Purchasing Card News by Caxton House Marketing

PURCHASING CARD www.purchasingcardnews.co.uk

Incorporating:

The Information Exchange for Card Payments Programmes, Transactions Processing & e-Payments Solutions

...

Edition 1 2010 Issue No 47

PA G

Ge ttin g

t en ym s a P ion d t” ar lut 0 n i C o Po ng s S 201 he si nt e T “ ha yme enc c r r Pu e-Pa nfe o e Th & C

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Contents Getting to“The Point” of Card Payments at...

The Purchasing Card Payments & e-Payments Solutions Conference 2010 See page 7

Jargon Busters

The Twenty Tens Decade - Time to dispel the myths and misconceptions

The Purchasing Card Payments and e-Payments Solutions Conference 2010

American Express brings world class expertise to the UK Public Sector

Benefits of the Welsh Purchasing Card are clear to the National Library of Wales

E-mail all your news, views, features & events for publication to: info@purchasingcardnews.co.uk

Future of Cash and Payments

Advertising:

ITS simplifies PCI DSS compliance ahead of anticipated crackdown

RBS WorldPay & ITS open new revenue streams

Purchasing Card User Group

MasterCard inControl Service Now Available from Barclaycard

Search for Purchasing Card Capable Suppliers ...On Line!

Editorial:

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Issue No. 48 Publication Dates: Mailing Distribution from: Online version from: Copy Deadlines: Advertising Booking Deadline: Editorial & feature copy received by: Receipt of Advertising Copy:

w/c 14th June 2010 w/c 7th June 2010 17th May 2010 24th May 2010 31st May 2010

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www.purchasingcardnews.co.uk Purchasing Card News - Purchasing Card NewsLink – Purchasing Card & e.Payments Solutions Conferences “The Information Exchange 2010” Purchasing Card News TV are registered trading titles of:- Caxton House Marketing Limited. www.cardpaymentsolutions.co.uk Card Payment Solutions - Purchasing Card News User Group & Card Payment Solutions TV are registered trading titles of:- Card Payment Solutions Limited www.search-online-now.co.uk Search-Online-Now is a registered trading title of:Public Sector Suppliers Bureau Limited. No article may be reproduced in part or in whole without permission of the publisher Purchasing Card News is published and printed by Caxton House Marketing Ltd. © Copyright: Caxton House Marketing Ltd 2010. All rights reserved. The publishers are not liable for the statements made and opinions expressed in this publication.

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To help understand the Payments Industry own unique language, we thought of a good idea to produce a Glossary of Terms of the most commonly used terms, acronyms and abbreviations associated with payments transaction processing and e-Commerce applications. This glossary of terms will be especially beneficial for those in the early stages of development and implementation of Purchasing & Card Payment Solutions Programmes. For further information please contact: info@purchasingcardnews.co.uk Acquirer or acquiring bank

Customer Reference Code (CRC)

Management Information (MI)

The bank where a merchant has an account to process transactions and credit payments

Reports and expenditure analysis for monitoring your purchasing card spend.

AVS Address Verifications Service

VAT capable suppliers can input a CRC at the Point of Sale up to a maximum of 16 digits being alpha or numeric. An example would be a job costing number.

Fraud-prevention mechanic that verifies a customer address against a card

Daily Transaction File (DTF)

AVV/CID The American Express equivalent of AVS & CVC2

BIN The bank identification number with the card schemes

Card Validation Code 2 (CVC2). Fraud-prevention mechanisms initiated by MasterCard and Visa to protect merchants. These codes are the three digits on the back of a MasterCard or Visa card that follow the cardholder's credit card number—they offer Mail Order and Internet merchants additional security by helping to identify a cardholder in a CNP transaction.

CCS Cardholder Currency Selection The Servebase enablement functionality for Dynamic Currency Conversion (DCC) through various providers

Chargeback Is a practice in which the bank that issues the credit card returns a customer's disputed transaction to the merchant—via the merchant's acquirer—for resolution.

CNP Cardholder Not Present For example, Mail order or Internet transaction processing

The transaction file that includes all of your Purchasing Card spend for the previous 48 hours.

DCC Dynamic Currency Conversion A foreign exchange mechanism provided by banks and third parties that gives a cardholder an option to pay either in the merchant’s local currency or their home currency at the point of sale

VISA specified groups for categorising types of spend (eg: airlines, cash advance). Approximately 35 groups

MID The Merchant Identification Number with the bank acquirer.

Point of Sale (POS) Terminal at supplier through which the transaction is processed.

Government Procurement Card (GPC) Same as a VPC but specifically aimed at Government Agencies and Bodies.

Level 1 Supplier VISA Capable Suppliers (accept Purchasing Cards but are non-VAT enabled otherwise referred to as NVE supplier).

PSP Payment Service Provider

SDOL MasterCard Smart Data OnLine solution provides back office management information and works in conjunction with MasterCard ‘onecard’ combining purchasing card and travel transaction functionality on a single card.

Level 2 Supplier VAT Capable Suppliers (accept Purchasing Cards and provide the facility for a customer reference code and summarised VAT total).

SPA/UCAF The Mastercard equivalent of VbV (Now also known as MasterCard SecureCode)

Level 3 Supplier

Cost Allocation Codes (CAC)

LID Line Item Detail

Applying internal cost coding to each Purchasing Card Cardholder (eg: cost centre number, department number or budget number).

The auxiliary data attached to a purchase card transaction to qualify for VAT certification in place of an invoice (UK).

American Express Corporate Purchase Card – effectively the Amex version of VISA & MasterCard Purchase Cards

Merchant Category Groups (MCG)

A mandatory requirement from card Schemes to distinguish transactions generated through the Internet

VISA specified codes for categorising the actual commodity (eg: nuts and bolts). Approximately 300codes.

