1. Merchant Credit Card Processing in Canada
Suzanne Stiles
Manager, Financial Compliance & Control
Region 7 meeting
1 May 2004

2. Credit Card Processing
IEEE Piscataway began processing credit cards with PNC Merchant Services in 1997
PNC Merchant Services processes on the First Data Merchant Services (FDMS) network
FDMS is the largest processor of credit card transactions in the world
IEEE’s annual volume is US$44.5 million, 269,054 transactions, with an average transaction amount of US$165.28
2.235% per transaction “all in”

3. FDMS Canada FDMS has created a subsidiary in Canada
Processes through TD Canada Trust Merchant Services
Accepts Visa, MasterCard, American Express in Canadian dollars
Deposits in Canadian bank account

4. TD Canada Trust Merchant Services
TD Canada Trust Merchant Services has knowledgeable technicians to help choose the appropriate processing options for Region 7’s processing needs
Fixed and portable point-of-sale terminals
PC based software

5. TD Canada Trust Merchant Services
Quick reference guide available to step users through transactions
Advertising materials are provided to increase awareness about new payment processing capability
Knowledgeable Help Desk representatives available toll-free 24 / 7

6. Different Processing Methods
Point of Sale (POS)
Terminal
Wireless
Software
PC based
Web based

7. POS Processing Methods
Debit & Credit Terminals – 2 Methods
1. Turbo Basic 256K
This terminal allows you to offer your customers a wide variety of payment options and provide instant authorization for Visa*, MasterCard®, Interac** Direct Payment and American Express.
Equipment
Terminal, printer and PIN pad
What this provides
Instant authorization of Visa, MasterCard, Interac Direct Payment and American Express
Automatic printing of sales drafts and debit transactions
Balancing reports at end of day
Electronic end-of-day deposit to your designated accounts
Cost
$25 per month

8. POS Processing Methods
Debit & Credit Terminals (con’t)
2. Freedom Lite
This terminal allows you to offer your customers a wide variety of payment options and provide instant authorization for Visa, MasterCard, Interac Direct Payment, American Express, Diners Club/enRoute and Sears®3. You can even include anticipated tips or gratuities on the spot.
Equipment
A magnetic swipe reader and a thermal printer in one device
A separate or integrated PIN pad
What this provides
Instant authorization of Visa, MasterCard, Interac Direct Payment, American Express, Diners Club/enRoute and Sears.
Automatic printing of sales drafts and debit transactions
Balancing reports at end of day and customized reporting
Electronic end-of-day deposit to your designated accounts
Advertising receipt banner

9. POS Processing Methods
Debit & Credit Terminals (con’t)
Freedom Lite (con’t)
Cost
$32 per month with integrated pin pad
$38 per month with external pin pad

10. POS Processing Methods
Wireless Terminals
Freedom II Wireless
The portable Freedom II Wireless debit & credit terminal is like a cell phone - compact, light and powerful. It even snaps onto a belt clip. It provides three new ways to pay:
Pay-at-home. If your business takes you to your customer's home, this terminal is your secure payment solution. Ideal for plumbers, pizza delivery persons, financial planners - and more.
Pay-at-the-table. If you're in the hospitality business, now you can offer your customers the increased privacy and convenience of debit and credit card payment right at the table.
Pay-anywhere-anytime. Provide faster service for customers outdoors. Add an extra checkout counter inside. Use the Freedom II Wireless debit & credit terminal at tradeshows or outdoor markets.

11. POS Processing Methods
Equipment
Integrated terminal, printer and PIN pad
What this provides
Instant authorization of Visa, MasterCard, Interac Direct Payment, American Express and Diners Club/enRoute
Automatic printing of sales drafts and debit transactions Balancing reports at end of day and customized reporting
Electronic end-of-day deposit to your designated accounts Advertising receipt banner
10 days of detailed transactions stored in the terminal
45 days of totals stored in the terminal
Customized cashback functionality
Training mode
On screen help functionality

12. POS Processing Methods
What this provides (con’t)
Ability to process transactions when the terminal is outside of a coverage area
Ability to process transactions when the terminal is in a radio restricted area (e.g. hospitals and airplanes)
Cost
$48 per month for terminal
$0.18 charge by Bell mobility per Kilobyte of time (approximately $0.08 per transaction)
$75 one time set up fee per merchant number

13. PC Processing Debit & Credit Software 1. Merchant PC What you get
This PC based software allows you to offer Visa, MasterCard, Interac Direct Payment, American Express and Diners Club/enRoute payment options to your customers. This software offers you the ability to configure the transaction screen to your preference, customize reports and assign operator IDs and passwords to you and your staff, which can bring you added security and save you time.
What you get
Software and PIN pad (if offering Interac Direct Payment)
What you need
486 or higher processor.
32Mb of RAM.
30Mb of free disk space.

14. PC Processing What you need (con’t)
Windows 95/98/NT (with service pack 4 or higher)/2000/XP .
Epson compatible parallel receipt printer (or their own parallel printer).
Communication line (Dial).
US Robotics compatible modem 28.8K or higher (3101 dial communications).
DSL or other high-speed connection (IP communications).
Magnetic stripe reader (Optional for credit card transactions).
Certified PIN Pad (provided by TD) for debit transactions.
Commercially available firewall software or commercially available firewall appliance (MANDATORY for IP communications).
Anti-virus software (MANDATORY for IP communications).

