© 2010 deluxe enterprise operations, inc. proprietary and confidential deluxecard programs and the...
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
DeluxeCard Programs and The Credit CARD Act Impact
Presented by: Deluxe Corporation, The Bancorp Bank, and FIS Global
May 20, 2010
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
Cindy Mattson
Vice President of Prepaid Implementations
FIS Global
Therese Jerrard
Senior Training Specialist
Paul Landry
Senior Vice President
The Bancorp Bank
Becky Frederick
Regulatory Compliance
Deb Rodgers
Senior Product Manager -DeluxeCard
Your Panel For Today’s Discussion
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
Our Trusted Partners
FIS Global (Metavante)
The Bancorp Bank and its affiliate
University National Bank
VISA®
Program Role
Card Processor
Issuing Bank The Network
Primary Responsibilitie
s
• Provides online applications for financial institutions to order cards
• Fulfills in-branch inventory
• Provides customer service for cardholders
• Processes card transactions
• Issues the cards based on applicable regulations
• Facilitates the funding for prepaid card transactions
• Provides setup and customer service for financial institutions
• Allows Deluxe to participate in the association as a Program Manager
• Acts as the network for card acceptance at merchants and retailers
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
What We’ll Share With You Today
• What’s at Stake? – Protecting Fee Income for Financial Institutions
• Regulatory Changes– Becky Frederick, Esq. Regulatory Compliance– Paul Landry, Senior Vice President, The Bancorp
Bank– Cindy Mattson, Vice President of Prepaid
Implementations, FIS Global• DeluxeCard Compliance• Prepaid Card Program• Let’s Get Started!
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
Credit CARD Act & Regulation Changes Overview
Interview with Becky Frederick, Paul Landryand Cindy Mattson
This presentation is provided for informational purposes only with the understanding that Deluxe Corporation, FIS Global and The Bancorp Bank are not rendering legal advice and that this presentation is not to be used as a substitute for legal counsel.
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
Key Dates & Background
Credit CARD Act of 2009
Prepaid Card provisions affect expiration dates and restrict ability to charge certain types of fees.
Signed into law
May 22nd, 2009
Jan. 12th, 2010
Federal Reserve issues final rules for
credit cards
Aug. 22nd, 2010Mar. 23nd, 2010
Federal Reserve issues final rules
for gift cards
Law takes effect
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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What Do The New Rules Cover?• Cardholder fees
– Cannot charge inactivity, dormancy or service fee until 12 months of inactivity
– Can only charge one fee per month– Fees must be properly disclosed
• Expiration – cards & funds– Cards must have five years remaining life at time of sale– Funds cannot expire less than five years from time of sale
• Disclosure requirements– New disclosures available to purchaser prior to sale– New disclosures on the card– Fee disclosures available via toll-free number
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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All Open Loop General Purpose Prepaid Programs
All Open Loop General Purpose Prepaid Programs
Which Programs Are Affected?
