Overview of Card Industry: Technology To Loyalty

Overview Of Card Industry
Technology To Loyalty
1
A Thought
Commerce has become a technical issue. It is not only about making a financial transaction, it is about having a relationship with the consumer while they are exchanging currency for goods and services.
2001-2004 BusinessHive & Creative Commerce Group.

All rights reserved.
Insight
Kim Resch
Extensive Experience in Debit, Credit, and Smart Cards, Mobile Commerce, Loyalty and Incentives. Practical Experience in new product launches including Amex Blue and smart Visa. Specializes in project strategy, project management, implementations, and training in the emerging areas of commerce.
Dave Carrithers
20 years experience in semiconductor, chemicals, consumer products, incentives, stored-value & debit cards, etc. Marketing, IT, Sales, NBD, operations Focus on product, business & market development
3

A Little Laugh

Objectives Of Today
History of the card industry Review the different types of cards and payment types available in the market Insight into how card products are processed & the players Review of the loyalty card industry How & where the money is made in the industry Review of the credit card & airline loyalty programs Review of the smart card Trends in the world of cards & payments Opportunities 5
History Of Payment Cards

1914 - Western Union provided metal cards giving free, deferredpayment privileges to preferred customers. These cards came to be called "metal money. 1924 - General Petroleum Corporation issued the first metal money for gasoline and automotive services first to employees and select customers and later to the general public. Late 1930's - American Telephone and Telegraph (AT&T) introduced the "Bell System Credit Card." Soon, railroads and airlines introduced similar cards. Credit cards grew in popularity until the beginning of World War II when "Regulation W" restricted the use of such cards during the war and temporarily suppressed the growth of this new payment alternative.

1946 - A New York banker developed a credit system called Charge-It. When customers charged local retail purchases, the merchant deposited the charges at Biggins Bank and the bank reimbursed the merchant for the sale. The bank later collected payment from the customer.
1950 - Mr. McNamara created Diners Club charge card.
1951 - Customers of New York's Franklin National Bank

submitted an application for a loan and were screened for credit. Approved customers were given a card they could use to make retail purchases. The merchant copied the customer information from the card onto a sales slip, called the bank for approval of transactions over a certain amount. The bank would credit the merchant account for the loan minus a fee to cover the costs of providing the loan.
1959 - Many banks were offering the option of revolving credit, which allowed customers to make regular payments on the balance owed rather than having to pay off the entire balance at one time.
1965 - Bankcard associations began when Bank of America
formed licensing agreements with other banks. This enabled them

to issue BankAmericard and Interchange transactions among participating banks. 1966 - Fourteen US banks formed Interlink, a new association with the ability to exchange information on credit card transactions.

1967 - Four California banks formed the Western States Bankcard Association and introduced the MasterCharge program to compete with the BankAmericard program.
1967 - Jrgen Dethloff invents the smart card computer. 1969 - As the bankcard industry grew, banks interested in issuing cards became members of either BankAmericard or
MasterCharge. Their members shared card program costs,

making the bankcard program available to even small financial institutions. 1970 - As credit card processing became more complicated,
outside service companies began to sell processing services to

VISA and MasterCard association members. This reduced the cost of programs for Issuing Banks and Acquirers and increased the size of the bankcard industry.
1970 / 1971 - MasterCharge and BankAmericard developed rules and standardized procedures for handling the bankcard paper flow in order to reduce fraud and misuse of cards. The two associations also created international processing systems to handle the exchange of money and information and established an arbitration procedure to settle disputes between members.
1976 - A pre-paid phone card was introduced by the Italian national phone company SIP. The introduction of the phone card was brought about by an extreme shortage of coins in the country which led to a rash of payphone thefts. The Italian phone card
used a magnetic stripe, similar to those found on credit cards, and

required the use of a payphone specially equipped with a magnetic card reader.
10

1977 - BankAmericard became VISA.
1979 - MasterCharge changed its name to MasterCard.

