Posted by Mark Brousseau
There’s a famous quote from Henry Ford that Steve Jobs has been known to cite: “If I’d have asked my customers what they wanted,” Ford reportedly said, “they would have told me ‘a faster horse.’” Yes, it reflects a bold product development philosophy. And this closed-door, tell-customers-what-they-want-even-if-they-don’t-yet-know-it approach works well for our modern day King of Innovation (and his development team at Apple, of course). But if you’re tempted to adopt the Jobsian method yourself, Dan Adams urges you to think twice.
“Don’t start wearing black turtlenecks and imagining your blockbuster new product just yet,” advises Adams, author of New Product Blueprinting: The Handbook for B2B Organic Growth and founder of Advanced Industrial Marketing.
“The reality is that the average new product success rate—once the costly development stage begins—is only 25 percent,” he adds. “Generally speaking, for those of us who aren’t Steve Jobs, the practice of developing new products first and then waiting to see if customers buy them is a terribly inefficient use of resources.”
For B2B suppliers, in particular, Adams extols the virtues of first understanding market needs and then developing supplier solutions to meet them. In fact, his New Product Blueprinting—packed full of very practical methods, skills, and tools that have been finely tuned on six continents and in hundreds of industries—centers on this “ask before you innovate” philosophy.
“The good news is that you can conceptualize products you know your customers need before spending a bundle on development and launch,” explains Adams. “And even more good news, this approach does not prevent you from developing exciting, breakthrough products. What’s more, it’s unlikely your competitors are using this approach today, so your competitive advantage can be enormous.”
Here are the key steps to becoming a new product mastermind in your own right:
Remember, Steve Jobs deals in consumer goods—a whole different ballgame from B2B products. In describing his iTunes development team, Jobs said, “The reason that we worked so hard is because we all wanted one. You know? I mean, the first few hundred customers were us.”
In contrast, points out Adams, when DuPont developed Kevlar, they first experimented in applications such as tire cords. They went 10 years before implementing the first field trial in protective body armor, which ultimately became their main market. If you’re selling to other businesses, it’s unlikely you know enough about your customers’ worlds to hit the nail on the head with every product you develop for them.
“Unlike Steve Jobs, who can create successful products based on what he knows he wants and what his Apple employees want, you have to ask your customers what they want,” says Adams. “Otherwise, you risk spending tons of time and money on a product that you think is great, but that ultimately elicits a sleepy yawn from your customers.”
Compare your IQ (Innovation Quotient) to Steve’s and act accordingly. There’s no doubt that you and your team are smart. And in fact, you and your development team may just be as smart as Jobs and his team. But it’s unlikely you’ve worked as hard for as long at mastering the skills needed to develop blockbuster products.
“Just because Reinhold Messner—one of the world’s greatest mountain climbers—makes a solo climb of Mt. Everest without supplemental oxygen, doesn’t mean you can,” notes Adams. “But with training, oxygen, the right team, and an easier route, you might still enjoy the same view. My point is, if you want to win in the marketplace, tip the scales in your favor. Why not avoid unnecessary risks when you can?”
Because these risks can be costly. During a time period that Jobs was absent from Apple, the company had its share of new product flops. You might recall the Newton MessagePad. Or how about the Apple Bandai Pippin, the gaming console technology created by Apple, or Cyberdog, the Internet browser Apple created back in the late ’90s?
“Sure, it would be great if your next three products were MacBook, iPod, and iPad,” says Adams. “But if they are Newton, Pippin, and Cyberdog, will you still even be working at the same company?”
Learn how to attack the right market. When Apple develops a new product for the global consumer electronics market, it can be assured it is pursuing a market that is large, growing, and open to change. Unfortunately, it’s possible—and all too common—for B2B suppliers to pursue far lesser markets.
“If you make adhesives, they could be used in window construction, aircraft interiors, solar panels, and so on,” notes Adams. “Smart B2B suppliers focus their scarce resources on just those market segments with the best prospects for growth, adequate size, reasonable competitive landscape, and so on. You can learn much of this information by doing solid secondary market research. But you often need to spend time interviewing customers in potential market segments as well. Sometimes you’ll find an ‘over-served’ market that is looking only for lower pricing. That’s a good time to ‘bail’ and pursue a different market.”
Uncover customer outcomes. Steve Jobs makes a good point when he says you can’t just ask customers for “the next big thing.” But the next big thing is the “solution,” which is supposed to be the supplier’s area of expertise. The customer’s area of expertise is the “outcome”—what they want to have happen or what they want a new product to do for them. They don’t know how to make it happen. They just know they need it to happen. When you find out what kind of outcome your customers want, you can provide their solution.
