Source: Nilson Report. 4 ... Source: World Payments Report 2013. 8 ... Source:
Credit Card News, The Nilson Report, and First Annapolis Consulfing analysis.
PAYMENT CARD ACCEPTANCE WHAT YOU AND YOUR CLIENTS SHOULD KNOW
Presented by: Tom Wimse9 Chairman & CEO – Wimse9 & Company
Disclosure Tom Wimse* is chairman of Wimse* & Company. The conflict of interest was resolved by peer review of the slide content. He declares no other conflicts of interest or financial interest in any product or service men@oned in this program, including grants, employment, giCs, stock holdings, and honoraria. ASAP’s and NCPA’s educa@on staff declares no conflicts of interest or financial interest in any product or service men@oned in this program, including grants, employment, giCs, stock holdings, and honoraria.
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Learning ObjecFves Following this presentaFon, a9endees should be able to: 1 Describe the role and responsibili@es of various payment industry stakeholders. 2 Describe payment card pricing trends and components of fees which make up the “merchant discount rate.” 3 Describe the latest trends in payment card acceptance and how various point of purchase devices can impact processing fees.
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Payment Card Industry A Growth Business 250
Projected Worldwide
200
(Billions) (1)
150
100 80
100
Projected by Region
United States
(Billions) (1) 50
60
0
40 05
06
07
08
09
10
11
12
13
14
Europe Asia/Pacific
15 20 0 05
06
07
08
09
10
11
12
13
14
15
(1) Purchase transac/ons Source: Nilson Report 4
Large and Growing U.S. Market Personal ConsumpFon Expenditures
Source: Nilson Report
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Source: Nilson Report 6
PAYMENT CARD ACCEPTANCE POINT OF SALE ACCEPTANCE TRENDS
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Payments AcquisiFon Value Chain
Sign-‐up and Underwrite
Acceptance
AuthenFcaFon & AuthorizaFon
TransacFon Capture
Processing
Clearing and Se9lement
ReporFng
Value Chain Components Witnessing Innova@on
Source: World Payments Report 2013
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EMV – (Europay, MasterCard and Visa)
-‐ Standards for chip and PIN card acceptance -‐ Process flows as normal once captured -‐ Stronger security and authen@ca@on -‐ October 2015 shiCing liability -‐ October 2017 shiCing liability (Petroleum)
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EMV Credit Cards in the U.S.
Source: Aite Group
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NFC – (Near Field CommunicaGon)
-‐ Short-‐range wireless RFID technology -‐ Authen@ca@on and creden@als stored on device -‐ Process flows as normal once captured -‐ Applica@ons for promo@ons and discounts -‐ ISIS recent na@onal rollout
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Cloud-‐Based Mobile -‐ Mobile wallet stores account data -‐ Once authen@cated, device displays barcode or other image -‐ Merchant requires op@cal image scanner at POS -‐ Wallet provider serves as merchant aggregator -‐ Lack of standardiza@on creates ubiquity issues
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Maturity of Mobile TransacFons Component
Level of maturity
DescripFon
Mobile payments
Using a mobile device to pay for goods and services at a merchant loca@on
Mobile banking
Performing tradi@onal banking ac@vi@es such as balance inquiries, account transfers, deposits and bill payments
Mobile acceptance
Accep@ng cards via mobile device
Source: DeloiBe
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Mobile Payments: Things We Know -‐ Fragmented eco-‐system -‐ Lots of players; no standards; slow adop@on -‐ Limited consumer adopFon -‐ Less than 6% of U.S. consumers -‐ 50% of young and wealthy open to mobile payments (MasterCard 2012 Study)
-‐ Merchants skepFcal of NFC -‐ Costs but no clear benefits -‐ EMV POS deadlines loom, but mobile NFC acceptance s@ll at merchant’s discre@on aCer EMV-‐enablement
Source: Jack Henry & Associates
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Payments 2020: Digital & Invisible
Customer walks into a coffee shop
Customer’s phone no@fies the barista of the customer’s entry
The customer walks out with his coffee, without needing to pull out his phone/ credit card for the payment or even specifying his order
The system pulls up a picture of the customer along with his drink order
The customer authen@cates himself on the biometric device. His bank account details are associated with his biometric iden@ty, and he is charged for the cup of coffee. Source: DeloiBe 15
PAYMENT CARD ACCEPTANCE CONTRACTING WITH MERCHANT ACQUIRERS
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Industry Stakeholders The payments industry consists of many stakeholders. For credit and debit card transac@ons there are no less than five categories of stakeholders involved in each transac@on.
Card Brand Networks
Cardholder
Merchant
Acquirer
Card Networks
Issuer
The Acquirer is responsible for collec@ng and se*ling all monies with merchant.
Over 8 million businesses in the U.S. accept card based payments
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Card P rocessing Fees Paid by U.S. M erchants
Source: Credit Card News, The Nilson Report, and First Annapolis Consul/ng analysis
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Acquirer Fees
Acquirer
Paid to the merchant processing en@@es Includes mul@ple service providers No standard fees, na@onal chains pay $0.02 or less per card swipe but small businesses oCen pay over $1.00 per card swipe Independent Sales RepresentaFves
ISO’s, Banks, POS Providers, & Other Middlemen
Merchant Service Providers
Core Processors
Sponsoring Banks
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Merchant Acquiring Pricing
Net Spread (bps)
U.S. Industry Average Net Spread
Merchant Size (Annual Bankcard Volume)
Source: First Annapolis Consul/ng
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Thank You! Tom Wimse9 Wimse9 & Company, LLC
[email protected]
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