1982 - Japan's Nippon Telephone and Telegraph introduced the first Japanese pre-paid phone card to make calling more convenient for the tens of thousands of daily subway riders in Osaka and Tokyo. Like its European counterparts, the Japanese pre-paid cards relied on a magnetic strip and specially equipped telephones.
1993/1994 - Experimental card operating system at the University of Karlsruhe. It was mainly intended to implement and compare a family of public key crypto protocols worked on at the European Institute of System Security. Hence the name of the card was "ICEcard" (Ic card for Cryptographic Experiments).
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1990 New York's RBOC, Nynex released the first pre-paid calling card that used PIN authorization instead of the magnetic stripe. Nynex's card permitted the cardholder to dial an 800 number and enter his PIN to make long distance phone calls.
1993 First bank debit card/ checking card issued. 1994 - MAOSCO and Keycorp create programmable smart cards. 1995 Selective Use Debit Card Issued Exclusively Yours Card.
1995 First Stored-Value card issued Your Choice Card.

1996 Visa Cash Stored-Value Launched.

12
Card Industry Landscape
The Why!
The Players! The Program Specifics! The How!

13
Definition of Terms
Card Associations: Both VISA and MasterCard are not for-profit organizations who both issue credit cards and set and maintain the rules for processing. They are both run by board members who are mostly high-level executives from their member banks. Issuing and Acquiring Banks: An issuing bank is the original bank that issues the card, such as a First USA Visa card. The acquiring bank is the bank set up by the merchant to accept transaction processing for cards accepted. Authorization Request and Response: An electronic request for authorization sent to an Issuer by a merchant or Acquirer. The response can approve, decline or route the transaction. Authentication: A cryptographic process that validates the identity and integrity of data used in smart cards.
Smart Card/Chip Card: A plastic card embedded with an integrated circuit, or chip, that communicates information to a interface device. Chip cards offer increased functionality through the combination of significant computing power and data storage. Chip cards are capable of holding multiple applications and sometimes are referred to as Multi-Ap Cards.
14
Definition of Terms
Online Authorization: A method of requesting an authorization through a data communications network other than voice to an Issuer, an authorizing processor, or stand-in processing. Offline Authorization: A method of processing a transaction between the card and terminal at the point of transaction without sending the transaction online to the Issuer for authorization. Transactions are sent in batch format to the processing systems. Processor: A vendor acting as the agent to a bank that provides authorization, clearing, or settlement services for merchants and banks. Host Systems: A computer system used by an Issuer, Acquirer, Merchant, Client or Vendor to perform in-house processing. Interchange: The fees merchants pay to the card associations or companies on the transactions, usually a % of the sale price.

15
Card Industry Landscape
The Why!
Psychology of a card program
The Players
Cardholder
Banks
Issuing and Acquiring
Corporate Sponsor
Merchant / POI
Processor
The Programs Specifics
Access Device
(Card, Transponder, Terminals .)
Rewards
(Points, coupons)
Program
(Loyalty supplier, database, rules)
Collateral
(setup, statements, printed materials)
The How!
Technology
(Systems, processing, hardware, firmware, Issuing)

16
Transaction Breakdown
Cash
In Store Web
Check 10% 0% 30%
Card 30% 95% 70%
eCurrencies* 0% 5% 0%
60% 0% 0%
Catalog/ Phone
* Represents e-coins/e payment services, direct deposit

17
Card Facts
2000 - MasterCard's 20,000 member institutions had issued over 437 million branded cards world wide, 15.4 percent more than the previous year. The number of cards issued in the US reached 235.1 million in 2000, 16 percent above the 1999 level. MasterCard association generated $857 billion in gross dollar volume (GDV), which includes both purchase activity and cash transactions, representing a 21.5 percent increase on 1999. In the fourth quarter of 2000, GDV rose 19 percent to $231 billion. In the US, full year GDV registered its highest growth rate in six years having risen 20.2 percent to $423 billion. MasterCard has 21 million acceptance locations worldwide, a 12.7 percent increase on 2000. 1998 - Visa had issued 655 million cards, generating sales volume of $ 1,4 trillion and was accessible at 488,585 ATMs.

