Transcript 36 point Times New Roman

DeluxeCard
Programs and
The Credit CARD
Act Impact
Presented by: Deluxe Corporation,
The Bancorp Bank, and FIS Global
May 20, 2010
© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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Your Panel For Today’s Discussion
Deb Rodgers
Paul Landry
Cindy Mattson
Senior Product Manager DeluxeCard
Senior Vice President
Vice President of Prepaid
Implementations
The Bancorp Bank
Becky Frederick
Regulatory Compliance
Therese Jerrard
Senior Training Specialist
© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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FIS Global
Our Trusted Partners
FIS Global
(Metavante)
Program
Role
Primary
Responsibilities
Card Processor
VISA®
Issuing Bank
The Network
• Provides online
• Issues the cards based
applications for
on applicable
financial institutions regulations
to order cards
• Facilitates the funding
• Fulfills in-branch
for prepaid card
inventory
transactions
• Provides customer • Provides setup and
service for
customer service for
cardholders
financial institutions
• Processes card
transactions
© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
The Bancorp Bank
and its affiliate
University National
Bank
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• Allows Deluxe to
participate in the
association as a
Program Manager
• Acts as the network
for card acceptance
at merchants and
retailers
What We’ll Share With You Today
• What’s at Stake?
– Protecting Fee Income for Financial Institutions
• Regulatory Changes
– Becky Frederick, Esq. Regulatory Compliance
– Paul Landry, Senior Vice President, The Bancorp Bank
– Cindy Mattson, Vice President of Prepaid
Implementations, FIS Global
• DeluxeCard Compliance
• Prepaid Card Program
• Let’s Get Started!
© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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Credit CARD Act & Regulation
Changes Overview
Interview with Becky Frederick, Paul Landry
and Cindy Mattson
This presentation is provided for informational purposes only with
the understanding that Deluxe Corporation, FIS Global and The
Bancorp Bank are not rendering legal advice and that this presentation
is not to be used as a substitute for legal counsel.
© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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Key Dates & Background
Credit CARD Act of 2009
Prepaid Card provisions affect expiration dates and restrict ability to
charge certain types of fees.
Federal Reserve
issues final rules
for gift cards
Signed
into law
May 22nd, 2009
Mar. 23nd, 2010
Jan. 12th, 2010
Federal Reserve issues
final rules for credit
cards
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Law takes
effect
Aug. 22nd, 2010
What Do The New Rules Cover?
• Cardholder fees
– Cannot charge inactivity, dormancy or service fee
until 12 months of inactivity
– Can only charge one fee per month
– Fees must be properly disclosed
• Expiration – cards & funds
– Cards must have five years remaining life at time of sale
– Funds cannot expire less than five years from time of sale
• Disclosure requirements
– New disclosures available to purchaser prior to sale
– New disclosures on the card
– Fee disclosures available via toll-free number
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Proprietary and Confidential
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Which Programs Are Affected?
All Open Loop General
Purpose Prepaid Programs
Reloadable
Prepaid
Gift Cards
Loyalty,
Promo, Award
IN SCOPE
IN SCOPE
OUT OF SCOPE
Included – all
provisions
apply
New disclosure
rules apply
Excluded – no
provisions
apply
(not marketed as
gift)
For all gift cards issued on or after August 22nd, 2010
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Proprietary and Confidential
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Service Fee Changes
• No service fee can be charged unless there has been at least
12 months of no activity on the gift card
– Deluxe currently charges a monthly service fee of $2.50
commencing in 7th month and will implement this change
for gift cards issued on or after August 22, 2010
• Cannot charge more than one fee per month
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Proprietary and Confidential
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Expiration Date Rules
•
Systemic controls that require a minimum
5-year life meets standard
•
Stocking cards on shelf with 5 1/2 years
remaining life meets standard
•
Safe Harbor rule for cards created with 7year life (Sec. 205. 20(e)(3)(iii))
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DeluxeCard Fee Compliance
• FIS Inactivity Fee meets compliance requirements
– Monthly fee
– DeluxeCard has configured the minimum number of months of
inactivity
– Activity based on financial transactions, excluding cardholder
fees
• DeluxeCard has reviewed Final Rules carefully to determine what
fees can be assessed
• DeluxeCard has reviewed policy for foreign currency transactions
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Proprietary and Confidential
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Expiration Date Changes
• All expiration dates must be at least five years after the
date the gift card is issued
– DeluxeCard Visa Gift Cards currently expire two years after
the date the gift card is issued
– Gift cards issued on or after August 22, 2010, DeluxeCard Visa
Gift Cards will expire seven years after the gift card is issued
• Expiration date must be disclosed on the face of the Gift Card
– DeluxeCard Visa Gift Cards currently disclosure the expiration
month and year on the face of the gift card
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Proprietary and Confidential
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DeluxeCard Expiration Date
Compliance
• New, longer card expiration dates
– DeluxeCard has configured the
number of months for card expiration
– Network rules are being modified to allow
the longer required expiration dates
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Proprietary and Confidential
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DeluxeCard Expiration
Date Compliance
• Provide consumers with a reasonable opportunity to purchase
a card with a minimum of 5 years remaining life
– 7 year expiration of DeluxeCard Visa Gift Cards gives
financial institutions 2 years of additional shelf-life
– Stocking cards on shelf with 5 ½ years remaining life (minimum)
– Meets Safe Harbor rule
Polling question: What promotions are you considering to deplete your existing gift
card stock?
