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MasterCard Worldwide

Mr. Michael Foye
Vice President
Sales and New Business Development
MasterCard RPPS®
Systems MasterCard Worldwide Thank you for joining us today, Mike. Please give us an overview of your background and your role at MasterCard.

Michael Foye: I’m primarily responsible for the development and delivery of MasterCard RPPS solutions to financial and recurring-bill-payment institutions, matching our extensive electronic bill-payment capabilities and services to the specific needs of our customers.

I have more than 27 years of experience in the fields of financial transaction processing and financial software—the last 10 years at MasterCard, where I first worked with the MasterCard® Debit Switch before joining the MasterCard RPPS team.

Prior to MasterCard, I held various management positions in financial services, debit card networking, customer service, and software support organizations, and I earned a B.S. degree in management information systems from the University of Wisconsin in Milwaukee. We understand you’ll be speaking at NACHA’s upcoming Payments 2008 conference. May we have an overview of your topic, “Matching Processing Power with Consumer Demand”?

Michael Foye: I’m very pleased to be speaking with Western Union at the NACHA conference regarding consumer demand for streamlined, almost instantaneous payment processing. Whether it be online bill pay, credit and debit card transactions both online and at the POS, or automatic recurring payments, consumer demand for this type of payment processing is at an all-time high. Our session will examine the successful relationship between payment-processing vendors, related payment networks, and direct billers in streamlining electronic payments processing. We’ll discuss the evaluation, implementation, and execution phases, and we’ll supply real-world examples from the banking and insurance industries, demonstrating some of the challenges in electronic payments processing and the solutions we’ve devised to address them. We’ll focus on a number of topics that we think our audience will find particularly interesting—such as avoiding exceptions in processing, eliminating redundancy in customer records and reporting, increasing the speed of payment delivery, and decreasing the costs associated with processing electronic payments. Given the consumer demand, we want to help our audience to move traditional check payments to the electronic platform, thereby increasing speed of payment and improving the protection of consumer information. We’ll be talking about how the electronic model streamlines and expedites bill payment, enhancing not only speed, but accuracy and security as well. Online network security threats are becoming more and more sophisticated. We are hearing more about “phishing” and “pharming” and other criminal tactics designed to steal consumers’ sensitive information. How does MasterCard RPPS protect consumers who pay their bills online?

Michael Foye: This is the beauty of the MasterCard RPPS network and what it does for our customers. For the past 20 years, we’ve processed billions of transactions without exposing consumers’ bank routing transit or personal account numbers or address information. Payment data is exchanged within a secure network, and funds are typically settled via the Fed wire. Here’s how it works: The consumer registers payments to his or her billers. Those billers are then compared against registered billers in our database prior to a financial transaction being processed. We push the credit through to the billers without exposing the consumer’s private bank account information, just his or her name and the account number with that particular biller. Now, when it comes to such tactics as phishing and pharming, the best protection is consumer education. MasterCard RPPS has long supported consumer education with a series of programs and materials that help our customer financial institutions and billers provide a coherent and effective education for their customers. Please tell us about the trend toward electronic payments.

Michael Foye: Well, the short answer is that the trend continues its sharp upward trajectory. A study conducted by Dove Consulting in 2005 estimated that the number of online bill payments would reach 2.4 billion by 2007, up from just 101 million a decade earlier. In US Online Banking: Five-Year Forecast, published by Forrester in 2007, Catherine Graeber noted that the growth in the number of U.S. online households that bank online is actually accelerating, showing year-over-year growth of 17%, 20%, 21%, and 27% from 2002 to 2005. She forecasts that the number of those households will grow to 71.7 million by 2011, up from 18.7 in 2001. The number of online banking households that also pay bills online will increase from 5.1 million to 37.5 million over the same period. What is your perspective on the market drivers for MasterCard solutions at this time and MasterCard’s competitive advantages in this space?

Michael Foye: This is really a vibrant marketplace that is still just starting to take hold. While the industry has experienced extraordinary growth in the last decade, we know that as late as 2004, according to eMarketer Spotlight Report, approximately 70% of consumers were still relying on paper checks to make their payments, so we still have tremendous room to grow. Electronic payment volume has soared as its valuable benefits versus paper-based payment have become apparent to everyone involved in the transaction, from the consumer to the biller. For consumers, it provides welcome convenience, timely payment posting, and security. They are looking for a variety of ways to pay bills quickly, securely, and at virtually any venue—financial institution website or phone, biller website, kiosk, and cell phone—and MasterCard RPPS enables that for them. For billers, credit counseling agencies, financial institutions, service providers, and others, electronic bill payment delivers exceptional savings, enhanced productivity, and other valuable advantages. As the single largest network for electronic bill payment, MasterCard RPPS is well positioned as the hub that connects all of these stakeholders with a single connection. We support our originating members by offering immediate online access to a biller directory of over 5,000 billers. Billers and electronic lockbox service providers benefit from a single payment pipeline to virtually everybody in the electronic bill-pay industry. Their transactions have been “scrubbed” by MasterCard RPPS, providing clean accurate, postable data and guaranteed funds. Thanks again for joining us today, Mike. Are there any other subjects you’d like to discuss?

Michael Foye: Yes, I’d like to let readers know that MasterCard RPPS is much more than a passive conduit for safe, secure, accurate electronic payments. As volume has grown, the industry is facing a new set of challenges that really originated in our own success. For example, when volume is measured in billions of transactions and not tens of millions, even a very small percentage of exception payments—those that cannot be processed electronically because of a consumer’s error in entering account data, say—can constitute a large number that can be very costly to process manually. MasterCard RPPS is working ahead of the curve to prevent unpostable payment transactions. Our Electronic Exceptions Service enables even flawed transactions to be posted electronically and returns an electronic notification of change to the payment originator so that the error can be corrected at its source. Mergers, acquisitions, and other large account change events present another type of challenge and can really derail accounts receivable processes. Payments that should be coming in electronically get dropped to paper or don’t show up at all. Matching old account numbers to new account numbers consumes resources that could be leveraged more productively elsewhere. Payment posting slows to a snail’s pace, customer satisfaction plummets, and the volume of customer service calls goes through the roof. To resolve these payment routing and posting issues, MasterCard RPPS has introduced Account Conversion Technology. This new service not only automates the conversion process, but it will also deliver notifications of change to originators so that payment account information can be corrected before payments are sent. This patent-pending technology has performed flawlessly in managing very complex portfolio conversions. Innovations such as these represent one of the most fundamental changes to our network since its inception: we’re moving from functioning as a firewall against bad transactions to performing as a self-healing network to optimize the quality and volume of electronic transactions for our customers. It’s an exciting time.