18
Card Facts
Affinity Cards
MBNA Corp. The Wilmington, Delaware-based issuer issues cards for 4,000 groups, ranging from virtually every college and university in the US to the International Bridge Club. The company's 2000 annual report says its average account balance was USD $3,519, compared with the industry average of USD $2,311. The average transaction value for MBNA customers was USD $129, compared with the industry's USD $99.
First USA has more than 2,000 partnership programs, including relationships with America Online Inc., Microsoft Corp., and Yahoo! Inc.
According to association estimates, about 40 to 50 percent of cards issued worldwide are multibranded (either a cobranded, affinity, or loyalty card), a level that some say is the saturation point for the market.
19

Card Facts
Affinity Cards
MasterCard has more than 12,000 co-branded and affinity programs worldwide. Visa has about 9,000 multibranded programs worldwide. About 20 percent of its US card base is cobranded or affinity.
Auto and airlines cards each account for 23 percent of the cobrand card market, followed by retail cards at 19 percent, according to Visa and MasterCard figures.

20
How Money Is Made

MasterCard & Visa are not-for-profit associations, which support member banks, which share a common network American Express & Discover Card are, for-profit companies and own their own networks All card associations and companies charge an interchange fee to the merchants that offer their cards Ranges: MasterCard & Visa 1.2% to 3% AMEX 2.5% to 5% Discover Card 1.2% to 4%
MC & Visa issuing banks get a cut of the interchange (between .03% and 1% based on size of issuing volume)
Acquiring Banks get a cut of the interchange fee, plus sometimes a processing fee (between .002% and 1%)
21
How Money Is Made

Processors charge a fee to handle transaction bundling and data reporting, etc. Range between 1 cent to 25 cents per transaction Card issuers charge consumers a fee to have a card, ranging from $25 a year to $300 a year Purchase cards charge yearly fees on reporting and filtering support (range from $50,000 to $200,000 a year) Cost per card, by card manufactures range from 10 cents to $5 dollars based on the type of card (i.e. smart card) Breakage & float

22
Types Of Cards
Charge Cards
American Express Retail Store/Private Label
Credit Cards Visa/ MasterCard Secured Credit Cards Purchase/ Procurement Cards Debit/ Check Cards Stored-Value Cards
Gift Cards Phone Cards
Membership & Other Cards Smart Cards

23

Types Of Card - Charge

Charge Cards
American Express Retail Store & Gas Cards Interesting Points No line of credit must be paid off each month Heavy penalties for late payment In the past most retail stores offered one Profitable for the stores Single retailer version limited use Service & extended warranty sales opportunities

24
Types Of Card Credit Cards
Credit Cards Visa/ MasterCard Affinity Cards Airline Cards Interesting Points Limited in what can be done Payment pretty straight forward Requires credit check & approval Market seems to be at saturation point Operates on an open platform

25
Types Of Card - Secured
Secured Credit Cards Target market is credit consumers Requires a deposit of between $500 and $2,000 Monthly payment is required otherwise draw down on deposit and high penalty Requires high maintenance and yearly fees Operates on an open platform with some level of authorizations

26
Credit/Debit Online Transaction Processing
-Merchant accepts card -Validates card by signature check or PIN -Processes transaction
-Merchants bank initiates transaction -Routes to locations determined by card ids for approval and processing
-Collects card ID/number, Merchant ID, Amount.
-Consumers bank approves transaction, sends back to merchant -Settlement will post to statement.
Request
Request
Auth
Auth
Settlement
Processor
Visa or MC systems Legacy Hosts
Settlement

27
Types Of Card - Purchase
Purchase/ Procurement Cards Allows for filtering/selective use via SIC codes (i.e. hotels, fuel, etc.) Spending limits (daily, weekly, monthly, by category) Intense reporting & tracking Main target B2B & corporate travel Operate on an open platform, with some level of tabling/filtering

28
Purchase/Procurement Card Transaction Processing
-Merchant accepts card -Validates card by signature check or PIN -Processes transaction
-Merchant;s bank initiates transaction -Processes against SIC filter -Routes to appropriate locations
-Processes transaction -Approves or Declines transaction -Posts to statements on settlement
Request
Request
Auth
Auth
Settlement
Settlement
Processor
Visa or MC systems SIC Filtering

29
Types Of Card Debit/Check

Debit/ Check Cards Started out as ATM only card Requires a pin Access to a bank/ checking account (continual deposits) No credit line (instead an overdraft line) Concern by retailers on fees Runs on bank transaction networks (Interlink and Maestro) Networks originally designed for banks to share information Operates on an open and/or closed platform with security Filtered (selective use) and open available

