Manage Your Customer's Payment With Speed, Accuracy, Reliability and Savings

6. WWhhaatt iiss EEFFTT?? EDI (Electronic Data Interchange) - usually used by large companies for large payments Reduce deduction codes and standardize file formats WIRE Transfers - usually used for same day payment - international payment Broader standardization of process and remittance - final payment ACH (Automated Clearing House) - universal usage Broader standardization of process and remittance Credit Card - primarily used for smaller payments - customer convenience - ‘perks’ © 2010 UTA, All Rights Reserved

11. ACH Payment Entry © 2010 UTA, All Rights Reserved TTrraannssaaccttiioonn ## 664466005533 16 084000084 156564163 (OPTIONAL) 995 997 999 $1001.50 $100.00 $500.50 ABC Plumbing Apply transaction to invoice # 1165339 Deduct late fees on all invoices No. of Invoices: 3 Amount: $1602.00

12. Credit Card Entry © 2010 UTA, All Rights Reserved TTrraannssaaccttiioonn ## 664466005533 16 1525 SW 33193 ABC Plumbing 41111111111111 995 997 999 $1001.50 $100.00 $500.50 Apply transaction to invoice # 1165339 No. of Invoices: 3 Amount: $1602.00 Miami 4141

13. ePay Online™ Point. Click. Pay. An exact copy of your invoice or statement is presented. © 2010 UTA, All Rights Reserved Link your invoice or statement to scanned documents like Purchase Orders, Bills of Lading, POD with signature capture and more…

19. CCrreeddiitt CCaarrdd MMeerrcchhaanntt SSeerrvviicceess RReedduuccee yyoouurr pprroocceessssiinngg ffeeeess aanndd tthhee ccoosstt ooff aacccceeppttiinngg ppaayymmeennttss bbyy ccrreeddiitt ccaarrdd.. © 2010 UTA, All Rights Reserved

20. Ecosystem ooff aa ccrreeddiitt ccaarrdd ttrraannssaaccttiioonn © 2010 UTA, All Rights Reserved Three key entities manage the payment system. Issuers <Others>  Issue cards  Assume buyer’s credit risk  Generate reports  Provide customer service Acquirers  Sign up merchants  Underwrite merchant risk  Provide processing – Authorization – Capture/Settlem ent  Generate reports  Provider customer service Networks <Others>  Provides systems/operations  Develops products  Provides risk management  Provides advertising and promotions  Sets standards and rules

22. LLeevveell II,, IIII aanndd IIIIII DDaattaa RReeqquuiirreemmeennttss Data Type Level 1 Level 2 Level 3 Merchant Name x x x Transaction Amount (Total) x x x Date x x x Tax Amount x x Customer Code (16 Char) x x Merchant Postal Code x x Tax Identification x x Merchant Minority Code x x Merchant State Code x x Item Product Code x Item Description x Item Quantity x Item Unit of Measure x Item Extended Amount x Item Net / Gross Indicator x Item Tax Amount x Item Tax Rate x Item Tax Identifier x Item Discount Indicator x Ship from Postal Code x Freight Amount x Duty Amount x Destination Postal Code x Destination Country Code x Alternate Tax Amount x © 2010 UTA, All Rights Reserved Level-I and Level-II data elements can be transmitted via a standard credit card point of sale terminal. Level-III line item detail requires greater system capability, which is provided via UTA/Vantiv partnered payment processing applications.

23. SSaammppllee TTrraannssaaccttiioonn CCoossttss:: IInntteerrcchhaannggee EExxppeennssee Visa Purchasing Card: $500 transaction Purchasing B2B Rate (Level I): 2.10 + .10 $10.60 Purchasing Level II Rate: 2.05 + .10 $10.35 Purchasing Level III Rate: 1.95 + .10 $ 9.85 14% reduction in cost by processing Level III versus Level I data MasterCard Purchasing Card: $500 transaction Purchasing Data Rate I (Level I): 2.65 + .10 $13.35 Purchasing Data Rate II (Level II): 2.40 + .10 $12.10 Purchasing Data Rate III (Level III):1.80 + .10 $ 9.10 32% reduction in cost by processing Level III versus Level I data © 2010 UTA, All Rights Reserved Interchange only -- Not showing all interchange categories

