Reducing cost of payment acceptance Hello, everybody. My name is Oliver Gumbrill. And one of my colleague, Alan Vickness, and I are going to be presenting to you today about how to reduce the total cost of processing. Alan is a leader within our consumer debit product team. And I am responsible for payment optimization. The three things that we're going to cover today are commercial card optimization, our fee programs, and debit optimization. I love this visual right here. The header says understanding the total cost of accepting payment. And this is where we hone in and remind everybody that it's expensive to process credit cards. It's expensive to process payments. And as you can see in this visual right here, when you send your processor a payment for the cost of the charges, 99% of the total cost is inclusive of inner change and assessment. And you're like, what? What are interchange and assessment? So again, 99% of the total cost of the monthly bill for processing payments and credit cards and debit cards is interchange and assessment. Leader fees that are established by the card brand. And again, they change approximately twice a year, usually in April and October. And it's expensive. So when you think about the cost of payments for your processor, it's slim. It's very, very small. So when you think of an RFP, and you're doing an RFP, often you're focused on just that little sliver of what is the most affordable piece. But we need to help you reduce the total cost of processing, the total pie. And that's what we do through our services. We have a suite of services that we're going to talk about today that help you shrink the pie and reduce your cost. When you look at this slide, we're going to hone in on commercial card costs. Commercial cards are expensive. So again, when you think about commercial cards, what is that? Again, when we're talking more business to business, and business-- consumers to business. So what do you mean? So whenever a card is in a wallet of ours, and you're traveling for business, that would be a business-to-consumer usage. This would increase commercial cards. And then you have a business buying products and service from another business. Again, that's another type of commercial card usage. As you can see, there's a lot of percentages on the screen. One of them on the left says that 50%, only 50%, of commercial cards right now are processing at the lowest rate. When you think of the pie in the prior slide, again, you're thinking interchange. Only half of them are actually processing at the most affordable rates. However, in order to qualify them at the best rate, you need to provide and deliver a lot of different data. But if you do that, then you can save a lot of money for your business. All right, when you look at this slide, we're talking, again, still commercial cards. This is got a visual on here about the actual basis points. If you look at the focus numbers with the green, that is where we're able to help you as an organization in a business reduce basis point. And every interchange category that's listed on the left side, depending on whether you send them level one basic data, level two, a six more additional data elements, or level three, 20 plus data elements, you get a more affordable rate. And so if you were to move from level 1 to level 2, again, there's a certain amount of basis point average. And then if you move a level 1 to level 3, often your basis point average can be as much as 80 basis points to 1 percentage effective rate. Here's the great news. It's expensive. When you're not sending in the data on commercial cards, whether you're sending in level 2 data or level 3, you're unable to do that for some reason. It's expensive. And it takes a lot of work to get there on your own. Even the best don't do it 100% of the time. Well, we have a software we've built. It's called Commercial Card Optimization software. And this is a software where we automatically collect all the right data for you. And we deliver it on behalf of you to the card brands. So that you can get 100% of the time the lowest cost of rates. That's pretty good news. I mean, I would-- stop. I want to pause here and just say, I mean, again, I just want to say that we have a software that if you're at 0% now, or 50%, or 80%, and you're lacking some of those transactions and you have an expensive cost in place because of the 99% in the pie, we can help you get to 100% and reduce your cost. All right, now we're going to talk about another piece of the puzzle, another way to reduce cost. Because again, everything today is payment optimization. It's about helping you reduce the total cost of processing. Another way to do that is through our fee services. And what is that? Again, fees are a way to offset the total cost, thinking again, back to the pie. Instead of sending in data on commercial card optimization, what you can do is pass it along to the cardholder. And there's a variety of ways depending on the industry to do this. And we'll talk about that. All right, here they are. There's three of them that we offer. And they're dependent upon the way you run your business, the type of industry you're in. And again, you can't do all of these. So you've got conveniences. These are flat fees available to transactions or businesses that actually you may sell something at a brick-and-mortar. But you also make it available over the phone or via mail or online. And again, there's a variety of different payment types that are available to actually create a community and pass that on and have the consumer again, help you eliminate the payment cost and process. Then