Who’s A Control Freak? Audrey Flood November 2006 State of Texas User Conference

2 © 2005 JPMorgan Chase and Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Agenda Controls Overview  Volume Controls  Velocity Controls  Date Controls  Merchant Category Controls Standard Applications  Reduce Fraud Exposure  Employee Misuse  Employee Policy Abuse Unique Applications  Declining Balance Cards  Vendor Specific Cards  Commodity Purchase Control

Controls Overview State of Texas User Conference

4 © 2005 JPMorgan Chase and Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Controls Overview Volume Controls - $$$$  Controls the dollar amount that can be authorized for purchases  Billing Cycle limit – ―How much during the statement billing cycle ―Refreshes at billing cycle  Daily Limit ―How much per day  Limit per transaction ―How much for one transaction  Declining Balance limit ―Dollar amount for the life of the card or during a specified time period ―Limit does not refresh at billing cycle

5 © 2005 JPMorgan Chase and Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Controls Overview Continued... Velocity Controls  The number of transactions that can be authorized during a specified time period  Number of transactions per billing cycle  Number of transactions per day Date Controls  Determines the length of time a card is valid  Used in conjunction with “declining balance” controls

6 © 2005 JPMorgan Chase and Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Controls Overview Continued... Merchant Category Controls  Controls where a card can be used ―Travel merchants are generally a one-to-one relationship ―All others industry types are general ―MCC Groups are created and applied to cards ―More than one group can be applied to a card ―Specific MCC’s can have independent dollar limitations  State of Texas Standard MCC Group ―Can be more restrictive ―Agencies require TBPC approval to be less restrictive ―Contact David Bennett at TBPC for exceptions on PCard Groups and Melissa Hernandez for exceptions on Travel  Vendor Tables ―Allows card to be restricted to a specific vendor

Standard Applications State of Texas User Conference

8 © 2005 JPMorgan Chase and Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Standard Applications Limit Exposure to External Fraud  Your exposure to external fraud is limited by the electronic controls on your cards!  Utilize the three main controls  Volume  Velocity  MCC ―Restrict high risk “sin” merchants such as jewelers, furriers, package stores, massage parlors, etc...  Monitor high limit cards closely

9 © 2005 JPMorgan Chase and Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Standard Applications Continued... Employee Misuse  Employee misuse is defined as transactions that DO NOT benefit your entity. Misuse can be discouraged by having the right controls on the card.  Setup cardholder ‘profiles’ ―Establish MCC, Volume and Velocity controls based on the purchasing responsibilities normally associated with job duties of the cardholder  Use special “Override” group for one time overrides. ―Universities and Co-Ops can create their own or use State’s group ―Override group is monitored and changed back to original group or you can call in and change it ―Periodically review cardholder listings to check if this group is still active on cardholder accounts  Have merchant call in for approval

10 © 2005 JPMorgan Chase and Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Standard Applications Continued... Employee Policy Abuse  Purchasing policies shall be adhered to even though you are paying for the purchase with a card  The single best way to control policy violations is via cardholder education and formalized transaction review  Single Transaction Limits ―Help keep your employees from making purchases outside their authorized limits  Declining Balance Limits and realistic Monthly Limits ―Helps stop employees from over-spending budgets

11 © 2005 JPMorgan Chase and Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Standard Applications Continued... Employee Policy Abuse Continued...  Split Transactions and Sales Tax cannot be controlled using card controls ―Monitor for split transactions utilizing on-line reporting and exception reports ―Monitor for Sales Tax by reviewing receipts – online reporting is not a recommended tool for monitoring Sales Tax ―Sales tax is NOT a disputable transaction through JPMC. Entities should contact the merchant to seek reimbursement.

Unique Applications State of Texas User Conference

13 © 2005 JPMorgan Chase and Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Unique Applications Declining Balance Card Uses  Budgetary Cards ―The amount budgeted for card spend is placed on the card at the beginning of the budget year ―At the end of the year, the credit limits are “refreshed” in coordination with customer service to begin the new budget year  Grant Cards ―When a grant is established a card can be issued with the entire amount or portion of the grant funds tied to the card. When the funds are used the card is no longer valid. ―Usually a single use card

14 © 2005 JPMorgan Chase and Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Unique Applications Continued... Declining Balance Card Uses  Travel Cards for infrequent travelers ―A stock of “Company Cards” for infrequent travelers can be maintained with a pre-set MCC group. ―Once travel is approved, the limit and date range are maintained. ―Single Use card  Relocation Cards ―Employee relocation packages can be put on the card ―The card is issued in the name of the employee and is used to pay for moving expenses and per diems  Employee Incentive Cards ―For internal use for employee rewards for special programs ―Tie declining limit to specific time period. Certain MCC codes should be blocked. Single Use card.

15 © 2005 JPMorgan Chase and Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Unique Applications Continued... Vendor Specific Cards  Controls exactly which terminal at a vendor location where a card may be used.  Used primarily with contracts where a large volume of transactions will be placed on the card  Vendor may or may not have the card number  Special reconciliation controls needed to manage transactions on card  Reduces exposure to external and internal fraud

16 © 2005 JPMorgan Chase and Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Unique Applications Continued... Commodity Purchasing Control using MCC Monetary Limits  Controls how much can be authorized at a particular type of vendor  Setup an MCC group for vendor type or groups of like vendors  Establish purchasing limit – ―Equipment and Electronic stores with a single transaction limit of $100. ―Restaurant spend on travel cards limited to $75 per transaction

Questions and Answers State of Texas User Conference

18 © 2005 JPMorgan Chase and Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Contacts JPMC Program Coordinator Team: Nicole Sirianni and Melissa Johnson Phone: Laura Miles, VP JPMC Relationship Manager Phone: Toinette Miller, VP JPMC Relationship Manager Phone: Audrey Flood, AVP JPMC Co-Op Relationship Manager Phone: JPMorgan Chase Relationship Managers: