ACI CARD MANAGEMENT

SOLUTION
DISCUSSION PAPER

Victor Lee
 Agenda
• The Solution Overview
• ACI Issuer
• ACI Acquirer
• ACI Interchange
ACI Card & Merchant Management (CMM) Product Overview Retail
Payments
The CMM suite exists facilitate consumers &
merchants in the exchange of goods.
Consumer Goods / services are bought and exchanged Merchant
Merchant &
& Biller
Biller
Purchase

Authorization

Issuer Interchange Merchant Acquirer

‘Issues’ payment instruments ‘Acquires’ transactions

ACI Issuer Authorization Member Fees Authorization ACI Acquirer

Issuer Processor (optional) Acquirer Processor (optional)

Process Accounts & Transactions Process Accounts & Transactions

Authorization Authorization

ACI Interchange

Transaction Flow
Payment Networks
Direction of Fees Paid Govern the industry & connect members. Aka Schemes or
Associations. e.g. Visa, MasterCard, Union Pay, JCB, Debit
ACI proposed solution in card management Retail
Payments
ATM, POS, Authorization Networks,
Retail Banking Core Systems New payment method, e.g.
Payment Network WeChat, Alipay..
Online Fraud Management

Online channels
UPF Pay.ON RedShield

Authorizations
Proactive Risk
BASE24-eps Manager (PRM)
Switch Authorizations Fraud Management
Merchant
Data Card and Account
Data
Acquired
Transactions ACI Issuer Token Manager
ACI Acquirer
Cards & Card Accounts Chip Card Management
Merchant Accounts
Merchant Cardholder
Postings Postings

Automated Dispute Originations

ACI Interchange Behavioural Scoring CMM
Manager (ADM) Collections Card Management
Case Management
& Workflow
Optional
Payment Scheme
ACI solutions
Clearing and Settlement
ACI solution to support digital banking initiatives ACI Suite
End to end solution with flexible foundation to add new payment capabilities
Any-to-Any Product Differentiation Time to Market Omni Channel Flexibility

MARKETING ACQUISITION AUTHORIZATION SERVICES OPERATION COLLECTION ACCOUNTING

Omni Channel
API Manager
Robust

Product Config. Application Repayment Plan Product Merchant Onboard Analytics Customer Service Local Method

Multi Institution Contact Clearing Hierarchy Merchant Service Fraud/AML Clearing Tokenization

Multi Language Interest Settlement Fee Authorization Token Settlement Settlement

Multi Card Type Fee Statement Multi-Currency Fraud/AML IP Baseline Batch Fraud/AML
C
S Liquidity Recurring o
Multi Card Scheme Account Control Dispute Mgt DCC Posting Exceptions
e m
c Multi Currency TranX Pricing Collection Dispute Settlement Search Fee Business Intell.
p
u l
Customer Seg. Risk Base Pricing General Ledger Loyalty Billing Reporting FX Monitoring
r i
i Rule Base Fraud/AML Report/Letter Assemble Prod. Workflow Dashboard Fraud Reporting a
t n
y CARD ISSUING CARD ACQUIRING REAL TIME PAYMENTS eCommerce c
e
ORCHESTRATION AND MESSAGE TRANSFORMATION Cloud Solution

Endpoints Session Entity Control Center

99.999% uptime
or better
INFRASTRUCTURE INTEGRATION
24 x 7 x 365
PaaS 24 x 7 x 365 availability 99.999% uptime or better 3000TPS+ availability
 Agenda
• The Solution Overview
• ACI Issuer
• ACI Acquirer
• ACI Interchange
Developing a Flexible Consumer Payments Solution ISSUER

Credit Cards

Personal Loans Prepaid Cards

New Products Visa &

other card Debit Cards
schemes

Move beyond clearing and settlement to seamlessly grow product offerings,

taking whatever capabilities you need, when you need them.