“Knowing that these are the outcomes his customers wanted, what kind of products should he develop?” says Adams. “Perhaps something that looks like iTunes and the iPod. I use this made-up scenario to illustrate how the outcomes you hear from your customers might translate into new products. Once you know what outcomes your customers want, you can begin to develop a product that delivers them.
“Research shows there are 50 to 150 customer outcomes for every job your product is hired to do,” he adds. “And the reality is that talking to customers and uncovering these outcomes actually helps your team be more creative. For example, it’s likely your customers will reveal an outcome they need that you and your team might never have thought of without their input.”
Don’t “just ask” customers. When you ask customers for their outcomes, get creative. You need to really get your customers thinking and talking. In-depth. One- or two-sentence answers will rarely give you the information you need—and that’s what you’re likely to get unless you know how to probe.
“You can encourage customers to dig deeper using interview methods similar to those we developed at Advanced Industrial Marketing,” says Adams. “For example, we have special ‘trigger methods’ to get them out of mental ruts. We have fresh ways for probing their responses. And we have unique observation and customer tour tools to let you see exciting new opportunities.
“When someone says, ‘Don’t just ask customers what they want,’ it doesn’t mean you should isolate yourself deep within the bowels of your company to guess what they want,” he adds. “It means you should get innovative about ways to enter your customers’ worlds and understand the needs they cannot easily articulate on their own.”
Prioritize customer outcomes. What will customers richly pay you for? Only for delivering outcomes that are important and currently unsatisfied. That’s why Adams advises clients to get quantitative—to ask customers to rate how eager they are for certain elements of a new product. For example, you might ask on a scale of 1-10 how important it is to “search for a broad range of music.” Then ask that same customer to rate, on a scale of 1-10, how satisfied they are today with their ability to “search for a broad range of music.” Then focus your product development on outcomes that scored high in importance and low in current satisfaction.
“Most suppliers fail to ask these quantitative questions,” says Adams. “The result is they miss two critical points: The first is that it’s a mistake to let your engineers and scientists work on answers to questions customers don’t care about; secondly, to a certain extent, we all ‘hear what we want to hear’ in customer interviews, so quantitative data is needed to drive out internal bias and wishful thinking.”
Take advantage of the profit motive. Many B2B suppliers completely overlook an enormous advantage they have over consumer-products companies such as Apple: the ability to measure value delivered to their customers. How do you measure the “coolness” of a tiny iPod, the convenience of a fast music download, or the bragging rights of owning the latest iPhone model?
But the B2B supplier’s world is different. “I’ve helped B2B suppliers in hundreds of industries,” says Adams, “and their customers are usually in the business of making money. B2B suppliers can help their customers make more money by improving their processes and/or their products. If suppliers are willing to work at this, they can often measure or predict how a new product will let customers a) reduce costs, b) sell higher volumes, or c) sell at higher prices.
“Tools such as value calculators allow attentive B2B suppliers to understand the value their customers will receive from their new product,” he adds. “This teaches the supplier how to precisely ‘tune’ the design of their new product, how to price it, and how to promote it. This may not be as much fun as a new touch-screen phone, but it’s great for the supplier’s bottom line.”
Get creative with the solutions. Truly hearing the voice of the customer is necessary, but not sufficient. Here’s where you can and should emulate Jobs and his team at Apple—in the creativity department. Jobs doesn’t just encourage innovation; he requires it. He wants Apple employees to take risks, give feedback, and constantly think outside the box. Basically, creativity is a must.
“Once your team knows the outcomes customers care about, they need to focus all their creative energy on finding the solutions that result in those outcomes,” says Adams. “This is best done by engaging as many of the right minds as possible. But remember, this often means engaging those who work outside your company.”
“I leave you with a sort of caveat,” says Adams. “The new product development process that I’ve laid out might look neat and orderly, but in fact, it is often like a messy kitchen as the meal is being prepared. It won’t be unusual during the process for your scientists to invent great new technology before finding a home for it—think Post-it Notes or ScotchgardTM. Do you just leave those products quivering on the lab bench since customers didn’t ask for them? Absolutely not.
What do you think?
Showing posts with label payment processing. Show all posts
Showing posts with label payment processing. Show all posts
Tuesday, June 7, 2011
Wednesday, April 6, 2011
No end in sight to paper checks
By Mark Brousseau
While the Federal Reserve Bank’s latest figures show that electronic payments continue to achieve strong growth, the data also suggests we’re still a long way off from the eagerly-anticipated “checkless” society.