30
Debit Offline Transaction Processing
-Merchant accepts card -Validates card with PIN -Processes transaction
-Collects batch data and formats clearing transaction -Approves or Declines transaction -Routes to appropriate locations
-Processes transaction -Posts to statements
Batch Request
Request
Auth and Settlement
Auth and Settlement
Settlement
Processor
Settlement

31
Types Of Card Stored Value

Stored-Value Cards Gift Cards Phone Cards Mall Cards Gas Cards Interesting Points Open and Filtered (selective use) from one store, to a chain, to a mall Funds are pre-loaded on the card most once spent are disposable Most are anonymous Most operate on a closed platform

32
Stored Value Transaction Processing
-Cards are preloaded with points. -Merchant requests transaction -Verifies Card
-Transaction processes like Debit -Card is validated against stored value hosts or filtering
-Processes transaction -Posts to statements
Request
Request
Auth
Auth
Settlement
Processor
Visa or MC systems Legacy Hosts/filters
Settlement

33
Types Of Card - Other
Membership & Other Cards Most likely no payment involved Account &/or membership ID / number Discounts / punch cards Special access/ areas Purchase or activity tracking Magnetic strip &/or bar code More about belonging to a club/group Operates on a closed platform Loyalty & frequency tracking

34
Membership Card Transaction Processing
-Card is accepted -Checked against internal database -Can be routed to third-party database through processor.
Example: Internal Database
Blockbuster
Example: Dining Ala Carte
3 party Database
Processor
rd

35
Types Of Card Smart
Smart Cards Multi functional (debit, stored-value, credit) Simple cards to very complex (based on chip type) High security & fraud protection Requires special reader Contact & contactless technologies Operates on closed and open platforms Can have multiple currencies (i.e. cash, points, etc.)

36
Smart Card Transaction Processing
-Card and Terminals authenticated with cryptograms -Obtain PIN, if needed -Verifies static data on chip -Processes static programs offline -Sends transaction online -Routes to any internal legacies -Verifies risk parameters on card
-Formats the crypto authentication request -Routes and initiate online transactions.
-Validates card and transaction data -Routes to hosts systems -Processes settlement -Posts to statements
Online Request
Online Request
Auth
Auth
Settlement
Processor
Settlement

37
Smart Card Overview
Voucher Replacement Mobile Commerce Automated Lodging Processes
Logical & Physical Access
Smart Card: 101 The Market Smart Cards in Loyalty
Electronic Ticketing & Automated Air Travel Processes
POS / Merchant's
Lessons Learned
Automated Car Rental Processes
Corporate Security
Target Marketing and Expandable to other Locations E-Purse Special Offers and Loyalty Programs
Enhanced Customer Information

38
History of Smart Cards

Smart Cards have been around since the early 70s. The patent
was registered in 1974. Commercialization started in the early 1980s with phone cards. In 1993, there were 300 million Smart Cards issued in the world. (80% were phone cards) In 1998, Amex Blue was introduced in US. In 2000, vendors shipped 1.6 billion chip cards worldwide, of which 541 million were cards with microprocessor chips, up 36% from the year before.
In 2005, vendors will ship an estimated 2.4 billion of the higher-end microprocessor cards, half of which will be subscriber identity module cards for mobile phones
39
What is a Smart Card?
A smart card resembles a credit card in size and shape, but inside it is completely different A silicon chip beneath a contact plate The silicon chip is a small computer with 8-64bit microprocessor It has the same processing speeds as old computers, such as Tandy

40
Smart Card at a Glance!
Contact Plate
Applications
EMV
Loyalty
Wallet
Misc. Appl.
Operating System (MULTOS, JAVA, Windows) Silicon
1234 5678 9012 3456 Joe Smith

41
Why Smart Cards?
Security and fraud reduction

Interactive Storage Capacity
Dynamic downloading
Side Note: Outside the U.S., Smart Card use has aggressively taken place because of two major factors: 1. Telecommunications is very poor & costly 2. Majority of transactions are offline
42

Types of Smart Cards

Memory Card: No processing capability Contact Contactless (Proximity): Using Radio Frequency Combi-Card Transponders or Key Fob
Operating Systems Java Card
Multos
Microsoft Windows for Smart Cards
43
Fraud and Security
Magnetic stripe technology remains in wide use in the U.S. However, the data on the stripe can easily be read, written, deleted or changed with off-the-shelf equipment. To protect the consumer, businesses in the U.S. have invested in extensive online mainframe-based computer networks for verification and processing. The microprocessor on the smart card is there for security. The host computer and card reader actually "talk" to the microprocessor. The microprocessor enforces access to the data on the card.