Card and Merchant Management – ACI Issuer
Included capabilities
FULL SUPPORT FOR ALL PAYMENT TYPES
Meet the evolving payments market
• Support all kinds of payments within a single solution,
including credit card, debit card, prepaid and loans
• Meet new payment mechanisms with easy
adaptations to the new fields and tokens
HIGHLY CONFIGURABLE SOLUTION
Rapidly respond to market changes and launch new
products quickly
• Deploy quickly and easily with configuration, and no
need to invest in adaptation of the source code
• Create new products quickly for your customers
through configuration in the UI thanks to simple,
parameters-based model
SERVICE-ORIENTATED (OPEN)
ARCHITECTURE
Create an end-to-end payments solution
• Take advantage of exposed web services to build an
orchestration layer or your own workflows across
multiple systems in a custom UI
• Gain new functionality without ripping or replacing
your current systems
ISSUER
ACTIONABLE INTELLIGENCE
Generate data insight and apply it back to your
business
• Leverage relational database to extract data insight
into your customer base and AB-test product
offerings
• Use the raw data from the general ledger to perform
business intelligence and identify opportunities for
growth
GLOBAL SOLUTION
Operate in a global market and build in expansion
to deliver new services
• Reduce costs with a single deployment split across
separate instances
• Enter new territories utilizing a single license with a
multi-institution set-up
MODERN TECHNOLOGY
Respond to unpredictable volumes and pressures
to lower operational costs
• Deploy best-in-class back-office solutions on cost-
effective Linux-based hardware, without
compromising on reliability, scalability or availability
• Flexible deployment with seamless experiences
across on-premise installations, SaaS or third-party
cloud offerings
 ISSUER
Achieving Sustainable Growth

Report &
General
Ledger
Processing

Dispute System
Processing Configuration

Statement Product
Configuration

Enhanced
Loyalty customer
Promotion segmentation
 System
Configuration
System Configuration
Remove issuer, currency, card scheme and product silos

• Multi-institution • Multi-card scheme

− Multiple issuers in a single copy of the system − Standard interfaces for: Visa, MasterCard, American Express, JCB,
− Supports bureau processing or multiple organizations within a single Discover, UnionPay
instance − New interfaces easily added (e.g., domestic schemes)
− Separate reporting by institution − ACI Issuer provides generic card management processing
− Separate access security profiles by institution
− ACI Interchange provides card scheme clearing and settlement interfaces
− Institutions “own” products, customers, accounts and cards
− Private label
− Locally acquired transactions
• Multi-currency
− Multiple account currencies in a single institution
− No restrictions on number of currencies supported • Multi-product
− Multi-currency customers − Credit, charge, debit, prepaid, loans
− Multi-currency plastics − Consumer and commercial
− Multi-currency cardholder structures
− Billing currency is selected at account level

• Multi-language
− User screens, customer communications
 Product
Configuration
Flexible Product Definition

• Discrete rule sets independent of product and account type

− E.g., minimum payment rules, statement production rules, etc.

• Pricing parameters for multi-currency accounts

• Product terms and conditions built through menu based rule selection
− Products can share individual rules
− Minimal duplication of rule values
− Rules and products can be cloned for fast deployment

• Default product definitions to standardize terms and conditions across products

 Product
Configuration
Flexible Product Definition

MINIMUM MEMBERSHIP
PAYMENT FEE
CREDIT
None LOYALTY LIMIT $173.579

3% 1.0% $173.579.500 $69.431

5% 0.5% $17.357.950 $17.357

100% None $0 $0
1. DEFINE RULES

DEBIT CREDIT PREPAID

$0 $69.431 $0

$0 $17.357.950 $0

0.5% 1% None

2. ASSEMBLE PRODUCTS None 5% None

 Product
Configuration
Flexible Product Definition
Membership fees

• Fees may be varied by product and/or account type

• Annual or cyclical fees
• Multiple billing options
• Tiered rates
− Main/supplementary cards
− Number of accounts in corporate structure
• Fee refund/fee discount
− Based on spend level for specified transaction types
− Three tiers of refund/discount rates
 Product
Configuration
Flexible Product Definition
Transaction level pricing

• Transaction level pricing and billing for cardholders
− Promotional campaigns to bring growth in market share and
raise card usage
− Unlimited interest rates and billing options in a single account
− Flexible fee facilities for Islamic programs
− General campaigns and specific offers in conjunction with
partner merchants
− Balance transfers
− Deferred billing (e.g., nothing to pay for six months)
− Unlimited installment billing options
− Flexible limit management
− Multiple loyalty programs
• User-defined fees may be charged on any
transaction type (e.g., cash advance fee,
returned payment fee)
• Fees may be varied by product and/or
account type
• Fees may be varied by transaction domain
− On-us, other domestic, intra-regional,
international, merchant, MCC
− Fee calculation options
− Flat and/or percentage fees with minimum and
maximum fee amounts
− Tiered fee rates based on transaction value
− “n” fee-free transactions per period
• Fees may be generated in specific currency
with a separate currency conversion fee
• Fees may be assigned to fee groups
− Waive first “x” fees per billing cycle
 Product
Configuration
Flexible Product Definition
Repayment plans