15. PC Processing What this provides Cost
Instant authorization of Visa, MasterCard, Interac Direct Payment, American Express and Diners Club/enRoute
Automatic printing of sales drafts and debit transactions
Balancing reports at end of day
Electronic end-of-day deposit to your designated accounts
10 days of detailed transactions
45 days of transaction totals
Cost
$319 per software copy

16. PC Processing Web Processing 2. OnLine Mart
Online Mart offers a complete payment management solution that allows for the creation of a web-based payment environment for both the management and processing of payment transactions.
What this provides
Payment Services provides full end-to-end payment management features and tools such as:
Secure capture and storage of credit card transactions on behalf of the merchant
Online, real-time secure credit card processing (supports 128-bit SSL encryption)
Payment notifications to merchant and buyer
Ability to process payment transactions (i.e. cancel, settle, and credit; including full or partial processing) via a easy-to-use web-based interface

17. PC Processing What this provides (con’t)
Built-in payment management logic (e.g. ensure credit amount does not exceed initial payment amount; automatic re-authorization after 7 days etc)
Web-based reporting and transaction history (1 year)
Support for multiple platforms
Payment Management Functionality and Tools
Provides merchants with the following functionality and value-added tools:
Web-Based Payment Management Tools
Web-Based Transaction Query Facility
Secure capture of credit card transactions with real-time processing using 128-bit SSL encryption

18. PC Processing Three Payment Solutions
Payment Form - Payment Form redirects the buyer to the Online Mart server in order to capture their credit card information through an SSL protected session and then have the amount specified by the merchant charged against the card entered.
Web Terminal - This service allows operators (i.e. in a merchant's call centre) to capture credit card information and initiate transactions on behalf of customers via an SSL protected web interface. The transaction flow is the same as for the Payment Form service except that the operator rather than the buyer enters the credit card information.
Direct Interface - We provide a Direct Interface solution that enables the merchants who have captured the credit card information in a secure environment to forward the transaction directly to Online Mart servers in real-time for authorization and settlement. This solution is available for a number of different operating system platforms.

19. PC Processing Cost One time set up fee of $145 to $345
Costs vary due to complexity of store front
One time set up fee of $145 to $345
Monthly fee of $40 to $95
Per transaction fees of 2.95% plus $0.15 to $0.35

20. Additional Costs per Merchant Number
$25 set up fee each for Visa and MasterCard (retail merchants – card present 80% or more)
$75 set up fee each for Visa and MasterCard (mail order/telephone)
Minimum processing fee is $10 per month

21. Estimated transaction based costs
Merchant discount rate for Visa and MasterCard is based on volumes and average ticket
2 – 2.8% per transaction
Chargeback fees
Retail - $10 per chargeback
Mail order - $20 per chargeback
“Push fund” fee $5 per month for depositing to a non TD Trust account for each Visa and MasterCard

22. Other Costs Cost of TD Trust account Required three year contract
Approximately $300 - $500 per year
Fees include balance reporting, minimum balance requirements, monthly fees, wire transfer costs, etc
Required three year contract
$350 if cancel in first year
$175 if cancel after first year before end of contract

23. Additional processing considerations
Merchant numbers can be set up on the Region level or at the Unit level
The more merchant numbers, the easier to differentiate between units
Needed for refunds and chargebacks
The more merchant numbers, the more back office support needed
Proceeds can be deposited into one TD Trust account, set up in the Region’s name or into individual unit accounts (on a merchant number basis)

24. “Back Office” Considerations
Accepting credit cards is the easy part
Back office support also needs to be considered
Back office support includes:
Reconciling transactions to bank deposits
Processing refunds
Responding to chargeback retrieval requests (usually within 7 business days)
Transferring funds from central account to local accounts if structured centrally
Bank reconciliations
Other

25. “Back Office” Alternatives
Three alternatives:
Region 7 processes transactions and handles back office support (totally decentralized)
Region 7 processes transactions and IEEE handles back office support (semi-decentralized)
IEEE processes transactions and handles back office support (centralized)

26. Alternative 1
Region 7 processes transactions and handles back office support (TBD)
Transactions processed at local level
Back-up sent to Regional location (TBD) or unit account
Designated person(s) perform(s) back office tasks and sends funds (via wire or check) to local level

27. Alternative 2
Region 7 processes transactions and IEEE handles back office support
Transactions processed at local level
Back-up sent to IEEE HQ
IEEE performs back office tasks and sends funds (via wire or check) to local level
Section pays basis points per transaction

28. Alternative 3
IEEE processes transactions and handles back office support
Section takes imprint of credit card or records credit card number in some secure manner
Credit card information is sent to IEEE HQ
IEEE HQ processes transactions in Canadian dollars through PC Software
IEEE HQ does all back office support
This alternative costs $2.50 per transaction plus credit card fees

29. The “Trade offs” is…
The more decentralized the processing, the heavier the “back office” support burden for Region 7
Both in terms of people and dollars
Totally decentralized processing means that Region 7 will be responsible

30. Next Steps How does Region want to process credit cards?
Feedback very important
Need consensus on how to process
Will take time to establish processing capabilities depending upon alternative selected
Proper staffing
Could conduct a pilot program with certain units

31. Questions?
Contact info:
ieee.org