44
Fraud and Security
Smart cards are protected with a public/private key infrastructure: Digital Signatures Cryptography to perform: Data Integrity Authentication Non-repudiation Confidentiality

45
Why are Smart Cards Safer?
Built in interactive capabilities

Personalized cryptography Tamper resistant, cannot be reproduced Creates card present environment Individual risk parameters Note: Security directly contributes to price.

46
Standardization
EMV (Europay, MasterCard and Visa) Card specifications Terminal specificities Application specifications Cross-border concerns How are they doing so far?

47
Common Uses of Smart Cards
The most common smart card applications are: Credit cards Electronic cash Computer security systems Wireless communication Loyalty systems, like frequent flyer points Banking Satellite TV Government identification
48
Common Applications
Loyalty: Multiple programs, tickets, points, coupons, one-to-one.

Network Access: secure email, secure sign-on, web access. Payment: Secure transactions, multiple accounts. Travel: reusable tickets, virtual ticketing, links to payment applications and software, Automated check-in, reduced fraud.
49

Smart Cards In Other Countries
Smart cards are much more popular in Europe than in the U.S.
In Europe the health insurance and banking industries use smart cards extensively. Every German citizen has a smart card for health insurance.
Even though smart cards have been around in their modern form for at least a decade, they are just starting to take off in the U.S.
50
Where The Smart Card Market Is Headed!
Card issuers want chip card to reduce fraud. Anticipates multi-aps will attract cardholders and transactions. Chip Manufacturer and Hardware Suppliers are showing losses Readers are not being adopted.even when free. Keyboards are progressing. Merchant migration is happening. Gimmicks are more successful than functions (i.e.. Blue, Clear) Internet transactions are seeming more secure.

51
The Current State of the Market
American Express
o Launched Blue September of 1999. Now with over 2 million cards.
o Applications: Secure Access, Wallet, Reader, BlueLoot

o Rolling out to multiple countries, Business, Student. o Decommissioned Wallet o Focusing on palm computing and mobile.
52

Visa USA
o Visa USA Launched smart Visa September 2000

o Over 3 million cards with Providian, First USA and Fleet.
o Applications: Payment, Access, Loyalty, Reader. o Launched Target POS (Providian made first transaction). o Hypercom, Vital and National City teaming up for POS o Pushing Loyalty as driver for merchant

53
MasterCard
o Citibank planned September 2001 launch of 4m cards o Applications: e-cash, loyalty, e-ticketing o Strong alliances, yet Multos-based.

54
Loyalty and Smart Cards
Multi-ap functions are prime for loyalty, yet difficult to please the
whole market. Closed environments are good examples and ripe for loyalty. Will supply more security. Market will not advance without merchant. Have not proved usable functions are more superior than mag stripe. What the industry is looking for is a gift card on steroids.

55
Opportunities for Loyalty
Relationship management on the card

Multiple earning and redeeming Individualized information and preferences Points and programs held locally on card Info storage capacity Links to databases

56
Obstacles In Adoption
Infrastructure
Ease and convenience with Mag. Stripe Cost of card and conversion Retailer ROI Cardholder confidentiality Standardization

57
Lessons Learned
Version and program control

Application segregation Transaction processing changes Card/program expiration dates Replacement cards Branding Servicing Information management / multiple databases

58
A Quick Review
Frequent Flyer & Card Programs

59
Prior to 1980, FFPs Not Possible

Airline Industry Regulation Lack of Infrastructure
Dominated by Unsophisticated Offerings

Merchandise & Coupon Based S&H Greenstamps Raleigh Cigarette Coupons
1981 Regulatory & Market Changes Give Birth To FFP

American invents frequent flyer miles Loyalty Becomes Impossible Without A Planned Program Hertz joins and subsequently drops, citing the high costs. Later rejoins after dramatically losing market share without a FFP. Today Hertz belongs to 20 FFPs After in-house Frequent-Stay Programs, hotels conclude that the greatest marketing benefits still come from the FFPs
60