Balance Components Transaction Types

Revolving Normal Purchase

Bill in Full Membership Fee

Account Balance

Revolving Cash Advance

12 installments
Revolving Add to revolving balance
Instalment Purchase

Instalment Bill over 24 months

Major Purchase

Nothing to Pay Nothing to pay until XX

Major Purchase

Repayment plans allow installment billing and payment-free periods

 Product
Configuration
Flexible Product Definition
Interest Rate

Balance Components Transaction Types

Interest Rate A Purchase

Interest Rate B Cash Advance

Account Balance

Interest Rate C Annual Fee

Interest Rate D Balance Transfer

6-months interest-free
Interest Rate E 18-months interest at 7.5%
Instalment Purchase
Standard interest
Interest Rate F Waived if full payment by XX
Repayment Plan Purchase

Repayment plans allow interest-free and low-interest periods

 Product
Configuration
Transaction-Driven Processing
Variable rules by institution/product/account type

Transaction Profiles

Balance Components Repayment Plans

(e.g., cash, retail, interest)

• Transaction fees • Credit limits • Installment plans

• Loyalty scheme • Interest rates/start date/grace • Deferred billing
• Loyalty points • Revolve, installment, bill in full • Interest promotions
• Spending limits • Payment apportionment • Extended grace
• Posting/settlement level
 Customer
Segmentation
Enhanced Customer Segmentation
Family account structures

Family Credit Line

$45 million

WIFE HUSBAND DAUGHTER CAR LOAN

$5,000 credit limit

$300 daily cash $25,000 principal
$20,000 credit limit $20,000 credit limit $500 single txn limit 36-month term
$1,000 daily cash $1,000 daily cash $20 supplementary fee Front-loaded interest
$50 membership fee $20 supplementary fee Individual statement Insurance
Individual statement Individual statement Usage restricted by MCC Annual statement
 Customer
Segmentation
Consumer Payment Flexibility
Agile alternative financing plans to drive customer experience and spending, with for individual Products and Account
Types

Regular Retail Special Special Special

Transactions Transaction One Transaction Two Transaction Three

0%
For 6 months

15% 20% 12%

10%
For 6 months
Nothing to pay 24 installments
for 12 months

15%
Transactions can be grouped or split in as many as three phases
 Loyalty
Loyalty Processing Practice Promotion
Points accrual on a single card

Transaction 1 1 point Voucher

Points accrual 2 points
finishes end of month
7 points
3 points
Transaction 2

As partner merchant 6 points Cashback

1 point
Transaction 3 8 points
1 point

Check
2 points
Transaction 4

2 points
3 points
 Loyalty
Promotion
Loyalty Processing
Redemption

REDEMPTION OPTIONS CONFIGURATIONS

MANUAL FREQUENCY
Support manual redemption of loyalty Define redemption frequency with
rewards minimum points value before auto
redemption permitted
AUTOMATED
RATIOS
Option to automate a range of
redemption options Define ratio to convert points to
credit amount
Check
TRANSFERS
Credit to external system Manually adjust or transfer points
Internal credit Account to account transfers

Points voucher Scheme to scheme transfers

Agenda

• The Solution Overview

• ACI Issuer
• ACI Acquirer
• ACI Interchange
ACI’s Merchant Management Solution ACQUIRER

Report

Billing Business
Setup

Settlement Merchant
Onboard

Fraud Merchant
Monitoring Services
Multi - Institution Business
Setup

Ideal for
bureau Separate
processing New access
or multiple institution Separate security Institutions
organisation set-up reporting by profiles by ‘own’ their
s within a through institution institution merchants
single parameters
instance of
ACI Acquirer

Independent merchant portfolios

representing acquirer’s business
segmentation
 Business
Multi-Currency Support Setup

SINGLE MERCHANT SINGLE TRANSACTION

Settlement Currencies
AUD Transaction amount
SGD USD

Currency USD Settlement amount

Mapping

SGD Institution amount

HKD SGD AUD USD

Transaction Currencies
USD Fee amount

Merchant Fee Currency USD

Currency conversion:
Institution Default Currency SGD • Central currency rate table
• Mark-up/mark-down at merchant level
 Business
Flexibility in Product Definition Setup

