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Citi Prepaid ServicesAn overview to delivering better, electronic payments
® 2009 Strictly Confidential2
Agenda Introduction to the Prepaid Industry
Prepaid Solution and Key Benefits Overview
Prepaid Solutions for State and Local Governments
Case Studies
Questions and Answers
Introduction to the Prepaid Industry
® 2009 Strictly Confidential4
Prepaid Program Types
Segment Product Types
Consumer to Consumer Teen Spending Cards, Gift Cards, Travel Cards, College Campus Cards, General Purpose Spending Cards, Private Label Gift Cards
Business to Consumer Insurance Claim Cards, Workers Compensation Cards, Promotional and Rebate Cards, Customer Service Cards
Business to Employee Payroll Cards, Incentive/Bonus Cards, Flexible Spending Account Cards, Transit
Business to Business Petty Cash Cards, Infrequent Traveler Cards, Relocation Cards, Private and Government Purchasing/Corporate Cards
Government to Consumer Federal and State government disbursements, for example Unemployment Insurance, Child Support, etc.
Total Multiple other custom applications either in market, plan, or to be identified. Product solutions may also be hybrids.
® 2009 Strictly Confidential5
The Prepaid Market
Network branded solutions (open loop) had an overall increase of +44.5% in 2007.
Growth for network branded solutions is projected to reach $101.4 Billion in 2010 and $124.6 Billion in 2011.*
Open Network Branded Prepaid, 2007 growth**: – Public Sector +1,000%
State Unemployment +115%
– Payroll +21%
– Consumer Incentives +87%
– Employee & Partner Incentives +81%
Mercator Advisory Group predicts that Network Branded solutions will continue to increase their penetration of market segments at the expense of Closed Loop solutions.
*Source: Mercator, “Prepaid Market Forecasts 2007 to 2010”; October 2007
**Source: Mercator, “5th Annual Network Branded Prepaid Market Assessment”; August 2008
® 2009 Strictly Confidential6
About Citi Prepaid Services
12 years prepaid experience as industry pioneers
Manage prepaid programs for over 1,400 public and private sector clients
Millions of prepaid debit cards issued globally
Forecasting model and infrastructure enables scale for any volume
Introduces streamlined workflows to organizations with improved tracking and communications
Citi is the leading provider of Visa and MasterCard prepaid debit card programs
Citi Prepaid Solution and Key Benefits Overview
® 2009 Strictly Confidential8
Public Sector Payment Challenges
Streamlining cumbersome, inefficient processes for issuing paper checks
Reducing payment production, distribution and management costs
Providing a solution for all beneficiaries, including the underserved
Mitigating issues around fraud and payment security
Easing the management of lost and stolen checks
Avoiding check delivery disruptions (e.g. weather, strikes, etc.)
Enhancing the tracking and auditing of payments
With constricting fiscal environments, agencies are facing payment challenges like:
State agencies can significantly impact their budgets by converting paper checks to more cost-efficient electronic alternatives.
® 2009 Strictly Confidential9
The Citi Prepaid Solution
90% cost reduction
Custom Visa®/MasterCard® prepaid card• Re-loadable and re-usable
• Good everywhere Visa/MC debit cards are accepted
• Zero Liability Protection
• PIN and Signature
Enhanced communications portal• Custom branded website
• Real-time account information (IVR/online)
• Account activity alerts (text message/email)
• Dedicated areas for agency communications
Turnkey solution• Custom cardholder Welcome Kit
• Card issuance and account maintenance
• Marketing communications support
• 24/7/365 multilingual Customer Service
® 2009 Strictly Confidential10
Key Program Components
Reporting
– Operational
– Business Reports
Infrastructure and Security – Redundancy
– Scalability
Implementation Methodology – Speed to Market
– Focus on Quality
– Training and Education
® 2009 Strictly Confidential11
Prepaid Benefits for the Agency
Better Financials
• Lower cost delivery
• Improve funds management
– Fraud Protection
– Payment Reversals
• Reduce required payment resources
• Reduce costs for the taxpayer
Streamlined Operations
• No lost/stolen checks
• Eliminate administration associated with checks/cash
• Eliminate escheatment handling
• Powerful reporting, better auditing capabilities
Powerful Communications Tool
• Comprehensive communication/notification package
• Ongoing communication with recipients
® 2009 Strictly Confidential12
Prepaid Benefits for the Recipient
Greater Convenience• No checks to deposit or cash• Funds available immediately• Universal Visa/MasterCard acceptance• Worldwide ATM access• No lost or stolen checks• “Zero Liability” fraud protection
Better Communication and Service• Detailed payment history online• 24/7 balance updates (phone, online)• 24/7/365 support (email, IVR, live reps)• Email/text message alerts• Special transfers
Improved financial management• No need to carry cash • Online account management • Robust payment tracking• No need to spend money cashing checks
® 2009 Strictly Confidential13
Underserved Population in the US
80 million consumers in the US without a traditional deposit account or with limited access to credit.