a. Moms, Dads and Grads Promotion b. Employee recognition
c. Email capture incentives d. Online banking enrollment incentives
e. E Statement enrollment incentives f. All of the above
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Disclosure Changes
• All fees must be disclosed on the back of the gift card
– Deluxe has opted for the 7 year expiration date
• Expiration date must be disclosed on the face of the gift card
• These changes require new card stock
• Bancorp needs a record of destruction of existing card stock
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Proprietary and Confidential
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DeluxeCard Disclosure Compliance
•
•
•
In-Branch
– DeluxeCard will design packaging and/or other materials
to address pre-sale disclosure requirements
On-Card Disclosures
– DeluxeCard will include the required
disclosures on new card designs
Telephone Disclosures
– DeluxeCard will continue to provide
a toll-free phone number on the card
– FIS CSRs will provide fee information
via the CMSe application
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Compliance Support
•
Financial institutions will take advantage of grandfathering cards
sold prior to August 22nd, 2010
•
To create compliant programs, DeluxeCard will modify BIN
extension configurations for cardholder fees and expiration dates
•
To create compliant cards, DeluxeCard will modify card package
components to incorporate new disclosure requirements on the
cards, on packaging and for new cardholder terms & conditions
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Compliance Resources
•
www.deluxe.com/dcprogram
–
Terms and conditions,
card handling instructions, and
compliance overview will
be posted
–
Inventory log matrix will be
available for download
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Next Steps
•
Deplete existing inventory
•
Order new cards (late June)
•
Complete form to log obsolete cards
•
Provide Bancorp Bank with log of
obsolete cards
•
Destroy any old cards, carriers & cardholder
agreements on August 22nd, 2010
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DeluxeCard® Prepaid
Visa® Card Program
The final rule affects only our
DeluxeCard® Visa® Gift Card
Program and not our DeluxeCard
Prepaid Visa Card Program
As long as the reloadable prepaid
card is not marketed as a gift card,
changes to gift cards are not required
for the prepaid card program
© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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Grow Revenue and
Reach New Customers
• Financial Institutions that currently pay ATM
and one-time debit transactions could realize
a 40-60% decrease in NSF fee income due
to Reg E
• The DeluxeCard® Prepaid Visa® Card can help
FIs generate fee income and reach new
customers to meet your target
Polling question: What has your financial institution considered
to generate additional fee income?