CPC

VISA specified codes for categorising vendors (eg: stationery). Approximately 250 codes.

ECI Electronic Commerce Indicator

VAT Capable Supplier with Line Item Detail (accept Purchasing Cards as VAT capable suppliers but in addition they will provide Line Item Detail descriptions for the goods / services provided with individual VAT amounts).

Commodity Codes (CC)

Merchant Category Codes (MCC)

Line Item Detail (LID) Suppliers with LID capabilities have software installed at their premises that will provide an individual line of detail for every commodity purchased.

Value Added Tax (VAT) Tax that is added to each commodity at the appropriate rate depending on the commodity purchased.

VbV “Verified by Visa” A methodology introduced by the Card Scheme and Banks to provide an additional, secure cardholder verification process prior to an Internet transaction proceeding.

VGIS Visa Global Invoice Specification.

Visa Purchasing Card (VPC) Charge card commonly used for low value, high volumetransactions.

Low Value Goods (LVG) Typical commodities bought using a Purchasing Card would be LVG (eg: stationery).

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The Twenty Tens Decade Time to dispel the myths and misconceptions

A personal view by

Alan Oram WPC Card Programme Manager Alan.Oram@Wales.GSI.Gov.UK

2010, and the start of a new decade if there ever was a year “0”! The ‘noughties’ could be deemed the decade that Purchasing Cards came good in the UK; certainly as far as the UK public sector is concerned. During this time many organisations started down the card path, some taking tentative steps and others getting much further than others. But how far down that path will they venture during the next decade and how many organisations that have not yet committed to use P Cards are likely to do so in the “twenty tens”? Purchasing Cards are now a well accepted concept in the UK in both private and public sectors and the vast majority of organisations starting a card programme have continued with them. It can be assumed that they have derived some benefit, otherwise they would have stopped. Nevertheless there are a substantial number of programmes that have not grown by any large amount and many that are still effectively in the pilot stage after several years. Many still remain unconvinced that P Cards offer sufficient benefits to start or expand programmes. page 4

This is puzzling given that for most organisations the business case for using P Cards in the first case presumably still stands and justifies expansion to maximise the benefits. There are of course other competing e-procurement solutions offering e-trading and e-invoicing which have become cheaper over the decade and may divert organisations from using cards, however the simplicity of cards and relatively minor costs of running a card programme are major benefits and there is every likelihood that the enlightened will see a place for both in the next decade. So what are the inhibiting factors that prevented the full potential of P Cards being reached during the past decade and, more importantly will be used to avoid uptake in the next? There are many and various, some based upon myths and misconceptions and others on real and practical issues that do exist (such as lack of commitment and resource) but nevertheless can be overcome quite easily in most cases. Frustratingly the commoner myths and misconceptions have persisted throughout the decade and continue to be rolled out as excuses not to "do cards". It is time to put them to rest given that the reality over the past ten years does not match the myth. Let's examine a few.

“A Card Programme is difficult to start and will require increasing resource and administrative effort to manage” Without doubt, time and effort has to be given to setting up and running a proper programme. This is, however, an investment into creating a process that will reap bigger

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The Twenty Tens Decade resource savings when bureaucratic paper based purchase to pay procedures are taken out. The often spouted excuse “We are too busy trying to cope with our existing workload around orders and payments to look at P Cards” is a bit like looking a gift horse in the mouth! Effort put in at the start will produce proportional benefits on-going. An electronic card management system is vital for any decent sized programme to handle the back end procedures, such as reconciliation, approval, coding and export to GL. There are however a range of systems to do this with varying degrees of functionality available from schemes, issuing banks and specialist providers. Many organisations have developed their own in-house solutions. But whatever way you go this is a “must have” if your programme is to go anywhere and is to be easily managed.

“Savings are unrealistic or unrealisable” The fabled (and long in the tooth) average savings figure endorsed by NAO for the public sector is £28 per transaction. Realistically what you achieve depends on how convoluted the existing process and how simple is the replacement P Card process. If staff time and effort is freed up from not raising, processing and approving requisitions, purchase orders and invoices then that staff time is saved. Hard savings will accrue from supplier discounts, reduction in paper, postage, etc plus any rebate on Card spend from the issuer. Realising the process cost savings depends upon the organisation honestly recognising that staff are less occupied in ordering/payment by a switch to a P Card process and acting accordingly. A universal example is that for every card purchase there is at least one less invoice to be processed for payment. 1000 card purchases saves more than 1000 invoices. How much staff time is that? Put bluntly, if the organisation choose not to reassign tasks or staff once their workload is reduced then the organisation is failing to realise the benefits.

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are now available for use with P Cards which give organisations absolute control over purchases. Fundamentally however P Cards are all about trust with responsibility and staff can be trusted to operate within the rules when using Cards as they indeed do in all others aspects of their employment!

“We must tightly control all purchasing to eliminate the risk of fraud” Frequently the cost of ordering and paying for low value goods and services is out of proportion to their value. Is it efficient use of an organisation's money to buy something valued at £10 with acquisition costs of £50? Successful Purchasing Cards programmes replace a risk avoidance (at any cost) culture with one of risk management, empowering staff to buy what they need to do their jobs, but with adequate checks and controls balanced to the risks involved: all at a much lower cost. Cards do not turn staff into fraudsters!

“We can only be assured of proper use if cards are in the hands (or locked drawers!) of our managers and senior staff.” Well, if managers have got nothing better to do than to make Card purchases then by all means give them cards; however it has been proven time and time again that cards work best as far down in the purchasing hierarchy as possible. Give them to staff to buy the goods and services they need for their job. Maintenance operatives, mechanics, IT buyers, cooks, field officers, nuclear physicists, whatever can all benefit from have direct access to their suppliers to purchase what they have identified as needed for the task. Given efficacious guidance and appropriate monitoring staff can be trusted! This takes out layers of paper shuffling bureaucracy and allow staff to get what they need with the minimum of fuss.

