1. Mitigating Risk and Improving Efficiency with Third Party Vendors – When is enough… enough? Paul Aries, RVP, Nelnet Business Solutions Ann Holland, Associate Dean Business Affairs Hopkinsville Community College

2. Agenda » Introductions » Background » Issues » Solutions » Questions

3. Kentucky Community & Technical College System (KCTCS) State system for 16 community and technical colleges – 67 Campus locations 100,000+ students 600 credit degree certificate programs Hopkinsville Community College –3755 Students –2 Campus locations offering courses at 6 sites

4. About Nelnet Business Solutions Focused on Higher Education –Built for education by education Over 800 college and universities 30 years combined experience in education Leading provider of payment plans and campus commerce On the PCI Standards Council PCI Level 1 compliant service provider NACHA compliant service provider Red Flag compliant service provider Serving KCTCS since 2002

5. Higher Education Challenges Higher education is unique Higher education makes up about 15% of the published internet space* Higher education networks –Are LARGE and COMPLEX –Traditionally “open” for collaboration –Application security is not a critical part of doing business * Source: Indiana University Session ID 0926

6. Higher Education Challenges Many groups, organizations and departments want to offer credit card and check payments to their customers, but they all have –Different needs –Resource limitations –Lack of payment processing knowledge Commerce is complex, risky, and involves many different groups –Who is in charge? –Is there a defined process? Reduction in Budgets Session ID 0926

7. Invoicing Process Paper is Expensive –Printed, folded, sealed, postage –Paper/folder jams –Cut/paste international student invoices for emails –Address issues –Returned mail Email is open source network Costly to develop ERP Functionality? Session ID 0926

8. Issues with Payment Processing Payment Card Industry Data Security Standards (PCI- DSS) came into effect –Compliance was a major concern –Collecting card information on ERP –No centralized control over credit card processing –Merchant fees –Do not know what departments were doing –Universities are not in the payment processing business –We are in the business of education, not payments Session ID 0926

9. Refunds Timing (compliance) Cost for paper checks Staffing and manhours –Printed, folded, sealed, postage –Address issues –Returned mail

10. Challenges in Managing Payment Plans Labor intensive –Managing enrollment process –High call volume – questions –Follow-up on missed payments Technology/Resources The costs associated with credit card processing Compliance with regulations (PCI, NACHA and Red Flag)

11. Challenges in Managing Payment Plans Low Collections/high receivables –Payment decisions for students Poor student services –Long lines & waiting Lack of Functionality in ERP system Changes, Changes, Changes! Reconciliation Colleges and Universities are not in the payment processing business

12. What are your options? Reduce services – not offer services

13. What are your options? Do nothing-suffer along– accept risk Poor student services Frustrated staff Hope there are no problems

14. What are your options? Throw money at it!!! Increase staffing Develop technology internally

15. Solution = Outsource

16. Advantages of Outsourcing Save Money –Programs not available without third party (Convenience fee) Generate income –Outsource the work and still generate income Increasing affordability & payment flexibility Reduce workload on staff Provide better customer service Utilize Proven Technology Integration with ERP Reputation

17. Advantages of Outsourcing What can they do now… what can they do later? –Keeping up with the industry –Keeping up with compliance Transfer Compliance Risk –Present – compliant systems –Future – vendor will keep up on future regulations Red Flag PCI

18. Create a Partnership Establish a strategic partnership where there is: A shared risk / reward An alignment of goals and vision A defined resolution process Highly engaged project management and customer support

19. Outsourcing Business Processes Look for: Functionality Technology Ability to deliver Vision Service / Support Cost References Accountability

20. Strategies for Compliance Accept the risk Transfer the risk Avoid the risk Mitigate the risk Session ID 0926

21. Avoiding Risk Do you really need the data? Eliminate non-compliant systems Evaluate co-sourcing partnerships Session ID 0926 Avoid the risk

22. PCI-Compliant Service Provider.EDU Commerce Server & Payment Apps User sent to PCI-compliant service provider Card data managed by service provider Consolidated payment processing Consolidated reporting Centralized management Transfer of user Business App Business App Transferring the Risk Session ID 0926 Transfer the risk

23. Are you Vulnerable? Is sensitive data stored securely? –credit card, banking and personal information Is sensitive data stored in your ERP? Do you change vendor supplied passwords? Do you have defined procedures for accepting credit card payments? Do you manage your own direct deposit of refunds? Do you complete a Self Assessment Questionnaire annually? –Who is responsible & do they know what they are looking for? Session ID 0926

24. Why Should I Care? Cost of non-compliance is more expensive than compliance! –$100,000 minimum fine from each card association –Cost to notify the victims –Cost to replace the cards ($10/card) –Cost for any fraudulent transactions –Forensics from a QSA –Level 1 certification Session ID 0926

25. Benefits of Using NBS Seamless integration to a schools ERP Fully hosted solution (ASP) Ability to deliver additional services beyond hosted payment screens – eBilling – Payment Plans – Authorized third party access – Student Refunds – Potential to reduce and avoid interchange rates – Cashiering Reduction of PCI scope for your institution

26. Regulatory Compliance has become more critical, more time consuming, more expensive Leverage NACHA compliant ACH processing Eliminate paper checks – convert to ACH/Check 21 at point of sale Utilize role-based access and security Extensive audit trail Improve staff efficiency & reduce workload Improved Customer Service Summary

27. 27 Summary Higher education IS unique PCI compliance is NOT optional You are always one change control away from being out of compliance Reduce scope by removing credit card and banking from your systems Non-compliance is more expensive than compliance Compliance is a journey not a destination Outsourcing to the right partner can be the way to go! Session ID 0926

28. Thank You! Paul Aries, Regional Vice President Nelnet Business Solutions paul.aries@nelnet.net 800-811-1079 Ann Holland Associate Dean, Business Affairs Hopkinsville Community College Ann.holland@kctcs.edu (270)707-3724