TRANSACTION MISCELLANEOUS
FEE FEES
SETTLEMENT
3% FRAUD LIMIT DELAY $20

2.5% HIGH 7 DAYS $10

FIRST DEFINE
THE RULES 2% MEDIUM 3 DAYS $5

1.5% LOW NONE $0

NATIONAL SMALL ECOMM

CHAIN RETAILER MERCHANT

$0 $15 $10

THEN BUILD NONE 3 DAYS 7 DAYS

THE
PRODUCTS LOW MEDIUM HIGH

1.5% 2.5% 3%
 Business
Flexibility in Product Definition Setup
Merchant package

SETTLEMENT RULES STATEMENT RULES

1 2 3 1 2 3 4

1
LOYALTY RULES

1
2

RISK PROFILE
2
3

3
4

1 2 3 4 5 1 2 3

TRANSACTION FEE RULES SERVICE FEE RULES

 Business
Merchant Set Up Data Setup

Agreement Transaction Fee Services

Identification Contracts
& Rebate
Model subscribed
Options

Currencies & Statement &

Card Types Settlement Bank
Advice
Accepted Groups Accounts
Options
 Business
Optimized Fees Model Setup
Offer an agile and flexible model to merchants

• Typical pricing criteria

− Transaction type
− Card type
− Capture method
− Cardholder payment
method
− Cardholder origin (on-us,
domestic, intra-regional,
inter-regional)
− Transaction currency
− Fee program tier
− Transaction amount (tiered
rates)
− Merchant category code
− Merchant type

• Percentage and/or flat fee (min and

max values)
• Multiple fee components
− Break transaction fees down into multiple elements

• “Interchange Plus” options:

− Interchange plus (plus)
− Tiered rates
− Blended rates
 Business
Tiered Pricing Setup

• Transaction fee gets calculated based on

transaction fee profile
• Rebates are applied based on level of
merchant/group of merchants within a hierarchy
activity:
− Total value of transactions (turnover) − Different rebate groups can be defined
per merchant
− Total value of transaction fees
− Refund of fees to merchants
− Total number of transactions
− Fixed amount and/or percentage
− Average transaction value (average ticket size)
− Tiered rates
− Step and threshold options
− Variable by transaction type
 Merchant
Flexible Hierarchies Onboard
Deliver cross-border merchant services
Settlement
&
Global HQ
Billing

UK Spain
Service Fee Division Division
Calculation £ € Statement

All Fee Fees,

Calculation Settlement
Airports and & Billing
Txn Fee Stations
Calculation £

Transaction London London Madrid

Oxford Luton Barcelona INTERNET
Acceptance Heathrow Victoria Barajas
£ £ €, $ ¥, $,£, €
$,£, €, ¥ £ €, £, $
 Merchant
Develop Partnerships for Growth Onboard
Leverage revenue sharing
Acquiring
Institution

Agent Bank
Credit to the agent’s
Wholesale
bank account
Settlement

Debit to the
chain’s bank Chain
account Wholesale & Retail Fee
Calculation

Merchant 3 Merchant 4
Merchant 1 Merchant 2 Wholesale & Wholesale &
No fee No fee Retail Fee Retail Fee
calculation calculation Calculation Calculation

Debits to the merchants’

bank accounts

Merchant Loyalty Incentives
Manage margins, lower risk and improve the customer experience
THE CHALLENGE
• Reduce downgrading of
transactions to manage
margins
• Drive loyalty with existing
customers to maximize
revenues
• Create new, tailored business
models to grow market share
Merchant
Service
AUTOMATED FEES REDUCTIONS
• Encourage complete transaction data submissions
from merchants with reductions for meeting
requirements
FLEXIBLE RATES DEFINITION
• Drive loyalty with tiered rates, and part/full fees
refunds for preferential customers who regularly
meet requirements
NEW BUSINESS MODELS
• Create partnerships and subsidies; transfer a
percentage of merchant fees for to a preferred
customer for referrals
 Fraud
Monitoring
Fraud Control – Merchant Activity Monitoring

• Merchant Activity Monitoring

– Average ticket
– No of transactions
– Same PAN / Same BIN
– Key-entered transactions
– Refunds
– Chargebacks
– Authorizations, etc
• 26 different criteria
• Associated online statistics of
merchant activity
– Monthly totals over 12 months
 Settlement
Merchant Settlement
Configure settlement packages for merchants

• Auto-payment or manual settlement • Delay and Defer options

• Settlement frequency − Delay of five days applied to all transactions
− Wide range of options, e.g., daily, every Friday, bi- − Collection of fees deferred by 15 days
weekly − Deposit retention (multiple reserves per merchant)

• Multiple bank accounts • Carry forward conditions

− by transaction group, currency, sign (debit/credit) • Non-settlement of specific card schemes

