LEARN COLLECT EXCEL E-Commerce Gaining Efficiencies in Local Governments Rolando Navarro Official Payments Corp.

LEARN COLLECT EXCEL E-Commerce Gaining Efficiencies in Local Governments

Over the past ten years, state and local governments have answered the call of citizens for increased efficiencies and convenience by embracing online services and electronic payments. Agenda History and Growth of e-Payments in Government Increasing Demand for e-Payments Benefits of e-Payments – Local Governments – Citizens Challenges facing Local Governments – Technical – Financial – Staffing Choosing an e-Payment Vendor Makes Sense Checklist for Choosing an e-Payment Vendor Choosing the systems that work for you Q&A

LEARN COLLECT EXCEL History of e-Payments in Government Although early government sites largely provided information, in the mid- to-late ‘90s, e-government services began to emerge In 2000, the US Government sold more than $3.6 billion via the Web (Amazon sold $2.8 billion that same year)  US Mint sold $150 million online  GSA auction site sold more than $3 million  US Postal Service sold $27 million By 2002, over 68 million adults were using government sites, many to conduct transaction-based business  16% filed taxes  12% renewed a driver’s license or auto registration  11% renewed a professional/recreational license  2% paid a fine

LEARN COLLECT EXCEL History of e-Payments in Government Cont. By 2005, 62% of government sites accepted credit cards for routine payments 80% of government Web site users are satisfied with their Internet experiences Users report that the Internet has improved the way they interact with government  49% improvement at the Federal level, 44% at the State and 30% at the local By June 2007, government e-commerce/transactional sites were the best scoring category in citizen satisfaction with a 3.5% quarter over quarter increase As e-government sites continue to add e-commerce and transactional capabilities, satisfaction improves because government heeds the consumer’s desire to interact with it online

LEARN COLLECT EXCEL The Growth of Online Services on Government Websites

LEARN COLLECT EXCEL History of e-Payments in Government The Growth of Online Services at the Federal and Local Level Over half of all Federal tax returns were filed electronically in 2006 E-filers who opt for Direct Deposit can expect a refund in 2 weeks or less, paper files typically wait between 3-6 weeks Filing after April 30 (30% of returns) increased the wait to as much as 8 weeks or more In Michigan at the local level the dollars processed went from $8.6 million in 2003 to $28 million in In the same 5 year span, the number of transactions increased by 39,000 In Ohio at the local level the dollars processed went from $17.1 million to $62 million in In the same 5 year span, the number of transactions increased by 85,000 In California at the local level the dollars processed went from $99.8 million in 2003 to $516.5 million in In the same 5 year span, the number of transactions increased by 271,000

LEARN COLLECT EXCEL Increasing Demand and Acceptance of e-Payments ACH Credits/Debits Credit Cards Debit Cards Electronic Data Interchange (EDI) <10,00010, ,000 50,000 – 99, ,000 – 499, ,000 – 999,999 >1,000,000 % of Government Respondents

LEARN COLLECT EXCEL Benefits of e-Payments Government Agency/Department  Reduced processing costs  Streamlined collections process  Quicker access to funds  Ability to provide additional payment options and feature to citizens  Improved citizen satisfaction with government offerings  Reduce the number of phone calls  Reduce office traffic

Benefits of e-Payments cont. Citizens  Convenience 24/7 x 365 availability Multiple payments channels – Internet, Phone, Kiosk, Over-the-Counter Multiple payment options – MasterCard, American Express, Discover, VISA credit and debit cards, and electronic checks No waiting in line, no postage required  Reliability Real-time authorizations Payment confirmations No login or PINs to remember  Rewards Flexibility to pay balances over time Points, miles and cash back for some credit card users

LEARN COLLECT EXCEL Challenges Facing Local Governments in Offering e-Payments The decision to offer e-payment services is not an easy one for local governments to make. Some of the many challenges facing local governments include: Technical Skills and Experience – System development and implementation – System maintenance and upgrades – System security compliance and certification Financial Processing Expertise – Knowledge of banking regulations – Knowledge of credit card and ACH regulations – Experience with settlement, reconciliation and balancing – Experience with chargebacks and returns Staffing – Day-to-day staff to handle implementation and operational issues – Dedicated staff to handle customer service issues – Dedicated staff to market the e-payment options – Dedicated staff to ensure security compliance Cost