you have service fees. Again, this can be flat or percentage based. Now, again, bullet point number two here is really important. This is where it's only available to the public sector. What does that mean? Public sector would be, again, government agencies, universities, and a variety of MCCs. And this is actually the merchant category. And again, you can work with your contacts and your representatives to understand whether or not you're eligible for service fees. And again, this can be applied to transactions with methods other than cash and check. So anything apart from cash and check, you can add a service fee. And again, this is for both face- to-face as well as e-commerce transactions. And then lastly, surcharges. All right, the surcharge, again, is for a different group of industry. Again, this is a percentage based fee. It says available to any merchant. But again, not necessarily. Again, if you are a public entity, you can't do surcharge. You would have service fees. And again, this is specific for credit card payments and card present and card not present environments. One thing that I want to finish on when it comes to the fee programs, is, again, I've kind of touched on it in the last slide. But it's the business type. It depends on the type of industry you're in, what your MTC, merchant category, assignment is, and how you process transactions. Is your card present? Is your card not present? Is it e-commerce, et cetera, et cetera. And it also depends on your actual POS, Point Of Sale Integration, that kind of allows you to know whether or not you can actually implement these too, again, reduce or pass the cost on to your consumers. So we've touched on two. And now I'm going to be passing it on to Alan. You're going to hear-- again, I talked about a suite of services. We've touched on commercial card optimization, the fee program. And now Alan is going to help us understand another option that you have. Thanks, Oliver. No, and this is wonderful. So to complete the stool, the third leg of the stool, is our debit optimization program. And in regard to that, well, what does that mean? Well, if you think about to what Oliver alluded to earlier is that the third largest expense or any business out there is transaction costs. First, being human capital. Second being you are overhead of your fixed fee. Your leases and things of that nature. And third would be your transaction costs. Now, the beauty behind this is that how do we reduce the transaction costs without hindering the customer experience is by routing. And routing it either populating the appropriate fields as Oliver mentioned, or routing it to different networks because the big guys, Visa and Mastercard charge the most out of anybody out there. So it's always in the best interest to route those particular transactions to the US debit networks, for example, Star, [INAUDIBLE] PULSE, and Accel because it's cheaper basically. So we're going to make this a little interactive again. Everybody take out their debit card, which I have right here. And mine is a Mastercard front facing. I'm making sure that I'm hiding my numbers, so nobody gets my numbers. If you flip it on the back, there was an act called the Durbin Act that was passed in 2010. Well, very simply, what does that mean? It means it gives merchant choice how to route that transaction. And generally speaking, you will see two unaffiliated networks on the back right here. For example, mine has Star, which is [INAUDIBLE] debit network, and Mastercard. So does that mean for your particular customer, is that you can route any particular transactions to either Mastercard or star. That's what's available. And it's always in the best interest for that customer to route to the non-Visa Mastercard customer generally speaking because it's cheaper. So what the program is basically in a nutshell-- and I need to keep things simple for myself-- is transaction goes in, into the machine, and any type of transaction, whether it's face to face. And that includes pin, pinless, and the tap-and-go, the mobile payments, Apple pay, Google pay, Samsung pay. That transaction goes in. It goes into a machine. And that machine says, hey, which is the least cost or the optimized routes, and let me go down its merry way and charge the merchant the least cost, basically. In a nutshell, that's what the program is. So again, it's not only for your face-to-face transactions. But it's potentially for your e-commerce transaction, your in-app transactions that we see more and more restaurants have the rewards program like Starbucks and things of that nature with their in-app payments. But in a nutshell, the three questions would be, for the customer, would be number one, would you like to save money? Check. Would you like to save money and have the customer experience unchanged? Check. And because face-to-face transactions, if you think about it, what are the main differences with prompts for a PIN? Would you like your charge and your fraud transactions to decrease? Check. It's a win-win-win across the board. So again, this is the last leg in the suite of products that we offer in order to optimize or reduce the costs from a transaction perspective, that it is amazing to move forward with. And I would highly recommend reaching out to your customers and see if any of these programs fit nicely with them. Thanks so much, Alan. That was really good. Everybody, we've covered a lot in a very short period of time. We expect your questions or interest. So please reach out to your contact. We'd be happy to help and make ourselves available. Looking forward to the next time we get to do this.