U.S. General Services Administration
Alternative Payment Solutions
Jeff George
Vice President
Citi Product Market Management
July 2012
2012 GSA SmartPay Conference
“Fine Tune Your Payments Program with GSA SmartPay”
This material is intended for use by the GSA only
Alternative Payment Solutions
House Rules
(agencyAdvanced
name)
To ensure the best possible learning experience for participants, please adhere
to the following house rules:
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Turn electronic devices to vibrate
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Take advantage of opportunities to provide feedback
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Alternative Payment Solutions
Schedules Available at the Welcome Center
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Alternative Payment Solutions
Reminders
Advanced
 Visit the Citibank Welcome Center–
Governor’s Lobby
 Visit the Citibank One-on-One Lab–
Governor’s Chambers D&E
 Citi Q&A Link–Tell us your thoughts
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Alternative Payment Solutions
Interactive Training Events–DoD
Advanced
Citi offers on-site training at no cost for agencies meeting the required minimum
participant level of 20 or more as set forth in the GSA SmartPay2 Master Contract.
 Regional Citi Training Locations
– Norfolk, VA
– Washington, DC
– Visit www.defenseTravel.dod.mil/passport to view and register for these sessions
 Upcoming Training
– Visit www.defenseTravel.dod.mil/passport to view and register for these sessions
 On-site at your base or installation
– 20-participant minimum
– Visit www.citimanager.com/dodhome under Resources to download the On-site
Training Request Form
 Distance Learning–Video Conferences
Please e-mail us at [email protected] and a Citi training coordinator
will work with you directly for on-site or Distance Learning sessions.
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Alternative Payment Solutions
Interactive Training Events–GSA
Advanced
Citi offers Computer-Based Training (CBT) via the Citi Commercial Card Learning
and System Support (CLASS) in CitiManager.
 Visit home.cards.citidirect.com and from the Web Tools tab select the CLASS
link
Please contact your Account or Client Manager if you are interested in setting up a
training session. Training can be conducted at a Citi Training Location, on-site at
your office or via the web.
 Regional Citi Training Locations
– Norfolk, VA
– Washington, DC
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Alternative Payment Solutions
Goals & Objectives
Department of
Advanced
Defense
This course is designed to assist you in
achieving the following objectives:
•
•
•
Learn Citi’s nontraditional SmartPay2
Solutions
Learn how to drive efficiencies and
compliance
Learn how to expand your program to gain
increased rebates
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Alternative Payment Solutions
Agenda
Advanced
 Industry Trends & Challenges
 Why Alternative solutions?
 Citi Alternative Payment Solutions
– Ghost Cards
– Virtual Card Overview
– Virtual Card for Accounts Payable
– Paylink for Cards
 Comparisons of these products
– Declining Balance Cards
– Stored Value Cards
 How Citi can help
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Alternative Payment Solutions
Industry Trends & Challenges
 Trends
– AFP 57% of B2B payments are still
made by check
 43% are by either cards, ACH, or
wire
– Clients are looking for Decreased
costs, increased cash forecasting,
increased fraud controls, ease to
monitor payments and perform
audits
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Advanced
 Challenges include
– Lack of a single payment file
standard across payment types
– IT integration and competition for
IT resources
– Storing payment information to
ensure proper disbursement
– Supplier reluctance to change
processes (see above)
– Cross-border payments (different
formats)
– Contracting with a payments portal
for multiple payment methods
Alternative Payment Solutions
Why Alternative Solutions Exist
Advanced
 Commercial Cards have evolved over the last 20 years
 Many clients have asked Citi for enhanced features
 Clients have asked for more control and flexibility during a purchase
 Clients have asked for the product to do more while spending time on things that
matter
– Doing more with less?
– Tending to your mission vs managing the card?
 Let’s touch on these now!
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Alternative Payment Solutions
Ghost Card
 Features:
– Noncard account for preferred supplier relationship
– Account number held by vendor
– A Seller Initiated Payment
– Allows many employees to purchase without issuing multiple cards
– Integrates with ERP systems or Electronic Purchasing Systems
– Allows for MCC-specific controls
– Can have temporary credit limits for added controls
 Applications and Uses:
– Central travel airline accounts
– Purchases made via Internet or intranet
– Elimination of low-value invoices (e.g. UPS, FedEx, etc.)
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Advanced
Alternative Payment Solutions
Virtual Cards–Overview
Advanced
Virtual Card Accounts (VCA) is an electronic global payment solution that offers unparalleled
control and flexibility without the need to issue plastic cards
What is a Virtual Card Account (VCA)?