These consumers received almost $1 trillion in payments from employers, states, government entities, insurance companies and others
Over $1.5 billion in fees are paid to cash checks
Approximately 80M “Underserved”… (Population in Millions)
..with almost $1T in Income ($ Billions)
9.0
44.8
27.1
131.4282.3
541.3
Unbanked (no banking relationship)
Underbanked (low/ no credit score)
Recent Immigrants
Underserved Consumers
Source: Study commissioned by Visa and performed by Bearing Point in 2006-2007
Cardholder Satisfaction
Responding to publicity regarding cardholder fees on State Unemployment Debit card programs, we deployed an online survey for a State client to gather feedback from their claimants:
97% of claimants say receiving benefit payments quickly to their debit card (rather than by check) is important.
93% of claimants find it easy to use their debit card.
90% prefer receiving their UI payment to their debit card, rather than via paper check.
82% find it easy to access their debit card funds without any fees.
Prepaid Solutions for State and Local Governments
® 2009 Strictly Confidential16
State and Local Prepaid Programs
Payroll
Unemployment Insurance
Pension Payments
University Payments
– Financial Aid & Payroll
Law enforcement
– Juror, witness stipends
Worker’s Comp
Food Stamps & WIC
Child Support & TANF
Wellness Programs
Catastrophe/ Disaster recovery claims
Replace existing check, voucher or cash payments with a more efficient, effective, secure and convenient prepaid program.
Child BenefitsWIC**
Food Stamps
Unemployment
Payroll
Universit
ies (state)*
20082010
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
In Millions
State Prepaid $ Projections
® 2009 Strictly Confidential17
Unemployment Insurance - OverviewWhat
– Provide unemployed with prepaid debit card
– Unemployed use card at ATM, point-of-sale or teller; or direct deposit funds to bank account
– Account enables all users to monitor deposits and access payment details (e.g., remaining # weeks on unemployment)
Benefits to State
– Significant cost and efficiency savings; fraud reduction
– Streamlined payment process – utilize one file to send all payment types
– Central communications channel – one package with card usage and direct deposit instructions mailed to all recipients
– Outsourced fulfillment to one of the world’s largest full service financial institutions
Benefits for Claimants
– Flexible choices for how to receive payments
– Accounts are FDIC-ensured; cards come with Zero Liability fraud protection
– Instant online access to payment and spending history
– Automated text alerts
– Eliminate check-cashing fees; accommodates the unbanked
– 24/7 multilingual customer support
® 2009 Strictly Confidential18
Payroll & Pension Payments - Overview What
– Citi provides multiple ways to achieve 100% paperless pay for all recipients (banked and unbanked): Payroll card for employees/retirees without bank accounts Direct Deposit for those with bank accounts Electronic Paystubs accessible via web, IVR, live rep, or fax back
Benefits to Employer
– Eliminates over 75% of payroll processing costs
– Pay all employees/retirees electronically; compliance with “free & clear” access to funds
– Faster, more efficient and guaranteed payments, even during natural disasters or other emergencies
– Outsourced fulfillment to one of the world’s largest full service financial institutions
Benefits for Employees/Retirees
– Accounts are FDIC-ensured; cards come with Zero Liability fraud protection
– Convenient options for accessing pay (spend, ATM, Pre-Check, cash advance)
– On-time pay without need to travel to pick up or cash checks
– Instant online access to payment and spending history
– 24/7 multilingual customer support
® 2009 Strictly Confidential19
Higher Education Refunds & Research – OverviewWhat
– Automate all refund and research payments to banked & unbanked