“Cards lead to loss of control over purchasing” Fundamentally Purchasing Cards let staff obtain the goods and services they need within clearly defined rules. Agreed that even with the tightest controls on cards there is opportunity for Cardholders to purchase outside of the organisation's rules. However adequate training and monitoring considerably reduces this risk and the reality is that cardholders stick to the rules, and why shouldn't they given the visibilty of their purchases. Cardholders are told what they can buy and from whom and Cards can be blocked against types of suppliers (indeed it is possible to restrict card use down to just one supplier outlet), and financial limits can be set. Enhanced MI and comprehensive exception reporting allows for easy checking of what is purchased. This combination of good guidance and visibility provide a robust process to manage the Purchasing Card programme and control what is bought. If however this is not considered enough and stronger controls are deemed necessary then pre-purchasing checks can be implemented or the Cards put in the hands of buyers and authorisers. Web based pre-purchasing authorisation systems

“No purchase order = no information” What information do organisations need to record and keep on their purchases? What they have bought and what they have paid for it; not what was ordered (which may or may not be what is supplied). continued over...

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...continued

The Twenty Tens Decade The information needed does not come from the purchase order. For P Cards the transaction MI will include what was bought and the price paid. Job done. Granted Level 1/2 data will not give you the detail of what was bought but standard practice is for this to be added to the data by the Cardholder where required to be included with data uploaded into finance systems (and using electronic card management systems makes this very easy to do). Level 3, no problem as this detail comes direct from the supplier. Let the Cardholder manage the ordering and the organisation concentrate on recording what is received and what it paid!

“Budgetary control and accounting will be difficult.” Only if it is made so! Consider a simplified budgetary/account coding system for card spend which, after all, in most cases will represent only a small proportion of overall budget expenditure. But if this is not possible then today's sophisticated card management systems (such as MasterCard's Smart Data OnLine) facilitate easy allocation of spend to budget/cost centres and the allocation of any other accounting codes. Spend can be reconciled, approved and assigned and correctly coded for direct loading into the General Ledger. In effect the purchase to pay process can be paperless (e-procurement at no cost!) and fully automated.

“VAT reclaim will be difficult” Data from Level 2/3 suppliers (either paper reports or electronic) provides sufficient evidence for VAT reclaims; a much easier process that having to collect and retain all paper invoices. Agreed that paper invoices are still needed to support reclaims in respect of Level 1 transactions, however, use of an electronic card management system can help to manage this requirement, allow for recording of VAT data against the transaction and provide fully accredited VAT

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reporting. Glass half empty or half full? Remember that if the Cards are used with a mixture of Level 1, 2 and 3 suppliers (as is the norm for larger programmes) there will still be a considerable number of invoices taken out the process

“Our Auditors do not like it” The killer and totally unfair! Properly formulated and managed P Card programmes provide a degree of visibility and control to satisfy the strictest audit requirements. Audit objectives have shifted during the past decade and increased emphasise is put on the efficiency of processes as well as financial veracity and P Cards offer an effective means of reducing process costs around purchasing and payment. With Government endorsement from the highest level this should not be an issue and indeed more and more auditors are asking why Cards are not being used in particular organisations. Myths and misconceptions should no longer prevent organisations from realising the contribution that Purchasing Cards can make to meeting the savings that will be desperately required by the public sector over the coming years. They are an easy and safe way to reduce unnecessary, bureaucratic administration and achieve real efficiency gains and savings to boot.

“Give cards a chance” Nothing beats a positive attitude to adopting and developing new initiatives. Rather than using the difficulties, real or imagined (and they are mainly imagined), as an excuse not to develop a Card programme look on the positive side and consider the potential that Cards can offer. Cards have moved on over the past decade and more than proved their worth to those who at times “dared to be different”. The start of the new decade presents huge challenges for organisations and businesses to reduce costs. Purchasing Cards have proved their worth and can play their part.

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The Information Exchange for Card Payments Programmes, Transactions Processing & e-Payments Solutions

Getting to“The Point” of Card Payments at...

the

“The Point” at LCCC The Point is an elevated suite with a stunning aspect, being glass-fronted and having a balcony overlooking the famous Old Trafford pitch. Inside the facility, there will be 7m headroom with no pillars to spoil the view.

There is a wonderful mezzanine bar area overlooking the main suite, and another separate, private bar. Design of the suite incorporates some of the latest green / eco-friendly features available, whilst access for all has been incorporated throughout.

The room itself will be sub-divisible into three sections and so is easily adapted for smaller events.

Getting to “The Point” By car: Stay on M60 Ring Road to junction 9. Exit on to A5081 (signposted Trafford Park). Immediately on joining the A5081 from the motorway roundabout, keep straight ahead following the sign for ‘Other Neighbourhoods’. The A5081 is a dual-carriageway road that will take you straight to Manchester United’s football ground. Stay on the A5081 following signs for Manchester & Old Trafford Football Ground. The ground will appear on your right-hand side after 2.2 miles. Immediately after the stadium, turn right at the traffic lights on to Sir Matt Busby Way.

Go along Sir Matt Busby Way, at the next set of lights keep straight ahead on to Warwick Road. Old Trafford Cricket Ground is facing you at the next set of traffic lights.

By train and Metrolink: InterCity and local services operate to both Manchester Piccadilly and Manchester Victoria stations. Each station is linked to the Metrolink Tram Service. Catch the tram service for Altrincham and alight at the Old Trafford stop which is next to the ground.