Loyalty, Promo, Award
Loyalty, Promo, AwardGift CardsGift Cards
Reloadable Prepaid
(not marketed as gift)
Reloadable Prepaid
(not marketed as gift)
Included – all provisions
apply
Included – all provisions
apply
Excluded – no provisions
apply
Excluded – no provisions
apply
New disclosure rules apply
New disclosure rules apply
For all gift cards issued on or after August 22nd, 2010
IN SCOPE IN SCOPE OUT OF SCOPE
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
Service Fee Changes
• No service fee can be charged unless there has been at least 12 months of no activity on the gift card
– Deluxe currently charges a monthly service fee of $2.50 commencing in 7th month and will implement this change for gift cards issued on or after August 22, 2010
• Cannot charge more than one fee per month
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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Expiration Date Rules
• Systemic controls that require a minimum 5-year life meets standard
• Stocking cards on shelf with 5 1/2 years remaining life meets standard
• Safe Harbor rule for cards created with 7-year life (Sec. 205. 20(e)(3)(iii))
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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DeluxeCard Fee Compliance
• FIS Inactivity Fee meets compliance requirements– Monthly fee– DeluxeCard has configured the minimum number of
months of inactivity– Activity based on financial transactions, excluding
cardholder fees
• DeluxeCard has reviewed Final Rules carefully to determine what fees can be assessed
• DeluxeCard has reviewed policy for foreign currency transactions
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
Expiration Date Changes
• All expiration dates must be at least five years after the date the gift card is issued– DeluxeCard Visa Gift Cards currently expire two years
after the date the gift card is issued
– Gift cards issued on or after August 22, 2010, DeluxeCard Visa Gift Cards will expire seven years after the gift card is issued
• Expiration date must be disclosed on the face of the Gift Card– DeluxeCard Visa Gift Cards currently disclosure the
expiration month and year on the face of the gift card
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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DeluxeCard Expiration Date Compliance
• New, longer card expiration dates
– DeluxeCard has configured the number of months for card expiration
– Network rules are being modified to allow the longer required expiration dates
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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DeluxeCard Expiration Date Compliance
• Provide consumers with a reasonable opportunity to purchase a card with a minimum of 5 years remaining life– 7 year expiration of DeluxeCard Visa Gift Cards gives
financial institutions 2 years of additional shelf-life– Stocking cards on shelf with 5 ½ years remaining life
(minimum)– Meets Safe Harbor rulePolling question: What promotions are you considering to deplete your existing gift
card stock? a. Moms, Dads and Grads Promotion b. Employee recognition
c. Email capture incentives d. Online banking enrollment incentives e. E Statement enrollment incentives f. All of the above
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
Disclosure Changes
• All fees must be disclosed on the back of the gift card– Deluxe has opted for the 7 year expiration date
• Expiration date must be disclosed on the face of the gift card
• These changes require new card stock
• Bancorp needs a record of destruction of existing card stock
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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DeluxeCard Disclosure Compliance
• In-Branch– DeluxeCard will design packaging and/or other
materials to address pre-sale disclosure requirements
• On-Card Disclosures– DeluxeCard will include the required
disclosures on new card designs• Telephone Disclosures
– DeluxeCard will continue to provide a toll-free phone number on the card
– FIS CSRs will provide fee information via the CMSe application
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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Compliance Support• Financial institutions will take advantage of grandfathering
cards sold prior to August 22nd, 2010
• To create compliant programs, DeluxeCard will modify BIN extension configurations for cardholder fees and expiration dates
• To create compliant cards, DeluxeCard will modify card package
components to incorporate new disclosure requirements on the
cards, on packaging and for new cardholder terms & conditions
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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Compliance Resources• www.deluxe.com/dcprogram
– Terms and conditions, card handling instructions, and compliance overview will be posted
– Inventory log matrix will be available for download
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
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Next Steps
• Deplete existing inventory
• Order new cards (late June)
• Complete form to log obsolete cards
• Provide Bancorp Bank with log of obsolete cards
• Destroy any old cards, carriers & cardholder agreements on August 22nd, 2010
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
DeluxeCard® Prepaid Visa® Card Program
The final rule affects only our DeluxeCard® Visa® Gift Card Program and not our DeluxeCard Prepaid Visa Card Program
As long as the reloadable prepaid card is not marketed as a gift card, changes to gift cards are not required for the prepaid card program
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
• Financial Institutions that currently pay ATM and one-time debit transactions could realize a 40-60% decrease in NSF fee income due to Reg E
• The DeluxeCard® Prepaid Visa® Card can help FIs generate fee income and reach new customers to meet your target
Grow Revenue and Reach New Customers
Polling question: What has your financial institution considered to generate additional fee income?