– Universities send payment instructions to Citi to manage payments to prepaid cards or bank accounts
– Flexible withdrawal options for recipients to access funds
Benefits to University
– Significant cost and efficiency savings, as well as fraud reduction
– Faster, more efficient payments
– One process to manage refund and research payments
– Facilitated processing of each semester’s refund payments to card
– Greater visibility to program metrics
Benefits to Recipients
– Convenience of debit card for PIN-based and signature purchasing, ATM or teller cash access
– No need to pick up check at bursar’s office
– Eliminated check-cashing fees and reduce risk of carrying excess cash– Instant online access to payment and spending history– 24/7 multilingual customer support
® 2009 Strictly Confidential20
Emergency Relief - OverviewWhat
– Supply instant issue card supply to organizations in preparation for emergencies
– On demand, organization can load payments and issue cards through online ClientZone tool or by integrating existing systems into Citi’s API
– ClientZone management tool enables reloads and program tracking
Benefits to Entity
– Payments are at the ready without the risk of holding large sums of cash for emergencies
– Fully automated tool requiring minimal to no client integration
– Portable, role-based online tool that is accessible at emergency sites and corporate headquarters
Benefits to Recipients
– Quick, flexible access to funds via PIN-based and signature purchasing, ATM or teller cash access
– Eliminate risk of carrying excess cash– 24/7 bilingual customer service support– Instant online access to payment and spending history
Case Studies
® 2009 Strictly Confidential22
State of Maryland DLLR: Unemployment Benefits
Challenge
– $450 - $900 million historically paid annually in UI payments
– Payments made 100% by check, depleting the State’s financial and administrative resources
– Unemployment rate at 7.5% in 2009, highest in 12 years and climbing
Citi Solution – Replace unemployment benefit checks with a custom reloadable stored value card– Comprehensive outsourced 24/7 cardholder support
Results
– Migrated payment process to fully electronic platform
– Increased convenience, delivery speed and access flexibility for claimants
– Achieved cost savings of over $1.00 per check preplaced by an electronic payment
– 67% reduction in payment inquiries to customer service
® 2009 Strictly Confidential23
National Guard: Incentive/Reward• Challenge
– Optimize recruitment program across all 50 states through referrals and recommendations
– Reduce program costs
– Enhance program tracking and visibility
• Citi Solution
– Replace paper checks with a custom stored value card for recruitment referrals
• Results
– Increased program referrals more than 35%, among most effective in U.S. National Guard history
– Reduced program costs by more than 40%
– Created direct communication channel to recruits
® 2009 Strictly Confidential24
Chicago Parks Department: Payroll Challenge
– The Chicago Park District (CPD) is responsible for enhancing the quality of life throughout Chicago.
– CPD wanted to decrease the payroll expense related to delivering checks and reduce the expense for employees to access their pay
Citi Solution – A customized Citi Prepaid Program helped the CPD
significantly reduce employer costs associated with payroll expenses, as well as reduce banking expenses for the employee.
Results – “From the start, we had confidence in Citi’s ability to
implement the solution. Citi assured us that implementation and adoption of their payroll card program would be transparent – not only was Citi able to seamlessly work with our existing Oracle payroll system, the pay card implementation did not create additional or extensive work for the payroll manager or our employees.”
® 2009 Strictly Confidential25
Questions
Thank you.
Doug HainesN.A. Market Manager, Citi Prepaid [email protected]