a. Expansion of gift card program b. Adding reloadable card program
c. Pursuit of opt-ins for Reg E d. Adding identity theft solution
e. Other f. All of the above
© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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Value to You
• Increase fee income
• Reach new customers
• Expand financial institution product suite
• Complete turnkey reloadable program
• No annual administration fees
• Free financial institution support
• Free personalized marketing tools
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Proprietary and Confidential
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Several Reasons
Consumers Value
Reloadable Cards
• Budget-friendly
• Easy to manage
• Easy to re-load
• Less risky than cash
• Controlled means to provide funds
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Proprietary and Confidential
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Targeting Customers
•
•
•
•
College students
Seniors on a budget
Bridal budget
Potential customers that don’t qualify
for a traditional account
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Reloadable Card Features
• Flexible
• Convenient Loading
• Money Management
• Safer
• Easier
• $5,000 Maximum Load
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Proprietary and Confidential
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Card Details – Financial Institution
• Setup Fee = $600
• Card Fee = $2.60
• Most FIs charge $4.95-$7.95
per card
• FIs can charge $2.95-$4.95
to reload card
• Minimum card order is 50 cards
• One card design
• Card is adhered on UltraForm
and comes with Card Holder
Agreement in #10 Envelope
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Proprietary and Confidential
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Card Details – Consumer Experience
Customer purchases instant issue
card at financial institution branch
Customer Identification Process
screen is batched and sent to The
Bancorp Bank
Customer does not pass CIP screen
Bancorp Bank sends letter to
customer to obtain necessary info
Customer passes CIP screen and
personalized card is created and
mailed to the customer
The Bancorp Bank receives
updated information
Customer receives
personalized card and
activates via IVR or website
Customer does not pass CIP screen.
Customer keeps instant issue card
Card expires after two years
Instant Issue card is deactivated
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Proprietary and Confidential
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Card Details – Consumer Card Fees
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Proprietary and Confidential
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Card Details – Consumer Purchase
• Maximum load value =
$5,000
• Maximum spent on a
Card per day = $2,500
• Minimum initial value
load = $20.00
• Direct Deposit form to
fund card from employer
or other account
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Proprietary and Confidential
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Card Details – Consumer Reloads
• Minimum value reload = $1.00
• Maximum value reload = $950 cash
reloading OR $5,000 via direct deposit
• Maximum reloads per day = two (2)
• Add value or load Card
– via direct deposit
– retail load networks (Green Dot®, MoneyGram®
and Visa ReadyLink®)
– and at bank branch
• Funds may be added to a Card (“value loading”) at any time
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Proprietary and Confidential
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Compliance
• Financial Institution required to integrate
into existing BSA/AML policy
• May require Board of Directors approval
• Compliance Overview and FAQs available
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Proprietary and Confidential
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Prepaid Card
Gift Card
Allow time to discuss
compliance
requirements; may need
board approval
Yes
Shorter lead time
due to less
compliance
complexity
No
Cost per card to the FI
$2.60
$2.60
Co-branding available
Yes
Yes
In Envelope
Yes
50
50
4 Weeks for FIs on Gift
Card; 6-8 Weeks for
new FIs
CMSe
6-8 Weeks
Same as Gift Card
Same as Prepaid
Sales Process
Reloadable
Card Carrier
Minimum Order Quantity
Setup Time
Web based Platform
User ID and Password
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Proprietary and Confidential
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CMSe
Training and Marketing Materials
Same web portal as gift cards:
www.deluxe.com/dcprogram
• Training Modules
• Marketing Materials
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Proprietary and Confidential
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Program Implementation of 6-8 Weeks
• Execution of Letter of Participation (LOP)
• Completion of paperwork in FI Executive Kit
– Set-up form, Visa application, Agent Marketing and
Distribution Agreement, Visa Member Applicant Risk Review
Survey, Self audit checklist, Send in logo for co-branding
• Enter into Implementation Wave and Receive Card
Management Access (CMSe)
• Training of Tellers
• Order Marketing Materials
• Access to Reporting Portal
© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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Exit Poll
1.
On a scale of 1-5, how prepared
are you for the Credit CARD Act
and final rule changes to your
customers?
a.
4 – Very Prepared
b.
3 – Almost there
c.
2 – Somewhat
d.
1 – Not Very
2. How did you hear about this
session:
a. E-mail invite
b. Postcard invite
c. Call from Deluxe
d. Association
e. Forwarded to me by
colleague
f. Other
© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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3. Are you interested in learning more
about the DeluxeCard Prepaid Visa
Card Program?
a. Yes
b. Not at this time
Additional Resources
•
•
•
•
•
•
DeluxeCard Visa Gift Card Program Compliance Overview
DeluxeCard Visa Gift Card Program Compliance FAQs
DeluxeCard Prepaid Visa Card Program Compliance Overview
DeluxeCard Prepaid Visa Card Program Compliance FAQs
Visit www.mydeluxecard.com
Submit outstanding questions
– will respond electronically
© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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Thank You for joining the web seminar. We look forward to
working with you on this and other marketing initiatives.
A recorded copy of this web seminar will be posted on
www.deluxe.com/deluxecard in one week.
© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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