For Conference Information, Agenda & Booking Details and Accommodation Options Please view: http://www.purchasingcardnews.co.uk/conference/ To secure your places please complete the booking form and return by fax, email or post. Alternatively you can book your places by email to info@purchasingcardnews.co.uk or call: 0161 928 0485 Lunch, Refreshments and Drinks Reception are included with complimentary on-site Car Parking provided for attending delegates. page 8

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Getting to “The Point” of Card Payments at...

the

The Purchasing Card Payments and e-Payments Solutions Conference 2010 “The Point” Lancashire County Cricket Club Brian Statham Way Old Trafford Manchester M16 0PX Thursday 11th November 2010 from 10:30 – 16:45 registration from 09:30 Lunch, Refreshments and Drinks Reception are included with complimentary on-site Car Parking provided for attending delegates.

1. DELEGATE DETAILS Delegate Name: ..........................………..………...……………….…

Position………………………………………………………………......

Organisation/Company………………………………………………...

Address ............................................................................................

............................................................................................................................................................... Tel...........................................

Fax...........................................

Post Code……………………….......

Contact email Address............................................................................

Second Attending Delegate Name………...…………….................

Position……………………………………………………………….....

Contact email Address………………………………………............... 1a. ORDERED BY

Contact Name: .......……………………………..................................

Position………………………………………………………………......

Organisation/Company………………………………………………...

Address if different ...........................................................................

................................................ Post Code………………………....... Tel........................................... email………………………………..........

2. DELEGATE COSTS Public Sector Organisations, Further & Higher Education, NHS Trusts, Emergency Services Police, Fire & Rescue, Private Sector Organisations, Card Capable Merchants.

B. Industry Delegates

Delegate No.1 @ £186.00 + £32.55 Vat Total £218.55

Delegate No.1 @ £286.00 + £50.00 Vat

A. Non Industry Delegates.

Name: …………………………………………………………

Select

Delegate No.2 @ £146.00 + £25.55 Vat Total £171.55

Card Scheme Providers & Issuers, Banks & Acquirers, Consultants, Media PR, Software Solution Providers.

Name: ………………………………………………………… Delegate No.2 @ £246.00 + £43.00 Vat

Select

Name: …………………………………………………………

Total £336.00 Select

Total £289.00

Name: …………………………………………………………

Select

PLEASE ENTER THE TOTAL AMOUNT PAYABLE IN THE PAYMENT DETAILS SECTION. Total Amount Payable £

Total Amount Payable £

Inc. VAT

On Receipt of your Purchase Order Number or Completed Booking Form your places will be confirmed by email

3. PAYMENT METHOD

Please complete where applicable as Confirmation of Booking

A. PURCHASE ORDER NUMBER DETAILS FOR INVOICING

Purchase Order Number

Ordered By ....................................................

Signature ........................................................

.........................................................

Position ..........................................................

Date ................................................................

C. CHEQUE PAYMENT

B. BACS PAYMENT

We will be making a BACS payment of £ Account Name: Caxton House Marketing Account No: 45603378 Sort Code: 05-05-29 Bank Name/Branch: Yorkshire Bank/Hyde Cheshire. SK14 1ET

We will be making payment by Cheque payable to Caxton House Marketing for the amount £

D. CARD PAYMENT DETAILS

Confirmation of booking The Payments Cards & e-Payment Solutions Conference 2010 inc. Vat

Please debit my Purchasing/Credit Card for £

P Card

Mastercard

Visa

Amex

Switch

Issue Date:

Expiry Date:

Security Code:

Other

Card holders details if different from above ............................................................................................................................................ Address ..................................................................................................................................................................................................... Post Code .............................

Signature .................................................................... Date ........................... Cancellations/Substitutions: Delegates cancelling six weeks prior or more before the conference date will be entitled to a 50% refund. Cancellations received thereafter will not be entitled to a refund. Delegates can be substituted at any time prior to the event. Notification of cancellations/substitutions must be received in writing or e-mail to info@purchasingcardnews.co.uk

Telephone ...............................................

Do you require a Vat invoice? Yes

Purchasing Card News & Purchasing Card Payment Conferences are trading titles of: Caxton House Marketing Limited, Castle Hill Farm, Castle Mill Lane, Ashley, Altrincham, Cheshire, WA15 ORB Tel: +44 (0)161 928 0485 / 3502

Website: www.purchasingcardnews.co.uk

WEBCON10

..................................................................................

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Benefits of the Welsh Purchasing Card are clear to the National Library of Wales

“This is saving us time and money” The National Library of Wales introduced the Welsh Purchasing Card (WPC) in 2003, primarily to eliminate the use of petty cash for small transactions. However, they have found that benefits of the WPC go much further. Administered by the Royal Bank of Scotland (RBS), the WPC is a low cost method of paying for low-value, low-risk items. It is available through the Welsh Assembly Government’s xchangewales programme.

We don’t have any one specific area of expenditure. The cards are used for all sorts of things such as books for the Library, items for resale in the Library shop, maintenance materials and labour, IT equipment and even payments for utilities”.

The National Library of Wales holds a vast array of different materials from books, periodicals and paintings to newspapers, manuscripts and maps, films, photographs and electronic resources. The building, first occupied in 1916, requires regular maintenance and the library collections are being constantly updated. The WPC helps to support these and many of the Library’s other procurement activities.

The WPC also brings real benefits for budgetary clarity and spend analysis. Karen notes, “The card allows control over spend limits and the types of suppliers used. A small number of suppliers impose a charge to use the card with them. We have been able to counter this by utilising the card control measures so staff cannot use the cards with these organisations”.