"We didn't want an FFP. But it came to my attention that FFPs were siphoning business travel away from us. We did it defensively, and I think if we had not done that we would have been terribly disadvantaged." - Herb Kelleher, President, Southwest Airlines First 20 Years Of FFP 9.77 Trillion Miles Accumulated - Source: InsideFlyer Magazine 2001 1985 - Banks Team Up With Airlines Co-branded Cards Wildly Successful Average spend up to 10x higher Active account rate up to 80 percent or higher Attrition and acquisition costs decline 150,000 members in 1981 to 200,000,000 members in 2001

61

By 1991: All major airlines and banks established exclusive relationships and Hundreds of credit card issuers locked out 1994: Virtual Airline is Born Generic Mile Programs Miles by a different name: Single Branded Miles vs. Co-branded Miles Generic vs. Branded Points Non-Restrictive Points Any Airline In The World How Generic Points Work: Sold to Over 125 of the largest US Banks Consumer Acceptance: fees $25 to $75 Spend Ranges: $8,000 to $22,500 a year Officially Sponsored by MasterCard Amex plays Follow the Leader $200 Billion + Spent on Enrolled Cards No need to Co-brand with an airline partner
62
Top Banks With Unrestricted Programs:

Capital One GE Capital Travelers Bank Direct Merchants Bank One First USA Fleet Morgan Stanley Dean Witter Chase Bank
Wells Fargo
Household Bank Town North Citibank Household Credit
Charter One
MBNA HSBC Comerica
Merrill Lynch

63
Loyalty Learnings
71% of consumers if FFP said they wouldnt trade their frequent flyer benefits for lower airfares.
Source: Frequent Flier Magazine
The proven addition of miles can drive repeat purchases and maximize customer lifetime value.
Source: Hambrecht & Quist
Consumers charge about $3,200 a year on a typical credit card add miles and they spend more than $18,000 a year.
Source: Bank Rate Monitor

64
Universal Mile + Network + Card

The Network as a Catalyst for Increased Spend and Activation
Purchases on card at partner retail locations
XYZ BANK
$1,325
Miles Earned Through Partners: 2,125 Miles from Card: 1,325 + Total Earning that Month: 3,450 +
PLUS all other card purchases outside the partner network
300 Miles $ 300
100 Miles $ 100
250 Miles $250
300 Miles $ 300
800 Miles $ 300
375 Miles $ 75
Grocery
Gas & Oil
Electronics All rights reserved. (online & offline)
Retail 2001-2004 BusinessHive & Creative Commerce Group.
65 Trip TeleCom
Universal Mile + Network + Card

Incremental monthly revenue volume increases 400%+ & revenues increase $100 Million + a year.
Increase in Monthly Charge Volume (in $Millions)
$500
Sample Card Issuer with 200,000 cards

$400
EXAMPLE*
Increased Spend Incremental monthly charge volume goes from $72M to $314.2Man increase of 430% Increased Activation Increased Acquisition
Monthly Revenue Increase Annual Revenue Increase
$ 4.0 M $ 2.7 M $ 1.9 M
$ 48.0 M $ 32.8 M $22.3 M
$300
$200
$100
TOTAL
$ 8.6M $ 103.1M
$0
$0 $2 00 $4 00 $6 00 $8 00 $1 ,0 00 $1 ,2 00 $1 ,4 00 $1 ,6 00 $1 ,8 00 $2 ,0 00 $2 ,2 00
Average Monthly Spend

2001-2004 BusinessHive & Creative Commerce Group. All rights reserved.
$2 ,4 00
66
* Revenue figure based on 2.9% of gross charge volume in interchange and miscellaneous fees, plus 60% revolving balances at 13.9% annual interest.
Card & Mile Issues To Keep In Mind

Attainability Of The Program Member: Limited Earnings Capability = Short-Term Loyalty & Interest Single Partner, Stand Alone Programs: Even Top Customers Cant Make For A Successful Program It Requires A Network Just Because They Carry Your Card Doesnt Mean Youve Captured Their Heart: "The research shows clearly that the existence of a loyalty card scheme is not associated with a degree of loyalty in shopping habits." -Source: Customer Loyalty Today

