ settles electronically within in approximately 24 hours. Vendor pays “discount” of 3 to 5% settles net $$ directly to the vendor bank of choice. UMB receives a portion of the discount which is called interchange.
• Magnetic stripe or EMV read • Data gathered and formatted with transaction data • Terminal validates expiration date and stripe data • Transaction sent to UMB for verification via VISANET
Vendor Point of Sale
•
Settlement of Payment
Is request is within delinquency thresholds? Is current delinquent status within allowable history? Is the request transaction within the State of Missouri Master Authority? If decline is issued, no reason is ever provided to vendor-privacy requirement
Credit Verification
Program Controls Check
Security Check
Card valid – Exp, name, address, number, status, EMV offset • Available purchasing fundsCard, control account, agency? • Authorization strategy controls? • Defense edge fraud checkup
• • • • • •
Defense Edge In pattern for card? High risk transaction? Known vendor fraud? National compromised list? Terminated merchant?
Why Use Cards?
Cost Efficiencies • Purchase Order Costs • •
Traditional Paper Based – Average cost per transaction $89.99 Card Payment – Average cost per transaction $20.14
• Shortened procurement cycle • •
Traditional Paper Based – 9.9 day average cycle time for goods to be received Card Payment – 2.9 day average cycle time for goods to be received
• Suppliers paid faster, bill not due until later • •
When paying with cards your supplier is paid in at the point of purchase The average float time on purchases made on cards is 29 days
• Rebate •
There is a rebate in excess of 1%
8
Why Use Cards?
Technology, Reporting and Enhanced Controls • Real-time, online administration access and enhanced controls • • •
View statements Open and close individual cards Set credit limits; adjust for short-term purchasing needs
• Advanced Reporting • •
Transaction, cardholder, merchant level Vendor Analysis
• Online reconciliation and Data Integration • Mobile support, alerts, receipt imaging • Auditing tools for increased program control •
Flag out of pattern purchases
• ePayables Solution 9
Why Use Cards?
Security • Customized Authorization Strategies • • •
Block specific MCC’s Single purchase transaction limits Cash restrictions
• EMV Chip Card •
25% decrease in card-present counterfeit transactions from 2015 to 2016. That number will continue to decrease as more merchants adopt chip terminals
• Defense Edge fraud check • Easier detection of misuse
10
Why Use Cards? Security In general, the rate of fraud for Government and Educational entities is below industry averages. The State of Mississippi’s card programs are not an exception and fall well below these trends. State of MS Industry 2015 .030% .148% 2016 .018% .129% UMB and Visa offer their card programs to customers with a
ZERO fraud liability policy
11
Why Use Cards?
Flexibility
12
Why Use Cards?
Are you keeping pace with your peers? “The best time to plant a tree was 20 years ago. The second best time is now.” • Payments on a purchasing card platform continue trend upwards • • • •
2010 Purchasing Card Spend - $161B 2014 Purchasing Card Spend - $245B 2017 Est. Purchasing Card Spend - $314B 2020 Est. Purchasing Card Spend - $441B!!!
• ePayables trend •
In 2017 17% of Government and Educational entities utilized an ePayables program, compared to 24% of private sector companies. Those numbers are expected to increase to 36% and 44% by 2019.
13
Why Use Cards?
Debunking 3 common myths • Card programs lead to rampant misuse resulting in agency losses • •
For every 10,000 transactions only .67 are due to misuse. Through the Visa Waiver Liability Program the customer is covered when it comes to cardholder misuse.
• Suppliers won’t accept cards •
•
Visa alone is accepted by over 9.5 million merchants in the US and 35 million worldwide. Supplier acceptance also continues to increase each year as they react to customers’ needs and recognize the benefits of electronic invoicing and quicker payment cycles. A vendor analysis tool is available to easily identify which vendors of yours are known card acceptors.
• Using cards creates a lot more work • • •
The utilization of a card program leads to more efficient transaction management, reducing purchase orders, invoices and checks. Data is automatically captured electronically and can be integrated into ERP systems New online tools coming in 2018 14
Questions
Questions? Ron Sager, SVP UMB Bank – Commercial Payments Solutions 816-843-2261 [email protected] Whit Brown, AVP UMB Bank – Commercial Payments Solutions 816-860-7680 [email protected] 15
Evaluating your Card Program • Introductions:
UMB Bank, Ron Sager and Whit Brown
• Quick Updates • • •
UMB Background State of Mississippi Card Product Offerings State of Mississippi Purchasing and Travel Cards program results
• Understanding the Card Purchasing Process • Why use cards? • • • •
Cost efficiencies Technology, Reporting and Enhanced Controls Security Flexibility
• Are you keeping up with your peers? • 3 Common myths debunked • Questions 2
Quick Updates
UMB Bank • Experienced government Purchasing and Travel Card partner. • 1969 – became one of the original issuers of bankcards • 1995 – entered into first state partnership. UMB currently processes card programs for 5 states • 2010 – Entered into partnership with the State of MS
• Will process over two billion in commercial card volume in 2017. 50% coming from government and educational entities.
3
State of MS Card Product Offerings Program
Purpose
Features
Benefits
Visa Purchasing Card
Efficient and flexible method to pay for business to business transactions
Carded and cardless central accounts with pre-set monthly limits, account controls, multiple billing options, widely accepted Corporate Liability Waiver Auto Rental CDW coverage, Travel Accident Insurance
Multiple purchases with one payment by the agency Convenient access to make purchases while eliminating non-value added procedures. Data availability for analysis.