Commenting on the use of the WPC, the Library’s Assistant Accountant, Karen Deakin, says, “The cards help to save us so much time and have reduced the pressure on the Finance Department to turn around payment within 10 days of invoice. As you can imagine, with 297 staff, we used to have so many invoices to sort, distribute and correctly code and authorise. All this used to take a lot of time. Now staff are simply paying with the card, reducing paperwork and enabling electronic transfer of data to our finance system. This is having a positive effect on efficiency, minimising the cost of back-office functions and ensuring that resources are available where they are most needed: in the Library’s front-line services.

Card expenditure can be managed and analysed through the online information management system, Smart Data OnLine (SDOL). “SDOL saves us so much time managing our expenditure, and provides us with a full audit trail”.

Realising the potential benefits of the WPC early on, employees are encouraged to pay for all purchases made on behalf of the Library with the Welsh Purchasing Card: “On average we are currently spending £650,000 per annum using the Welsh Purchasing Cards. The number of invoices paid by WPC is over a third of all our purchase ledger transactions.

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With the Library’s 49 cardholders completed 2,500 transactions per annum and spending an average of £270 per transaction in 2008/09 the cards are an integral part of the procurement process. Library staff are also using the card to pay travel and subsistence expenses. “This means our staff no longer have to pay for their own expenses up front, saving time by eliminating the need for the claim-back process”.

The National Library of Wales have really embraced the WPC: “Using the Welsh Purchasing Card is speeding up our payment processes, reducing the amount of time we spend processing orders and paperwork. It means staff across the Library can pay instantly for what they need, when they need it. This is saving us time and money”.

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Future of Cash and Payments

“Cash costs €130 per person in Europe” The number of retail cashless payments grew by over 160% between 2000 and 2008, to 87 billion transactions. Of these, 90% were in western Europe, 10% were in central and eastern Europe and two-thirds were in the eurozone.

The number of cash payments is forecast to fall by 2.3% per year in Europe up to 2014. However, despite this slow decline, cash will remain the predominant payment method for some years to come, still representing 63% of the continent’s 414 billion payments in 2014.

Despite this growth and the “war on cash” being waged by organisations such as the European Commission and the European Central Bank, a new study by Retail Banking Research (RBR) has found that cash remains the predominant retail payment method in Europe.

These figures and forecasts are based on a new study, "The Future of Cash and Payments”, an independent report that analyses the historic and current use of different retail payment methods (both cash and cashless) in 28 European countries, and for comparison purposes in Australia and the USA.

Cash payments accounted for 78 % of the continent’s 388 billion retail payment transactions in 2008; the total cost of distributing, managing, handling, processing and recycling cash and of accepting cash payments was €84 billion. This was equivalent to 0.6% of Europe’s GDP or €130 per person. The study argues that previous attempts to justify the economics of cash substitution in Europe are no longer relevant and advocates a new approach based upon establishing the business case for different players in the payments market, especially for retailers who ultimately decide which payment methods to accept and incentivise, and who provide much of the infrastructure for accepting payments. A good illustration of this point is the decision by many large UK retailers to stop accepting cheques.

The study looks at the economics and especially the business case for cash substitution, and evaluates the major drivers that currently affect and will change the cost and usage of different payment methods. It forecasts how the use of cash and cashless payments will change up to 2014. For more information please visit www.rbrlondon.com/futureofcash

Cash substitution will be driven by numerous factors including the Payment Services Directive, the Single Euro Payments Area (SEPA), payment card interchange fees and Merchant Service Charges. The study says that contactless cards and mobile phones offer a large opportunity for increasing the number of cashless payments; and it expects to see a significant increase in the use of contactless cards in countries such as France and the UK from 2010 onwards.

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ITS simplifies PCI DSS compliance ahead of anticipated crackdown As the grace period for PCI DSS compliance runs out, merchants are turning to the latest lodged card solutions from ITS to simplify their compliance obligations. Following a major PCI DSS (Payment Card Industry Data Security Standard) compliance push in the US, the card schemes are now turning their attentions to the European market.

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Cardholders using embedded cards within e-procurement systems can lodge their card details with approved suppliers only, thereby preventing maverick spending

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Secure hosting at a state-of-the-art UK data centre ensures all cardholder data is protected from online attack

In June 2009 TJX, the parent company of T.J. Maxx, settled claims arising from data security breaches for $9.75 million. In the wake of such examples, 99% of Level One merchants in the US have stopped storing prohibited data (Javelin Strategy & Research, 2009).

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American Express-audited secure environment gives merchants the confidence that all the security measures are being continuously enhanced

•

As an independent payment service provider, ITS works with all UK acquirers enabling merchants to keep their trusted systems even if they move banks

To date, no UK merchants have yet been fined for non-compliance, but it is only a matter of time before we see the first enforcement.

Thousands of merchants around the world rely on ITS to safeguard their data every day.

Merchants can safeguard their reputation Merchants facing increasing security obligations All merchants who store, process or transmit cardholder data must meet the payment card industry security standards. The standards are designed to minimize payment card fraud by preventing thieves gaining access to cardholder data. Merchants are facing hefty bills to upgrade physical, network and application security across their organizations. Any cardholder data that is to be transmitted across public networks must be encrypted whilst the data retained within internal networks must be protected by effective firewalls. Physical access to cardholder data must be restricted to essential employees and an audit trail maintained to enable any inappropriate activity to be pinpointed. Merchants must audit their security on an annual basis to demonstrate compliance. On top of all this is the headache of keeping abreast of the latest recommendations as security advice evolves to meet changing threats. The biggest risk for merchants is the brand damage that can be suffered when a breach occurs. According to research, 78% of consumers are unlikely to return to a shop once they discover it has potentially compromised their data (Javelin Strategy & Research, 2007).

