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Published byMolly Price Modified over 9 years ago
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U.S. Bank Payment Analytics Overview
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Payment Fraud Trends 2 Reference: Association of Financial Professionals (AFP), 2011 Payments Fraud and Control Survey A majority of organizations have experienced payment fraud Organizations are seeking tools to mitigate their risks from fraud
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Payment Fraud Trends 3 Reference: Association of Financial Professionals (AFP), 2011 Payments Fraud and Control Survey Commercial cards have built-in fraud controls: Restrict card use to specific types of merchants Establish spending limits for specific timeframes Set purchase and transaction limits Run reports that track and monitor expenses
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4 Commercial Cards: the Benefits Commercial cards have become the payment tool of choice for all types of business-related expenditures Enhanced Control –Set and control spend categories and transaction limits –Help ensure compliance with company policies Increased Efficiency –Replace cumbersome paper-based processes with an automated payment solution –Reduce cost, time and resources needed to procure and pay for goods and services
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Commercial Cards: the Challenge Organizations plan to expand commercial card usage over the next three years Reduce check usage by more than half Double use of commercial cards 5 More Time & People More Spend More Transactions More Review More Reports How do you efficiently and cost-effectively monitor transactions for employee fraud and misuse?
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Risk within a Card Program Perception: Risk of loss is quite high Reality: Actual dollar loss is much lower 6 Program Size$100 MM Average Transaction Size 1 $315.00 Total Transactions per Year$317,460 Estimated Amount of Fraud and Misuse Rate 2 $2.38 Amount per Year20% Estimated Amount of Policy Violation Rate 2 $60 per $1 MM in spend Amount per Year$60,000.00 Total Amount per Year$140,000.00 References: 1, 2 2010 Purchasing Card Benchmark Survey Results, Palmer & Gupta 3 2009 U.S. Bank survey of commercial card clients 79% of organizations have allowed perceived risk to be a barrier for card growth 3
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Cost of Manual Audits High cost to manually audit transactions Labor Intensive Inefficient Error-prone Program Size$100 MM Average Transaction Size 1 $315 Total Transactions per Year$317,460 Cost to Audit per Transaction 2 $2.38 Audit Sample Size20% Number of Audits Annually63,492 Annual Cost of Audit per Year$151,111 7 References: 1 2010 Purchasing Card Benchmark Survey Results, Palmer & Gupta 2 NAPCP Understanding the Processing Costs and Related Costs
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How to Mitigate These Issues? 8 Reign in your audit costs? Reduce your risk exposure? Grow your commercial card program? 1 2 3 U.S. Bank Payment Analytics
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What is Payment Analytics? 9 Enhances auditing practices by providing 100% commercial card transaction monitoring Rules Management: Compares each transaction to your customized rules to identify out-of-policy spend Case Management: Gives program managers timely information and tools to audit and resolve out-of-policy transactions
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Moving from Reactive to Proactive 10 Value of Action Time Detects relationships between transactions over time Event(s) ProactiveReactive Issue(s) Problem(s) Loss(es) $ $$$
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How Does Payment Analytics Work? 11 Payment Analytics Transaction Alerts Cases RULES
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The “Brains” behind Payment Analytics Defined templates contain logical arguments (i.e., rules) WHEN THEN statements Client assigns parameters to the rules WHEN a transaction meets all the conditions of the rule, THEN create a response –Alert: Notifies stakeholders via email when rule violations occur –Case: Allows users to track progress towards resolving an issue and violations over time 12
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Available Rule Templates Unauthorized Merchant Category Code (MCC) Alert Merchant Watch List Alert Transaction with a Non-Preferred Merchant Alert Split Transaction Alert Split Purchase Alert Transaction Close to Single Purchase Limit Alert Large Spend Increase over Average Spend Alert Excessive Use of Convenience Checks Alert Excessive Cash Withdrawals Alert Corporate Travel Card Purchase in Cardholder’s Postal Code Alert Weekend/Holiday Purchase Alert Account Opened/Maintained with Limits Exceeding Standards Alert 13
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Benefits Improve Compliance: Manage out-of-policy spend and detect fraudulent activities Enhance Control: Audit 100% of transactions versus a random sample Reduce Risk: Route flagged transactions to the appropriate personnel for review Increase Efficiency: Streamline the audit process with rules that are consistently and continually applied across all transactions Boost Cost Savings: Automate routine audit tasks Broaden Visibility: Record all case details in one central database Expand Revenue Share Opportunity: Realize growth incentives by identifying spend leakage 14 1 2 3 4 5 6 7
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15 Questions and Next Steps Contact your Account Coordinator or ServicePoint to get signed up with Payment Analytics ©2011 U.S. Bank National Association. All trademarks are property of their respective owners. CPS 1062 (R-11/11)
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