payment card acceptance what you and your clients should know

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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  [email protected]  in  this   program,  including  grants,  employment,  giCs,  stock   holdings,  and  honoraria.   ASAP’s  and  NCPA’s  [email protected]  staff  declares  no  conflicts  of   interest  or  financial  interest  in  any  product  or  service   [email protected]  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  [email protected]  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  

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(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  [email protected]  

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  [email protected]@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   -­‐  [email protected]@on  and  [email protected]  stored  on  device   -­‐  Process  flows  as  normal  once  captured   -­‐  [email protected]  for  [email protected]  and  discounts   -­‐  ISIS  recent  [email protected]  rollout  

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Cloud-­‐Based  Mobile   -­‐  Mobile  wallet  stores  account  data   -­‐  Once  [email protected],  device  displays  barcode  or  other   image   -­‐  Merchant  requires  [email protected]  image  scanner  at  POS   -­‐  Wallet  provider  serves  as  merchant  aggregator   -­‐  Lack  of  [email protected]  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  [email protected]  

Mobile  banking

 

   

     

           Performing  [email protected]  banking  [email protected]@es              such  as  balance  inquiries,  account                transfers,  deposits  and  bill  payments      

Mobile  acceptance  

 

           [email protected]  cards  via  mobile  device  

 

   

 

Source:  DeloiBe  

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Mobile  Payments:    Things  We  Know   -­‐  Fragmented  eco-­‐system   -­‐  Lots  of  players;  no  standards;  slow  [email protected]   -­‐  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   [email protected]  at  merchant’s  [email protected]  aCer  EMV-­‐enablement  

Source:  Jack  Henry  &  Associates  

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Payments  2020:  Digital  &  Invisible  

  

   Customer  walks  into  a   coffee  shop  

   Customer’s  phone   [email protected]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  [email protected]  himself  on   the  biometric  device.    His  bank  account   details  are  associated  with  his   biometric  [email protected],  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  [email protected]  there   are  no  less  than  five  categories  of  stakeholders  involved  in  each  [email protected]      

Card  Brand   Networks  

Cardholder  

Merchant  

Acquirer  

Card  Networks  

Issuer  

The  Acquirer  is  responsible  for  [email protected]  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  [email protected]@es       Includes  [email protected]  service  providers       No  standard  fees,  [email protected]  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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