Merchant Settlement (Cont’d)
• Settlement process generates payment orders
− Used to generate payments interface
− Viewable online
− Provide history of payments activity
• Standard, proprietary payments interface
− Can be reformatted as required for specific ACHs
• Settlement blocking will prevent payment interface
generation
Settlement
• Due date on payment order
− Used to manage deferred payments and merchant-
initiated payments
• Tax on merchant fees variable by institution, fee
type and merchant
− Option to calculate tax on transaction and service fees
− Fee rate held gross or net of tax
− Tax amounts reported on advice/statement
 Settlement
Deposit Retention
Leverage settlement flexibility to onboard new merchants

• Single up-front payment can be made into the • Possible for the user to define “reserve type” values
balance
• A separate balance will be maintained for each
• Proportion of settlement held reserve. Different funds may be:
• Possible to split a merchant’s settlement amount ▪ Released to different bank accounts: Merchant,
acquirer, third parties
multiple ways
▪ Balance reviewed and released at different
− Each “split” can be regarded as a different deposit
frequencies
reserve:
▪ Risk mitigation • Chargebacks and adjustments can be deducted
▪ Chargeback reserve, etc
 Billing
Settlement and Billing Flexibility
Example

• Settlement and billing flexibility

− Net and gross options
Group C
− User-defined settlement groups Refunds/
Reversals
Group D
Service Fees
− Multiple frequencies
Group A
Transactions

− Carried forward balances

Net-off

• Effective risk management Group B

Auto-payment
Transaction Bill
− Settlement/billing delay Fees

− Deposit retention Auto-payment

− Fraud limit checks

• Tax calculation and fee invoicing

Agenda

• The Solution Overview

• ACI Issuer
• ACI Acquirer
• ACI Interchange

Card and Merchant Management
Included capabilities
HIGHLY CONFIGURABLE SOLUTION
Find new margins in traditional transactions and identify new
opportunities
• Configure new rules without technical support through parameters-based
configuration
• Deploy rapidly with out-of-box configuration for major card schemes and
modular setup to easily set up new schemes
• Use optional merchant definition fields to enrich transaction data with
non-transactional data via the interface with Acquirer to auto-upgrade
transactions
SINGLE CUSTOMER VIEW
Identify opportunities and mitigate risk
• Use the end-to-end view of every transaction you clear and settle to
better convert transactions and spot trading patterns
• Pre-calculate and guarantee granular rates per customer based on
overview of volume of transactions through pre-calculation
• Offer comprehensive reporting and a transaction archive to customers to
optimize their business and interchange costs
MODERN TECHNOLOGY
Respond to unpredictable volumes and pressures to lower operational
costs
• Deploy best-in-class back office solutions on cost-effective Linux-based
hardware, without compromising on reliability, scalability or availability
• Utilize rolling refresh, not rip-and-replace, with seamless experiences
across on premise installations, SaaS or third-party cloud offerings
• Leverage intraday scheme submissions and parallel workload distribution,
without latency even at extreme volumes
INTERCHANGE
ACTIONABLE INTELLIGENCE
Generate data insight and apply it back to your business
• Automatically augment transactions with added intelligence and
information from ACI Acquirer to secure better fees
• Protect margin by making the most of new scheme releases and their
most profitable categories
• Guarantee fees with the inside liquidity-engine to offer value added
services, including same-day and NET settlement options
• Use the raw data from the General Ledger to perform business
intelligence and identify opportunities for growth
GLOBAL SOLUTION
Operate in a global market and build in expansion to deliver new
services
• Ensure full compliance across PA/PCI-DSS, data security and scheme
mandates to release resources for innovation and growth
REPORTING AND RECONCILIATION
Streamline your processes to improve the customer experience and
secure your business
• Support transactions throughout the disputes lifecycle and rejection
processing, manage both sides of the chargeback process to provide
quick and satisfactory resolution for the customer and create a clear
audit trail of action
• Reconcile with schemes daily to improve liquidity with integrated
reconciliation reporting
• Reconcile chargebacks and generate scheme notifications within your
reporting to reduce the cost of manual interventions
 INTERCHANGE
Disputes and Other Exception Items
Support for complete range of card scheme exception items

View interchange Entry of dispute Entry of other

• GUI screen entry transaction transactions to be items to be sent to
functions lifecycle sent to schemes schemes

• Data validation
Presentments,
Fee
• Data retrieval from chargebacks, etc.
linked by acquirer
Retrieval requests
and responses
collections/funds
disbursements
reference
transaction archive

Fraud advices
Chargebacks and
representments e.g., MasterCard
SAFE reporting
BENEFITS

• Minimum re-keying From data

retrieved from
archive or re-
• Efficient data capture keyed
THANK YOU