● Nonplastic account number for purchases
– The “real” billing account/card is never shared with
merchants
– Unique virtual card numbers (VCNs), linked to real
card, are created for secure purchasing
● Transparent to merchant at point-of-sale
– Standard 16-digit account number, expiration date,
three-digit security code created for seamless
transacting by the merchant
● Virtual Card Numbers can be requested by
authorized users or a system interface
– Web interface, batch file, real-time XML
API
13
The Banker Technology
Awards–Citi’s Virtual Card
Account wins 2010
Innovation in Payments
Technology Award
Alternative Payment Solutions
Virtual Cards–Overview
Security
 Clients’ real card number is never shared with
suppliers
 VCA users can only access specific purchase types
and have individual spend limits
 Single-use virtual card numbers–lock-down
potential misuse
Efficiency

Real-time VCN requests and management

Automated processes using the batch or XML API
interfaces

Secure delivery of VCNs by encrypted e-mail available

Streamlined record keeping with one-to-one VCN
transaction mapping

Able to assign custom data fields per VCN for simple
reconciliation and reporting
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Advanced
Control
Internal Controls
 Web user interface:
– Create user groups for different access types
– Multi-level approval flows
 Policy Compliance Controls:
– Issue VCNs with amount, MCC, supplier and
date controls
Merchant Controls
 Set VCN with appropriate authorizations / controls:
– Single or multi-use
– Maximum amount
– Validity Period
– MCC Groups
– Supplier
Alternative Payment Solutions
Virtual Cards–Overview
Advanced
VCA is a powerful, flexible product that is used in a variety ways. There are four major categories of use
which address different needs:
Centralized Payments
VCA Controlled Spend
Third-Party Programs
& Internal Workflows
Advanced Uses
 Use of the VCA website to
generate card numbers by
a limited group of users
 Utilize the VCA controls to
define how, when and
where a virtual card can
be used
 Enable third-party
programs to make virtual
card payments on your
behalf
 Separate certain
categories of spend to
track separately from main
card program
 Integrate VCA into your
back-end systems to
automatically generate
single-use card numbers
for every payment
 Utilize the groups on the
VCA website to provide
limited, controlled access
to third parties and internal
requestors
Sample Use Cases
Sample Use Cases
 Third-Party Property
Management
 Purchase Orders &
Enhanced Reconciliation
 Third-Party Event
Planning
 A/P Integration
 Utilize VCA controls to
reduce risk for highervalue payments and nonkey suppliers
Sample Use Cases
 High-Value Payments
– Advertising Expenses
– Legal and Court Fees
– Telecom Expenses
– Meeting and Event
Spend
 Out-of-Policy (High Dollar/Infrequent Vendor)
Payments
 Overseas Vendors
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Sample Use Cases
 Distressed Employees
 Project Spend
 Relocation/Repatriation
 Recruiting Programs
 Third-Party Central Travel
Booking
 Internal Approval
Workflows and Controls
(PreApproval to Spend)
 High-Volume Payments/
Disbursements
 Catalog Integration
Alternative Payment Solutions
Virtual Cards–For Accounts Payable
What is Virtual Cards for Accounts Payable?
 A card-based settlement method
Pay invoices using Citi Virtual Card Accounts
 Single-use electronic commercial card numbers
Set exact transaction amount controls and set expiration date
 Simplified reconciliation
Enhance card transaction data with client-supplied data
e.g. invoice numbers or payment reference numbers
 Automated payment processing
Request by file & deliver card numbers and payment information
to suppliers via secure e-mail
 No new process for suppliers
Process transactions as standard card transactions; no
additional setup or training required for card-accepting suppliers
 Global, consistent solution
Available in over 30 local currency markets
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Advanced
Alternative Payment Solutions
Virtual Cards–For Accounts Payable
Advanced
Due to agency requirements for controls, policies or approval processes, not all spend can be shifted to a
traditional purchasing card process.
Traditional
Procure-to-Pay
Transaction
Traditional
P-Card/Ghost Card
Transaction
Generate
requisition
Purchase
Approval
Reconcile
Purchase
Order
Payment
to bank
Shipping
Receipt
80% transactions,
20% spend volume
Approval
Opportunity
to expand
cards to:
Approval
Purchase
Order
Invoice
Approval
Check,
ACH
20% transactions,
80% spend volume
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&
Generate
requisition
Shipping
Receipt
Invoice
Payment
to Supplier
Procure-to-Pay
Transaction with VCA
Payment
to Supplier
Alternative Payment Solutions
Virtual Cards–For Accounts Payable
Advanced
Citi Virtual Card Accounts enables clients to seamlessly use card payments for Accounts Payable spend,
helping to remove process inefficiencies and generate key financial benefits.