ITS lodged card reduces compliance obligations ITS is a PCI DSS 1.2-certified payment service provider. By using ITS services merchants can relax in the knowledge that their cardholder data is securely stored and transmitted. From small businesses processing low volumes of transactions online to larger organizations conducting high volumes of transactions via a fully-integrated solution, ITS can cut down compliance obligations.

•

Lodged card functionality on both Procurer Online and Procurer ERP enables cardholder employees and merchant staff to conduct transactions without needing to know card details

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By working with a PCI DSS-certified payment service provider, businesses can reduce the burden of compliance. Merchants using the lodged card functionality on Procurer Online or Procurer ERP no longer risk storing card numbers on their premises. Card numbers are lodged once by an authorized member of staff and then all subsequent transactions are carried out by quoting a simple reference. By outsourcing elements of their payment security, businesses can:

• • • • • •

Prevent damage to reputation Reduce compliance responsibilities Secure transactions Maintain customer confidence Avoid fines & compliance audits Minimize fraud losses

Merchants who offer to lodge customers’ cards are demonstrating both a high level of security awareness and customer service. As the grace period draws to a close, all merchants should be asking their payment service providers how they can help them meet their compliance obligations. By acting now, merchants can safeguard their reputation and their customers’ security. Once cardholder data has been compromised it’s too late. To find out more about how ITS can help you simplify your compliance obligations, call us on 01243 434 500, e-mail sales@interactivets.com or go to www.interactivets.com

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RBS WorldPay & ITS open new revenue streams RBS WorldPay links terminals with ITS data handling services to open up additional purchasing card revenue streams for merchants Demand grows for purchasing card solutions As the largest card payment acquiring business in Europe, RBS WorldPay enables merchants to accept credit and debit card payments face to face, by phone or online. Part of The Royal Bank of Scotland Group, RBS WorldPay handles around half of all card transactions in the UK and supports all types of business, from small companies to the largest international organizations. With the growth in demand for purchasing card solutions, RBS WorldPay needed a partner to supply purchasing card capability to the increasing number of merchants wanting to deliver tax and invoice data along with their payment card transactions.

ITS enables terminal-based solution The ITS range of added value transaction handling solutions enables merchants to capture and submit purchasing card transactions in the way that best suits their business. From simple online applications through to fully-integrated retail chip and pin systems, ITS solutions are the cost-effective and secure way to accept all major payment cards. Thousands of Royal Bank of Scotland Group terminals are now polled daily by ITS, enabling merchants to accept level two purchasing card transactions on their existing hardware. Both traditional credit and debit card transactions plus added value tax and invoice data are captured, validated and submitted for settlement. Where level three purchasing card data is required, merchants can use one of the RBS WorldPay-approved ITS Procurer products, enabling submission of line item detail via a simple PC-based solution.

â&#x20AC;&#x153;Merchant satisfaction is paramount to us and we know we can trust ITS to deliver user-friendly, proven solutions supported by top quality customer service.â&#x20AC;?

The ITS Procurer range offers everything from an online solution for low transaction volumes through to fully-integrated, multi-currency, multi-site systems. Merchant satisfaction is paramount to us and we know we can trust ITS to deliver user-friendly, proven solutions supported by top quality customer service.

To find out how ITS payment solutions can help you grow your business call us on 01243 434 500, e-mail sales@interactivets.com or go to www.interactivets.com

Thousands of merchants around the world rely on ITS to safeguard their data every day

RBS WorldPay merchants profit from purchasing cards Helping our merchants grow their businesses makes us successful. By linking our terminals with ITS polling and data handling services we have opened up an additional purchasing card revenue stream to our merchants with no change to their existing systems. Because RBS WorldPay works with all kinds of businesses across the UK and Europe, a choice of flexible solutions is essential.

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PURCHASING USER CARD GROUP The Discussion Forum for Purchasing Card Payment Solutions, Payments Transaction Processing & e-Commerce Solutions We have produced and provided a number of initial Discussion Forums for our members based around specific interest topics which we hope you will use for general information and interest. The Discussion Forum requires you to register as a member by logging onto:

http://www.cardpaymentsolutions.co.uk/PCUG/ and following the “Register” link at the top of the main index page. Discussion Forums will include the following topics...

Merchant Payment Processing Transaction Data Management and Support Accepting Card Payments suppliers generally have to do two things: Firstly they need to be set up with a merchant account by an “Acquiring” Bank A relatively simple process subject to passing the bank’s appropriate credit/risk assessment criteria, although there are alternative paths from third party providers. The second requirement is to have the necessary solution with which to process card transactions on the merchant account, from card holder present to remote transactions such as phone, fax or internet orders or a mixture of both dependent on the type of cards to be accepted and level of transaction data demanded by customers. There are a wide range of solutions available from third-party providers including bureau services that will fulfil these requirements. Increasingly both public sector and private businesses are demanding an enhanced level of data including full VAT level three details from their card capable suppliers and the ability to provide this may be crucial in continuation of the business from these card users and further growth. Again, a range of solutions are available from both the acquiring companies and third party solution providers able to provide expert advice on the best solutions for any particular business.

Card Schemes In the UK the majority of commercial and pre-paid cards are branded products from the Amex, MasterCard or Visa stables and Arval for fuel cards Business Payment Cards come under a variety of nomenclatures, Corporate, Charge, Procurement, Lodge, Purchasing, Pre-Paid and Fuel Cards being just some as well as a variety of specialist Payments Cards. The term ‘Card’ is in itself somewhat misleading because many of the products now becoming available offer much more than just a piece of plastic. Indeed it is perfectly normal to run a card programme without any cards. Increasingly we are seeing Issuers and specialist companies offering a whole range of flexible purchasing solutions built around payment card functionality which can provide pre-purchase controls on the one hand and electronic delivery and manipulation of statements and management information on the other. Closed loop and hosted cards are terms for card usage where purchases are restricted to particular suppliers nominated by the buying organisation.