Contract Accounts
Efficient and flexible method to pay for business to business transactions with vendors on a State Contract
Cardless accounts with pre-set monthly limits, account controls, multiple billing options, restricted to specific vendors on contract
Travel Card Accounts
Efficient and flexible method to pay for travel related expenses
Carded accounts, few restrictions, Visa 911 travel benefits, Auto Rental CDW, Travel Accident Insurance
SET/Declining Balance Accounts
Efficient and flexible method to pay for infrequent traveler expenses, special purpose transactions
Carded with pre-set monthly and time limits, account controls, widely accepted, can be instant issue ,Corporate Liability Waiver, Auto Rental CDW coverage, Travel Accident Insurance
4
Quick Updates State of Mississippi Purchasing, Travel Card and EEF Programs Purchase Volume History State Agencies and Governing Authorities
5
Quick Updates State of Mississippi Purchasing, Travel Card and EEF Programs Purchase Volume History State Agencies and Governing Authorities
Calendar 2017 year to date results Transactions – 223,980 Purchase Volume – $26,955,000 Accounts/cards – approx. 38,000 Estimated Total 2017 Volume - $39,500,000
6
The Card Purchasing Process •
•
•
•
EMV chip is refreshed with a new offset value. Approval providedtransaction $$ settles electronically within in approximately 24 hours. Vendor pays “discount” of 3 to 5% settles net $$ directly to the vendor bank of choice. UMB receives a portion of the discount which is called interchange.
• Magnetic stripe or EMV read • Data gathered and formatted with transaction data • Terminal validates expiration date and stripe data • Transaction sent to UMB for verification via VISANET
Vendor Point of Sale
•
Settlement of Payment
Is request is within delinquency thresholds? Is current delinquent status within allowable history? Is the request transaction within the State of Missouri Master Authority? If decline is issued, no reason is ever provided to vendor-privacy requirement
Credit Verification
Program Controls Check
Security Check
Card valid – Exp, name, address, number, status, EMV offset • Available purchasing fundsCard, control account, agency? • Authorization strategy controls? • Defense edge fraud checkup
• • • • • •
Defense Edge In pattern for card? High risk transaction? Known vendor fraud? National compromised list? Terminated merchant?
Why Use Cards?
Cost Efficiencies • Purchase Order Costs • •
Traditional Paper Based – Average cost per transaction $89.99 Card Payment – Average cost per transaction $20.14
• Shortened procurement cycle • •
Traditional Paper Based – 9.9 day average cycle time for goods to be received Card Payment – 2.9 day average cycle time for goods to be received
• Suppliers paid faster, bill not due until later • •
When paying with cards your supplier is paid in at the point of purchase The average float time on purchases made on cards is 29 days
• Rebate •
There is a rebate in excess of 1%
8
Why Use Cards?
Technology, Reporting and Enhanced Controls • Real-time, online administration access and enhanced controls • • •
View statements Open and close individual cards Set credit limits; adjust for short-term purchasing needs
• Advanced Reporting • •
Transaction, cardholder, merchant level Vendor Analysis
• Online reconciliation and Data Integration • Mobile support, alerts, receipt imaging • Auditing tools for increased program control •
Flag out of pattern purchases
• ePayables Solution 9
Why Use Cards?
Security • Customized Authorization Strategies • • •
Block specific MCC’s Single purchase transaction limits Cash restrictions
• EMV Chip Card •
25% decrease in card-present counterfeit transactions from 2015 to 2016. That number will continue to decrease as more merchants adopt chip terminals
• Defense Edge fraud check • Easier detection of misuse
10
Why Use Cards? Security In general, the rate of fraud for Government and Educational entities is below industry averages. The State of Mississippi’s card programs are not an exception and fall well below these trends. State of MS Industry 2015 .030% .148% 2016 .018% .129% UMB and Visa offer their card programs to customers with a
ZERO fraud liability policy
11
Why Use Cards?
Flexibility
12
Why Use Cards?
Are you keeping pace with your peers? “The best time to plant a tree was 20 years ago. The second best time is now.” • Payments on a purchasing card platform continue trend upwards • • • •
2010 Purchasing Card Spend - $161B 2014 Purchasing Card Spend - $245B 2017 Est. Purchasing Card Spend - $314B 2020 Est. Purchasing Card Spend - $441B!!!
• ePayables trend •
In 2017 17% of Government and Educational entities utilized an ePayables program, compared to 24% of private sector companies. Those numbers are expected to increase to 36% and 44% by 2019.
13
Why Use Cards?
Debunking 3 common myths • Card programs lead to rampant misuse resulting in agency losses • •
For every 10,000 transactions only .67 are due to misuse. Through the Visa Waiver Liability Program the customer is covered when it comes to cardholder misuse.
• Suppliers won’t accept cards •
•
Visa alone is accepted by over 9.5 million merchants in the US and 35 million worldwide. Supplier acceptance also continues to increase each year as they react to customers’ needs and recognize the benefits of electronic invoicing and quicker payment cycles. A vendor analysis tool is available to easily identify which vendors of yours are known card acceptors.
• Using cards creates a lot more work • • •
The utilization of a card program leads to more efficient transaction management, reducing purchase orders, invoices and checks. Data is automatically captured electronically and can be integrated into ERP systems New online tools coming in 2018 14
Questions
Questions? Ron Sager, SVP UMB Bank – Commercial Payments Solutions 816-843-2261 [email protected] Whit Brown, AVP UMB Bank – Commercial Payments Solutions 816-860-7680 [email protected] 15