Benefits
VCA Enablers
Controlled
Payments, educed
Fraud
Streamlined
Processing
Eligible for
Commercial Cards
Rebate
Budget
Optimization
Benefits
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 Exact Amount Control
Pay invoices to the penny, avoiding short payments
and reducing exception processing
 Set Validity Period
Defined start and end dates to track and manage
outstanding, unprocessed card payments
 Single-Use
Reduced fraud and supplier misuse
Improved transaction risk management
 Batch File Interface
Automated method to generate card numbers from an ERP or AP
system
 Secure Delivery of Card Numbers
Encrypted e-mail delivery from Citi to suppliers
 Enhanced Reconciliation
Capture invoice numbers, payment reference numbers, etc.,
to streamline reconciliation and reduce reliance on merchantprovided data
 Standard 16-digit account numbers
No additional enablement or training is required for
card-accepting suppliers
Alternative Payment Solutions
Paylink for Cards–Overview
Advanced
Citi Paylink for Card automates end-to-end payment processing on a commercial card platform while increasing
security, control and efficiency.
What is a Citi Paylink for Cards?
● File-based payment process
 Buyer initiates payment via file submission (modified EDI 820) to Citi & the Payment
Gateway
 Payments settle on a master purchase card account(s)
 Payment is straight through to the vendor’s bank account
● Payment Gateway
 Central infrastructure where suppliers must securely register to receive straight-through
payment
 Matches payment detail in buyer’s file to registered vendors without the need for
transmission of sensitive bank account details
 Online portal that provides e-mail remittance and houses payment status and details for
use by buyer or vendor in reconciliation process
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Alternative Payment Solutions
Paylink for Cards–Overview
Security
 Card number(s) is never shared outside of Buyer
organization
 Reduce risk of wrongful use/fraud
 Sensitive bank account details are never
transmitted
Advanced
Efficiency
 Offers consistency across electronic payment
processes
 Similar to ACH processing
 Streamlines payment processing directly from
ERP
 Provides rich remittance detail via e-mail and
download from online portal for buyer or vendor
Control
 Buyer initiates payment to vendor at their
discretion
 Eliminates uncertainty of check-clearing
timeline
 Eliminates uncertainty of vendor card
payment initiation
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 Reduces payment processing and handling time
 Check creation, cutting, mailing
 Manual keying of card account number
 Removes paper (and associated costs) from
payment process
Alternative Payment Solutions
Paylink for Cards–Overview
Advanced
Purchase
Order
1
Invoice
Supplier
Bank
2
A
3
Supplier
4
Buyer
5
Bank
5
Supplier
Bank
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B
C
1.
Buyer sends purchase order to supplier and subsequently receives/approves invoice
2.
Buyer sends transaction instruction file to Citi
3.
Citi validates file, matches supplier data and sends to Boost for authorization and
settlement
4.
Vendor receives payment directly into its acquiring bank account
5.
Buyer and vendor receive remittance detail
Alternative Payment Solutions
Comparison of These Products
Advanced
Traditional Ghost
Cards
Citi Virtual Card
Accounts
Citi Paylink for
Cards
Card number used with
traditional transaction
and reconciliation
processes
Dynamically generated
single-or multiple-use
virtual cards with robust
controls
File-based, buyerinitiated, straightthrough payments
settled via card
 Card/account number
communicated to vendor with
each transaction, or specific
card maintained by vendor
● Standard transaction process
– limited ability to set
transaction controls
 Traditional card transaction
posting, payment, allocation
and reconciliation (potentially
manual)
 Enhanced controls versus
traditional ghost card
approaches
 Ease of integration–realtime, batch file or web user
interface
 Capture strategic, one-off
and large ticket purchases
within card program
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 Buyer-initiated and control
of payments
 Module of Citi’s P2P
electronic payments
platform
 Consistent
processing/integration
 Capture recurring
payments to core
suppliers
Alternative Payment Solutions
Comparison of These Products
Advanced
High
Very High
Virtual Card
High
Low
Pcard
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Spend per Supplier
– Card Account is held in trust by a key supplier,
charged at buyer’s instructions
– Ideal for recurring purchases and Catalog buy
 Virtual Card Account (VCA)
– Non plastic Card Account setup for a specific amount
and timeframe, with customized control fields for
automatic reconciliation
Ghost Pcard
Low
 Traditional Plastic Pcard
– Traditional Plastic Card Account with credit line.