a. Expansion of gift card program b. Adding reloadable card program c. Pursuit of opt-ins for Reg E d. Adding identity theft solution
e. Other f. All of the above
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
• Increase fee income
• Reach new customers
• Expand financial institution product suite
• Complete turnkey reloadable program
• No annual administration fees
• Free financial institution support
• Free personalized marketing tools
Value to You
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
• Budget-friendly
• Easy to manage
• Easy to re-load
• Less risky than cash
• Controlled means to provide funds
Several Reasons Consumers Value Reloadable Cards
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
Targeting Customers
• College students • Seniors on a budget• Bridal budget• Potential customers that don’t qualify
for a traditional account
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
• Flexible
• Convenient Loading
• Money Management
• Safer
• Easier
• $5,000 Maximum Load
Reloadable Card Features
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
• Setup Fee = $600
• Card Fee = $2.60
• Most FIs charge $4.95-$7.95 per card
• FIs can charge $2.95-$4.95 to reload card
• Minimum card order is 50 cards
• One card design
• Card is adhered on UltraForm and comes with Card Holder Agreement in #10 Envelope
Card Details – Financial Institution
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
Card Details – Consumer Experience
Customer does not pass CIP screen
Bancorp Bank sends letter to customer to obtain necessary info
Customer purchases instant issue card at financial
institution branch
The Bancorp Bank receives updated information
Customer does not pass CIP screen. Customer keeps
instant issue cardCard expires after two years
Customer Identification Process screen is batched and
sent to The Bancorp Bank
Customer passes CIP screen and personalized card is
created and mailed to the customer
Customer receives personalized card and
activates via IVR or website
Instant Issue card is deactivated
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
Card Details – Consumer Card Fees
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
• Maximum load value = $5,000
• Maximum spent on a Card per day = $2,500
• Minimum initial value load = $20.00
• Direct Deposit form to fund card from employer or other account
Card Details – Consumer Purchase
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
Card Details – Consumer Reloads• Minimum value reload = $1.00
• Maximum value reload = $950 cash reloading OR $5,000 via direct deposit
• Maximum reloads per day = two (2)
• Add value or load Card
– via direct deposit
– retail load networks (Green Dot®, MoneyGram® and Visa ReadyLink®)
– and at bank branch
• Funds may be added to a Card (“value loading”) at any time
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
• Financial Institution required to integrate into existing BSA/AML policy
• May require Board of Directors approval
• Compliance Overview and FAQs available
Compliance
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
Prepaid Card Gift CardSales Process Allow time to discuss
compliance requirements; may
need board approval
Shorter lead time due to less
compliance complexity
Reloadable Yes No
Cost per card to the FI $2.60 $2.60
Co-branding available Yes Yes
Card Carrier In Envelope Yes
Minimum Order Quantity
50 50
Setup Time 4 Weeks for FIs on Gift Card; 6-8 Weeks
for new FIs
6-8 Weeks
Web based Platform CMSe CMSe
User ID and Password Same as Gift Card Same as Prepaid
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
Training and Marketing Materials
Same web portal as gift cards:www.deluxe.com/dcprogram• Training Modules• Marketing Materials
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
Program Implementation of 6-8 Weeks
• Execution of Letter of Participation (LOP)• Completion of paperwork in FI Executive Kit
– Set-up form, Visa application, Agent Marketing and Distribution Agreement, Visa Member Applicant Risk Review Survey, Self audit checklist, Send in logo for co-branding
• Enter into Implementation Wave and Receive Card Management Access (CMSe)
• Training of Tellers• Order Marketing Materials• Access to Reporting Portal
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
2. How did you hear about this session:a. E-mail inviteb. Postcard invitec. Call from Deluxed. Associatione. Forwarded to me by
colleaguef. Other
3. Are you interested in learning more about the DeluxeCard Prepaid Visa Card Program?a. Yesb. Not at this time
1. On a scale of 1-5, how prepared are you for the Credit CARD Act and final rule changes to your customers?a. 4 – Very Preparedb. 3 – Almost therec. 2 – Somewhatd. 1 – Not Very
Exit Poll
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
Additional Resources• DeluxeCard Visa Gift Card Program Compliance Overview• DeluxeCard Visa Gift Card Program Compliance FAQs• DeluxeCard Prepaid Visa Card Program Compliance
Overview • DeluxeCard Prepaid Visa Card Program Compliance FAQs• Visit www.mydeluxecard.com• Submit outstanding questions
– will respond electronically
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© 2010 Deluxe Enterprise Operations, Inc.
Proprietary and Confidential
Thank You for joining the web seminar. We look forward to working with you on this and other marketing initiatives.
A recorded copy of this web seminar will be posted on www.deluxe.com/deluxecard in one week.
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