LEARN COLLECT EXCEL Technical Challenges  System development and implementation  Channels - Internet, IVR, Kiosk, In-Person  Payment options – Credit cards, debit cards, electronic checks  System availability  Departmental or Agency-wide system  System bandwidth – peak usage vs. everyday usage  Integration with existing office systems  Reporting  System maintenance  Adding new features  Staying current with security regulations  System upgrades  24/7 x 365 system monitoring  Security compliance  PCI compliance  NACHA rules compliance  SSL encryption, AVS, CVV, CVV2  Data security  Security of physical location of data

LEARN COLLECT EXCEL Financial Processing Challenges  Compliance with State banking regulations  Compliance with Credit Card companies and issuing banks  Compliance with NACHA standards  Settlement procedures  Chargeback and reversal handling  Reconciliation and balancing procedures  Co-mingling of funds  Re-presentment of returned items  Reports

LEARN COLLECT EXCEL Staffing Challenges  Staff to develop, implement and maintain the system  Staff to set up accounts  Customer service staff –Availability –Training –Phone and requests –Spanish speakers  IT/Risk Management/Security staff –Fraud prevention –Security compliance  Marketing staff

LEARN COLLECT EXCEL Cost Challenges  Staff  Implementation  Customer Service  Maintenance  IT  Marketing  Merchant processing fees may including Merchant IDs  Security compliance and certifications  Cost of providing multiple channels (Internet, IVR and face-to-face) and payment methods (American Express, Discover, MasterCard, and VISA credit cards; debit cards; and electronic checks

LEARN COLLECT EXCEL Choosing a Payment Vendor Makes Sense The challenges involved in providing electronic payments in-house can seem overwhelming. Choosing an outside third party e-payment vendor makes sense, but choosing the right e-payment vendor is critical to your program’s success. Checklist for choosing a payment vendor:  Vendor stability  Is the vendor financially solvent?  How long has the vendor been in the payment business?  Vendor experience  How many clients does the vendor have?  Who are the vendor’s clients?  What markets does the vendor serve?

LEARN COLLECT EXCEL Choosing a Payment Vendor Makes Sense Cont. Checklist for choosing a payment vendor:  System features  How diverse is the vendor’s product offering?**  Does the vendor meet your data requirements and business rules?  How often is the system upgraded and what cost to client?  Does the vendor provide a separate testing and development environment?  Is the system bilingual?  What is the length of a typical installation?  System reliability  What is the vendor’s website bandwidth? Has the vendor ever reached capacity?  How many phone lines does the vendor have?  Does the vendor have a separate back-up system?  Is the backup system completely redundant?  Is the backup system in a separate location?

LEARN COLLECT EXCEL Choosing a Payment Vendor Makes Sense Cont. What type of solutions does the vendor offer for integration?  For the Internet  Standard Secure Payment Portal  Cobranded Application  Fully Hosted Application  Bill Presentment Application  Web Services  Integration with your existing software vendor  Over The Counter Payments  Kiosks  For the Phone system or “IVR”  Standard blind pay system  DTMF  Fully Hosted Application  Bill Presentment Application  Web Services  Integration with your existing software vendor

LEARN COLLECT EXCEL Checklist for choosing a payment vendor Checklist for choosing a payment vendor:  System security  Is the vendor PCI Level 1 compliant?  What is the status of the vendor’s SSL certificate?  Does the vendor have annual independent audits of its system?  Is the vendor’s disaster recovery plan tested on a regular basis?  What is the level of building security maintained by the vendor? Cameras, security badges, etc.  What employee screening methods are utilized?  Customer focus  Does the vendor have separate client, customer and implementation support staffs?  What are the vendor’s average customer service metrics – length of hold time, average call time, first-time resolution, etc.?  What resources does the vendor provide for marketing online payment services? At what cost?  Does the vendor maintain card partner relationships such that your constituents will benefit by paying with a credit card?  Does the vendor offer flexible pricing models?

LEARN COLLECT EXCEL The Right Payment Vendor  understands the payment industry  understands appreciates the uniqueness of your organization  provides dedicated sales, implementation, support, and marketing personnel  works your organization to maintain controls, efficiencies and service  works to maximize your existing software solutions by conforming with your file formats and business rules  understands that governments have people’s livelihoods at stake and that managing the government environment is more than handling operations and human resources  works with you to achieve your long-term e-Payments’ vision

THANK YOU Rolando Navarro Ext 7817