Ideal for low-to-medium value purchases needed to
support business flexibility
 Ghost Card
Control
Transaction Size
Paylink
for
Cards
Citi’s Extensive Product Range
High
 Paylink for Cards (BIPC)
– File-based solution to make payments by effectively
“pushing” (straight-through processing) the
transaction to the supplier. Perfect to pay for large
strategic purchases without showing account info
while still delivering remittance information to the
merchant
Alternative Payment Solutions
Declining Balance Cards
Advanced
Advanced
Features
 Centrally Billed Accounts
 Specific purposes and/or time periods
– Accounts have a set credit limit and do not refresh
 Once the balance is used, the card becomes inactive
 Merchant Category Code restrictions can be placed on the card
 Unique data available for amount available on statements
 Targeted for reimbursable business expenses that need additional controls
– Such as Project Spend
– Meeting and Events
– Contract Spend
 Is not good for employee benefits…See Stored Value cards
Alternative Payment Solutions
Stored Value Cards
Advanced
Advanced
Prepaid Cards are a standalone product
– The accounts are paid in advance and the value of the payment is
loaded onto the card
– Cards can be single or reloadable
– Generally, there is a one-to-one relationship between each card and
the corresponding account that holds the funds, but other
configurations are available
– Moderate controls are available for this product
– Prepaid cards have a separate electronic access system to support the
product (e.g. to load value, to view transaction activity, etc.)
Alternative Payment Solutions
Stored Value Cards-Usage
• Prepaid cards can be used as cash or check replacement
• One of the key elements of the applicability of a prepaid card is
whether or not the funds placed on the card can be used in their
entirety and are truly the “property” of the cardholder
– These cards are often used for benefit payments or as a
substitute for cash rebates
Advanced
Advanced
Alternative Payment Solutions
Citi Working Capital Analytics–Budget Optimize
Advanced
Advanced
Background
 As described by the OMB, Strategic Sourcing is the driving force in business-tobusiness purchasing & payment
 Enterprise spend analysis is critical to the success of Strategic Sourcing
 Purchase-to-payment optimization is a Strategic Sourcing, Treasury &
Accounts Payable subobjective
 Spend analysis is a key activity for best-of-breed purchase-to-payment
optimization
Alternative Payment Solutions
Citi Working Capital Analytics
Advanced
Advanced
What can Citi Working Capital Analytics do for you?
 Citi will mine your agency’s payables data to make specific payment
recommendations on how to improve your budget and supply
chain processes
 Data will be selectively enriched to provide more targeted and
realistic results
 Once the analysis is completed, Citi will provide a step-by-step action plan for
unlocking opportunities within our Commercial Cards and Procure-to-Pay
Solutions sets
 Your agency's data will also be analyzed and compared to the
best-in-class organizations in your industry for increased visibility into your
working capital standing
Alternative Payment Solutions
Citi Working Capital Analytics
Advanced
Advanced
Citi performs an analysis to determine which areas need improvement, and provides recommendations
Evaluate
Opportunity
Analyze
Accounts
Payable Data
Citi Payment Solutions
 ACH conversion
campaigns
Best Practice
Assessment
Citi Commercial Cards
 Purchase card
expansion
 Buyer Initiated
Purchasing card
 Virtual card
Deliver
Results
Implement
Implement
Results &
Results &
Track
Track
Progress
Progress
Citi Supplier Finance
 Existing discount
capture
 Dynamic discounting
Alternative Payment Solutions
Final Thoughts
Advanced
Advanced
Some questions you may want to think about …
 Am I not able to pay supplier invoices via a card due to an approval process
requirement?
 Are there reconciliation issues currently with certain types of payments?
Implement
Results &
Track
Progress
 Does my agency have a large amount of one-off ad hoc spend that is paid via checks?
 Am I spending a great deal of time with offline processes and manual reconciliation?
 Would I like to put more controls on card usage and spend categories?
 Would additional information help reconcile my agency’s accounts payables better?
 Is there a spend category my agency could put on a non traditional card product?
Alternative Payment Solutions
Jeff George
Department o
Advanced
Defense
®
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Alternative Payment Solutions
Department o
Advanced
Defense
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