67
Trends Relationship Convergence
Wireless
Data Availability
Security
Loyalty

68
Thank You For Your Time
Kim Resch, Founder and President

Decision making around technical issues is expensive. Think-tank atmospheres are vital, yet difficult and expensive to implement in corporate America. Efficient implementation is the key to success. It is not an environment for a learning ground. Let us help with:
www.CreativeCommerceGroup.com
Creative Commerce Group, Inc. is dedicated to the support of their clients needs and solutions. Each client offers unique and special challenges, whether in technology, in concept development, in speed to market or hardware to make it happen. But through disciplined project management, we have helped clients' launch new products successfully, time-andtime again.
Resources for the Emerging Commerce Industry Smart Card and Magnetic Stripe Solutions Hardware Equipment and Implementation Stored Value Card Applications Loyalty Strategy Specialist Project Management Formula Methodlogically
636-861-9850 or Kim@ccg-i.net
69

Thank You For Your Time
David Carrithers, Chief Bee Keeper

Providing consulting services for business individuals looking for honest and straightforward counseling, coaching & implementation of business solutions that improve profit performance and loyalty with employees, channels and customers. www.BusinessHive.com
Generating Results Through: Targeted Individualized Coaching Program Improved Customer & Employee Loyalty Enhanced Product, Market & Business Development Results Profitable Brainstorming & Product Creation Faster & More Accurate Product & Business Launch Management Unbiased Incentive Program Assessment & Support Dynamic Organizational Development
707-484-3620 or e-mail David@BusinessHive.com

70

Overview of Card Industry: Technology To Loyalty

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Overview Of Card Industry

2001-2004 BusinessHive & Creative Commerce Group.

2001-2004 BusinessHive & Creative Commerce Group.

2001-2004 BusinessHive & Creative Commerce Group.

History Of Payment Cards

2001-2004 BusinessHive & Creative Commerce Group.

History Of Payment Cards

1950 - Mr. McNamara created Diners Club charge card.

1951 - Customers of New York's Franklin National Bank

History Of Payment Cards

1965 - Bankcard associations began when Bank of America

formed licensing agreements with other banks. This enabled them

2001-2004 BusinessHive & Creative Commerce Group.

History Of Payment Cards

MasterCharge. Their members shared card program costs,

outside service companies began to sell processing services to

History Of Payment Cards

used a magnetic stripe, similar to those found on credit cards, and

2001-2004 BusinessHive & Creative Commerce Group.

History Of Payment Cards

1977 - BankAmericard became VISA.

1979 - MasterCharge changed its name to MasterCard.

History Of Payment Cards

1995 First Stored-Value card issued Your Choice Card.

2001-2004 BusinessHive & Creative Commerce Group.

Card Industry Landscape

The Players! The Program Specifics! The How!

2001-2004 BusinessHive & Creative Commerce Group.

2001-2004 BusinessHive & Creative Commerce Group.

Card Industry Landscape

Psychology of a card program

The Programs Specifics

2001-2004 BusinessHive & Creative Commerce Group.

Check 10% 0% 30%

Card 30% 95% 70%

* Represents e-coins/e payment services, direct deposit

2001-2004 BusinessHive & Creative Commerce Group.

2001-2004 BusinessHive & Creative Commerce Group.

2001-2004 BusinessHive & Creative Commerce Group.

2001-2004 BusinessHive & Creative Commerce Group.

How Money Is Made

How Money Is Made

2001-2004 BusinessHive & Creative Commerce Group.

Membership & Other Cards Smart Cards

2001-2004 BusinessHive & Creative Commerce Group.

Types Of Card - Charge

2001-2004 BusinessHive & Creative Commerce Group.

Types Of Card Credit Cards

2001-2004 BusinessHive & Creative Commerce Group.

Types Of Card - Secured

2001-2004 BusinessHive & Creative Commerce Group.

Credit/Debit Online Transaction Processing

2001-2004 BusinessHive & Creative Commerce Group.

Types Of Card - Purchase

2001-2004 BusinessHive & Creative Commerce Group.

Purchase/Procurement Card Transaction Processing

-Processes transaction -Approves or Declines transaction -Posts to statements on settlement

2001-2004 BusinessHive & Creative Commerce Group.

Types Of Card Debit/Check

2001-2004 BusinessHive & Creative Commerce Group.

Debit Offline Transaction Processing

-Merchant accepts card -Validates card with PIN -Processes transaction