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card payment solutions

Supplier Recruitment

Commercial Cards Issuing Banks

Supplier recruitment is your organisations responsibility, they are your suppliers and you have a working relationship with them. Should you want your existing suppliers to accept Purchase Cards explain to them how the Purchasing Card process works and what the main benefits to them will be, namely:- Their payments from you received within four working days from the point of purchase. Reduction in their credit control costs not needing to produce or send invoices or statements. Maintaining the goodwill of a long term working relationship with your organisation.

Commercial Card Issuing Banks issue and offer a variety of Visa and/or MasterCard Purchasing and Card Payment Solutions.

You should Identify the best contact at your suppliers to speak regarding the implementation of your Purchasing Cards programme, it may not necessarily be the accounts receivables department as your point of contact and it could be better making contact with the sales department or the finance directors department Once you have identified which of your suppliers are already able to accept Card Payments and those who agreed they want to accept Purchase Cards, that’s when you need to point the non card capable suppliers in the direction of the acquiring banks for them to open an account and issue the supplier with a Merchant number. To check if your existing suppliers are already Card Capable Merchants able to accept Purchasing & Card Payments or to search for Purchasing Card Suppliers you can search-online at

www.search-online-now.co.uk You can search-online by:Supplier Name Suppliers Address Post Code & Region Goods & Services Supplied Merchant Category Code/Description

SAP Integration Solutions There is software available that fully integrates with SAP, from a user perspective they log onto SAP and the card management software is available. By using an integrated solution it enables the business to operate a single process for the raising of orders whether they are PCard or not, this means commitments will be available when purchase orders are raised and actuals will be posted upon goods receipting, with the vendor accounts being updated when the transactions are posted. By using this type of solution it treats PCard as another form of payment. If the company operates a No PO No Pay Policy this solution will complement that policy. As these solutions sit within SAP, there will be a single login and standard SAP access controls apply. Savings can be achieved from an integrated system both from the use of purchase cards, reduction in invoice processing, reduction in the member of staff required to operate the purchase card programme and the rebate received from the card provider.

The majority of enabled card capable suppliers that provide card management data can accept both Visa and MasterCard files. Some Commercial Card Issuing Banks have their own proprietary software, as does MasterCard, but apart from that the data they flow is identical. Most Card Issuers will make a daily transactions data file available to you, in some instances this may be a monthly data file with the level of service offered possibly depending on the size and the value of your programme.

Electronic Card MI and Transaction Management Solutions There are a number of web based card management software solutions available. These offer the functionality from card management software you would expect but with the flexibility for multi user access. A sample of the functionality available is

• Automatic cost code allocation on input of the file. • VAT reclaim for level one vendors. • Card and user profiles. • Splitting of transactions over multiple cost centres. • Various levels of transaction approvals As they are web based it the opportunity for the cardholders to manage their own transaction, make any necessary changes then sign off their transactions by approving them. Once the transactions have been “signed off” by the cardholders their manager can then review the transactions, monitor where the spend is being made, ensuring it is in keeping with the services they provide and if they are satisfied with the transactions they can approve them. Once they have been approved at this level, they are then available for “posting” to the general ledger. All the solutions will come with a suite of reports and most will have the ability to create your own custom reports and will produce an output file to feed into a number of the larger ERP systems such as SAP and Oracle.

Public Sector Procurement Card Programmes Welsh Purchasing Card (WPC) The Welsh Procurement Card initiative is similar to the OGC but is available to mainly Welsh Public Sector organisations. This offers both a MasterCard and Visa solution but the MasterCard solution has considerably more programmes. The uses of this scheme enjoy the benefit of a shared programme and dedicated support for the individual programmes from a team that work for the Welsh Procurement Initiative (WPI) and liaison with the bank is carried out from that team. Meeting are held with all members of the scheme, the bank and WPI team members.

continued over... page 17

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...continued One the major benefits of operating a scheme such as the WPC is that everyone shares in joint rebates from the bank as the total spend from the scheme counts towards that rebate, so smaller programmes benefit from a higher rebate. Buying Solutions

Another option for prepay cards internally is for travel. If you have employees that may need to travel either within the country or abroad would be issue then a preloaded card to cover their hotel and incidental expenses. This is an easier option than the employee spending their own money than put in expense claims and the cards can be topped up each time the employee travels.

Buying Solutions has arranged a framework agreement(GPC3) with a number of payments card providers and associated services. This agreement allows Public Sector organisations to select one of a number of providers to supply their payments card programme without going through a formal tendering process. As this is a framework agreement the financials within the contract are open for negotiation with the card-issuing providers.

Prepay and Pre Loaded Card Solutions Prepay cards are a simple and innovative method of moving away from cash and cheque payments to customers, some of which may not have bank accounts, for making social and benefit payments. There are basically two ways the cards can be used, single use, this where an amount of money is loaded onto the card and once used the card is no longer valid. The second method is a multi use card; this card can be loaded on a weekly, monthly basis with either the same amount or different amounts each time. The cards are accepted anywhere credit cards can be used and control, if required, can be placed onto the cards to restrict where they can be used. It is also possible to see where the cards are being used by using card management software. Even though these cards appear to be a “credit card” there is no credit involved and the recipient of the card can only spend up to the value that has been loaded onto the card and the cards are available for cash withdrawals. The options for use for Local Authorities are numerous such as, benefit payments, school clothing allowances, grant payments, asylum seeker payments and other social payments. By making these payments in this way it is potentially a much cheaper option than cash and cheque payments. It makes cash readily available to customers who may have no access to a bank account or may need an emergency payment.