24. SSaammppllee TTrraannssaaccttiioonn CCoossttss:: IInntteerrcchhaannggee LLaarrggee TTiicckkeett EExxppeennssee Visa Purchasing Card: $7500 transaction • Standard Rate 2.95 + .10 $221.35 • Business Electronic 2.75 + .10 $206.35 • Business Card Not Present 2.65 + .10 $198.85 most commom • Purchasing Level II Rate: 2.05 + .10 $153.85 • Purchasing Level III Rate: 1.95 + .10 $146.35 • Large Ticket 1.45 + .10 $108.85 Effective Rate 1.45% 46% reduction in cost by processing Level III versus Level I data © 2010 UTA, All Rights Reserved Interchange only -- Not showing all interchange categories

25. SSaammppllee TTrraannssaaccttiioonn CCoossttss:: IInntteerrcchhaannggee LLaarrggee TTiicckkeett EExxppeennssee Visa Purchasing Card: $25,000 transaction • Standard Rate 2.95 + .10 $737.60 • Business Electronic 2.85 + .10 $687.60 • Business Card Not Present 2.65 + .10 $662.60 most common • Purchasing Level II Rate: 2.05 + .10 $512.60 • Purchasing Level III Rate: 1.95 + .10 $487.60 • Large Ticket 1.45 + .10 $362.60 • VLPA .60 + 52.50 ($25k pricing) $202.50 Large Ticket Effective Rate 1.45% VLPA Effective Rate .81% 45% reduction in cost by processing Level III versus Level I data 64% reduction in cost by processing VLPA versus Level I data © 2010 UTA, All Rights Reserved Interchange only -- Not showing all interchange categories

26. VVLLPPAA -- CCrreeddiitt CCaarrdd IInntteerrcchhaannggee RRaatteess – Ticket Size Rate – $10,000 or less 1.95% + $0.10 – $10,000 - $25,000 0.70% + $49.50 – $25,000 - $100,000 0.60% + $52.50 – $100,000 - $500,000 0.50% + $55.50 – Greater than $500,000 0.40% + $58.50 © 2010 UTA, All Rights Reserved 26

27. Breakdown of Cost Total Cost = $12.46 Interchange represents 85% of the cost of this transaction. *Based on Average Ticket currently qualifying for the Visa Commercial B2B (Purchasing, Business, Corp) rate © 2010 UTA, All Rights Reserved

28. Can I pass the cost of the credit card processing along to my customer in the form of a fee? No, Visa and MasterCard regulations do not allow you to charge a fee or pass back the interchange to the cardholder for accepting their card for payment. UUNNTTIILL NNOOWW……………… © 2010 UTA, All Rights Reserved THE Question

29. Changes to No SSuurrcchhaarrggiinngg OOppeerraattiinngg RRuulleess…… ccoonnttiinnuueedd Effective January 27, 2013 (this is not a comprehensive guide) • Will permit surcharging of Credit Card transactions only • Does NOT permit surcharging for Debit Card transactions • Surcharge based on brand level (i.e. MC or VISA) o OR surcharge based on product level (i.e. World Card, Signature Card) o Cannot surcharge at brand and product levels o Cannot surcharge at card issuer level (i.e. Wells Fargo, Citibank ) • Surcharging practices are subject to a competitive ‘level playing field’ (complex) • Surcharged amount will be capped at “cost of acceptance” of applicable card • Disclosure of surcharge policy at ‘point of entry’ and ‘point of sale’ • 30 day advance notification of intent to surcharge must be given to Acquirer • Several states have laws currently prohibiting or restrict surcharging. CA, CO, CT, FL, KS, ME, MA, NY, OK, TX, (many others considering) • Strongly encourage that you visit the VISA/MC websites to obtain surcharging guidelines PRIOR TO implementation. © 2010 UTA, All Rights Reserved

30. FFEEDDEERRAALL CCOOUURRTT RRUULLIINNGG Effective December 13, 2013 (this is not a comprehensive guide) • Federal Court Ruling becomes law • $6.05 Billion reduced by 25% for merchants who opted out of the settlement o Merchants who accepted V/MC in the US between Jan 1, 2004 and Nov 28, 2012 • Part 2 - .10bp for 8 months is expected to equal $1.25 Billion o Merchants who accepted V/MC as of Nov 28, 2012 • Claims Forms are not yet available (see www.paymentcardsettlement.com) • Preregistration is optional but recommended (see www.paymentcardsettlement.com) • Jan 2, 2014 appeals have been filed by retail companies • State laws prohibiting surcharging - CA, CO, CT, FL, KS, ME, MA, NY, OK, TX, UT (many others considering). o Virtually no case law exists o Virtually no guidance expected from the card networks regarding legal issues • Strongly encourage that you visit the VISA/MC and www.paymentcardsettlement.com websites to obtain surcharging guidelines PRIOR TO implementation. © 2010 UTA, All Rights Reserved

31. Why EMV Chip? • Chip is an underlying foundation/infrastructure for future innovations • Chip is key in controlling/reducing counterfeit fraud • EMV is the global standard for payments © 2010 UTA, All Rights Reserved 31 *Visa – EMV chip Overview

32. Chip vs. Magnetic Stripe • Chip – Highly secure – Cannot be cloned – Prevents skimming – Pin to prevent fraud – Data encoded in chip – Unique key – Sensitive data never leaves the chip © 2010 UTA, All Rights Reserved • Magnetic Stripe – Less secure – Easily Cloned – No protection against skimming – Pin to prevent fraud – Data encoded in magnetic stripe – Sensitive data can be compromised 32

33. Chip Card Environments • Retail, ATM, Mobile, and Online Applications • Online Applications – Must use OTP device – One Time PIN or USB reader connected to PC – For use both in the merchant environment and the online banking environment (deters phishing) • Mobile Applications – EMV standards will be the basis for mobile application development in the future © 2010 UTA, All Rights Reserved 33

34. 1122 PPootteennttiiaall SSiiggnnss ooff CCNNPP © 2010 UTA, All Rights Reserved FFrraauudd Keep your eyes open for the following indicators. When more than one is true during a card-not-present transaction, fraud might be involved. Follow up, just in case. 1. First-time shopper: Criminals are always looking for new victims. 2. Larger-than-normal orders: Because stolen cards or account numbers have a limited life span, crooks need to maximize the size of their purchase. 3. Orders that include several of the same item: Having multiples of the same item increases a criminal’s profit 4. Orders made up a “big-ticket” items: These items have maximum resale value and therefore maximum profit potential. 5. “Rush” or “overnight” shipping: Crooks want these fraudulently obtained items as soon as possible for the quickest possible resale, and aren’t concerned about extra delivery charges. 6. Shipping to an international address: A significant number of fraudulent transactions are shipped to fraudulent cardholders outside of the U.S. Visa AVS can’t validate non- U.S., except in Canada and the United Kingdom.

35. 12 Potential SSiiggnnss ooff CCNNPP FFrraauudd ((ccoonntt’’dd)) 7. Shipping to a single address, but transactions placed on multiple cards: Could involve an account number generated using special software, or even a batch of stolen cards. 8. Multiple transactions on one card over a very short period of time: Could be an attempt to “run a card” until the account is closed. 9. Multiple transactions on one card or a similar card with a single billing address, but multiple shipping addresses: Could represent organized activity, rather than one individual at work. 10. In online transactions, multiple cards used from a single IP (Internet Protocol) address: More than one or two cards could definitely indicate a fraud scheme. 11. Transactions with similar account numbers: Particularly useful in the account numbers used have been generated using software available on the internet (e.g., CreditMaster) 12. Orders from Internet addresses that make use of free e-mail © 2010 UTA, All Rights Reserved services: These e-mail services involve no billing relationships, and often neither an audit trail nor verification that a legitimate cardholder has opened the account.

36. rrcceerrvvaanntteess@@uunniitteeddttrraannzzaaccttiioonnss..ccoomm rrffoouunnttaaiinn@@uunniitteeddttrraannzzaaccttiioonnss..ccoomm © 2010 UTA, All Rights Reserved RRaaffaaeell CCeerrvvaanntteess ((778866)) 551122--22996622 RRuuddeett FFoouunnttaaiinn ((4004)) 338866--99558866 MMaannaaggee YYoouurr CCuussttoommeerr’’ss PPaayymmeennttss WWiitthh SSppeeeedd,, AAccccuurraaccyy,, RReelliiaabbiilliittyy aanndd SSaavviinnggss

Manage Your Customer's Payment With Speed, Accuracy, Reliability and Savings

Credit Management Association

Manage Your Customer's Payment With Speed, Accuracy, Reliability and Savings