E-invoicing and OCR Solutions These solutions once set up are extremely efficient and can lead to significant cost saving due to the potential numbers of staff required to process invoices, as in the main the staff are only dealing with the exceptions. Most of these systems offer self learning OCR solutions which "learn" as the invoices are scanned, they look for all the obvious fields that you would expect on an invoice. These include, company name and address, invoice number and date, vat number, vat amount, gross and net amounts. It identifies these fields and the first time an invoice is scanned it offers a “best fit” for that invoice for that vendor. The first step is to verify what has been offered or adjust/match the fields, once the invoice has been verified the next time an invoice is scanned for that vendor it will match. These systems also come with their own flexible workflow solutions and one central screen which display the status of all the invoices in the system. Once scanned the invoice posts into SAP and based on pre set matching criteria certain actions will happen, if it matches the PO exactly it will be available to pay. If it doesn’t match the purchase order, it will block, work flow will start and route the item to the creator of the PO for them to either accept or reject. If they accept the differences, the invoice will unblock and become available for payment. If they reject the invoice they will be prompted for a rejection reason and it will then be work flowed back to accounts payables for them to deal with. Again this will work best if the business is issuing purchase orders for the majority of its spend as that will increase the automatic matching this is dependent on the vendor has quoted the PO number on the invoice.

PURCHASING USER CARD GROUP The Discussion Forum for Purchasing Card Payment Solutions, Payments Transaction Processing & e-Commerce Solutions The Discussion Forum requires you to register as a member by logging onto

http://www.cardpaymentsolutions.co.uk/PCUG/ and following the “Register” link at the top of the main index page. page 18

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card payment solutions

MasterCard inControl Service Now Available from Barclaycard MasterCard inControl Facilitating Active Role for Consumers in Managing their Finances Barclaycard and MasterCard Worldwide have announced that Barclaycard will now offer the option of MasterCard inControl functionality – an innovative service that gives cardholders the ability to set spending controls and receive real-time information about their accounts. The new functionality provided by MasterCard inControl enables Barclaycard to provide a service which allows them to give customers more control and peace of mind when using their Barclaycard. Customers can go online and set personalized controls and spend budgets, with SMS alerts or emails instantly sent to tell the customer when they have reached a budget or control set on their credit card. Controls can be set to trigger an alerts or a block on transactions made online or abroad. “Personal security and the ability to keep a tab on your spending is top of mind for our customers,” said Chris Wood, Managing Director, Barclaycard UK Foundation & Partnerships. “With inControl, we are able to utilize MasterCard’s advanced network technology and capabilities to fulfill the demand from cardholders for ever more convenient ways to pay and manage their spending MasterCard Worldwide said “The launch of this service from Barclaycard is clear demonstration of the growing trend by financial institutions to offer smart cardholder services that put financial control back into cardholders’ hands and we are excited to be working with them to both implement the first consumer application of our inControl service and harness its value for their customers.”

InControl Functionality for Consumer Products The MasterCard inControl service allows issuers to select which MasterCard controls and alerts to quickly, easily and cost-effectively integrate into new or existing debit, credit, prepaid, PayPass and mobile payment products.

This functionality not only helps issuers provide better service and grow loyalty among their cardholders, but can also extend card programs into new payment categories. With MasterCard inControl, cardholders can:

• Set budgets for particular types of spending and manage exactly where, when, how, and for what types of purchases each payment card linked to their accounts may be used.

• Establish their own system of alerts to safeguard against overspending and keep them informed in real-time about attempted card activity.

• Obtain single (or limited) use virtual card numbers linked to their accounts providing increased security and control when shopping online. The wide array of controls that issuers can offer both empower consumers and give them greater peace of mind with the knowledge that their cards cannot be used for transactions that they would not approve. A simple Web-based interface is used for setting up and managing the limits and alert triggers. The inControl service also gives banks the option to either immediately decline transactions that are not approved due to the assigned limits or request secondary authorization via an instant SMS message to ask the cardholder to personally approve the payment. MasterCard inControl is an innovative, flexible service which enables issuers to easily introduce payment products that offer unparalleled controls and alerts to both consumer and commercial cardholders. The suite of inControl offerings satisfies strong end-user needs for high security and controlled access to spending accounts, while providing cost-efficiencies and speed-to-market for issuers and no need for any changes in the payment process at the merchant. For more information go to www.mastercard.com

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Search for Purchasing Card Capable Suppliers ...On Line! Log on to:

www.search-online-now.co.uk

Making connections between Suppliers & Buyers

www.search-online-now.co.uk Has been developed to offer Public & Private Sector organisations a solution to source Purchasing Card Suppliers at Level One, Level Two and Level Three capability (LID capable). By providing an On-Line directory and search engine www.search-online-now.co.uk profiles suppliers business activities, products & services assisting both Public & Private Sector buying purchasing and contracting personnel to recruit UK based Purchasing Card Capable Suppliers. Existing and new Purchasing Card Capable Suppliers are able to amend, update and add their company details On-Line to www.search-online-now.co.uk on a self-administered basis.

www.search-online-now.co.uk Searches for Purchasing Card Capable Suppliers can be made amongst others by: -

• • • • • • • • •

Business Categories Products & Services Merchant Category Codes Purchasing Card Capability at: Level 1, 2 or 3 Purchasing Card Capable Suppliers All level 2 Purchasing Card Capable Suppliers All level 3 Purchasing Card Capable Suppliers Suppliers Name, Contact Details or Post Codes Geographical Area or Regional Search

For further information please contact:Public Sector Suppliers Bureau Limited Tel: +44(0) 161 928 3502 Fax: +44(0) 161 928 1713 Email: info@search-online-now.co.uk Web: www.search-online-now.co.uk