With 28.8 billion checks written in 2010 -- the last year the Federal Reserve researched -- the number of checks written between 2007 and 2010 declined by about 6 percent per year. What’s more, 92 percent of checks are now cleared electronically between U.S. banks, according to the Federal Reserve’s research.
So what should remittance processors make of this data?
“It’s clear that U.S. check volumes continue to decline at a gradual rate,” says Creditron Founder and CEO Wally Vogel, “But checks are not likely to disappear any time soon.” While those might be sobering words from some paper-weary operations managers, they can take heart in the fact that paper deposits – a drag on costs and efficiency – are experiencing a rapid decline as Check 21 emerges as the method of choice for deposits (Vogel points to NACHA figures showing a big drop in Accounts Receivable Check Conversion volumes). “This is bad news for manufacturers of high-volume check encoding equipment, but it’s a great opportunity for providers of Check 21 remote deposit technology. There are many remittance shops that manually process their transactions, or have outdated solutions that don’t support Check 21. With banks continuing to lower their fees for Check 21 deposits, many of these shops will likely look for electronic solutions.”
Vogel notes that Creditron has recently seen strong demand for its Check 21 remote deposit capabilities. “The market is recognizing the value of remittance solutions that offer Check 21 remote deposit, as well as an image-based workflow. Against this backdrop, I think we are well-positioned for success and growth.”
What do you think?
While the Federal Reserve Bank’s latest figures show that electronic payments continue to achieve strong growth, the data also suggests we’re still a long way off from the eagerly-anticipated “checkless” society.
With 28.8 billion checks written in 2010 -- the last year the Federal Reserve researched -- the number of checks written between 2007 and 2010 declined by about 6 percent per year. What’s more, 92 percent of checks are now cleared electronically between U.S. banks, according to the Federal Reserve’s research.
So what should remittance processors make of this data?
“It’s clear that U.S. check volumes continue to decline at a gradual rate,” says Creditron Founder and CEO Wally Vogel, “But checks are not likely to disappear any time soon.” While those might be sobering words from some paper-weary operations managers, they can take heart in the fact that paper deposits – a drag on costs and efficiency – are experiencing a rapid decline as Check 21 emerges as the method of choice for deposits (Vogel points to NACHA figures showing a big drop in Accounts Receivable Check Conversion volumes). “This is bad news for manufacturers of high-volume check encoding equipment, but it’s a great opportunity for providers of Check 21 remote deposit technology. There are many remittance shops that manually process their transactions, or have outdated solutions that don’t support Check 21. With banks continuing to lower their fees for Check 21 deposits, many of these shops will likely look for electronic solutions.”
Vogel notes that Creditron has recently seen strong demand for its Check 21 remote deposit capabilities. “The market is recognizing the value of remittance solutions that offer Check 21 remote deposit, as well as an image-based workflow. Against this backdrop, I think we are well-positioned for success and growth.”
What do you think?
Friday, February 4, 2011
New NACHA rule will streamline remittance processing
By Mark Brousseau
Hoping to make automated clearing house (ACH) processing more appealing to businesses – especially smaller ones – NACHA is doing away with its outdated opt-out provisions for Accounts Receivable Check (ARC) Conversion and Back Office Conversion (BOC) transactions.
The new rules, which will be effective March 18, reverse a longstanding policy that requires billers and merchants to let consumers choose not to have their checks converted to electronic debits. Merchants and billers will still have to give notice to customers that their checks will be converted.
NACHA sees the rules change as particularly important as smaller merchants and billers look at adopting ACH payments as an alternative to remote deposit capture (RDC), which allows businesses to create images of checks and deposit them electronically to a financial institution.
With ARC, billers are able to convert paper checks they receive from consumers at designated lockboxes into electronic transactions. With BOC, merchants can batch consumer checks throughout the day and convert them later—typically, in a back office rather than at the point of sale—into electronic debits. While ARC and BOC opt-out rates have been marginal, typically running well under 1 percent of all consumers, the handling of these exception items was a big hassle for billers.
“This is a step in the right direction for businesses,” says US Dataworks Product Manager Leilani Doyle. “Businesses no longer are required to offer opt-out indicators on their remittance documents or worry about honoring an opt-out provision, if they don’t want to. This simplifies remittance processing. But the fact is, a miniscule number of opt-outs have been requested since the ARC rule was introduced. And, consumers are only becoming more comfortable with electronic payments.”
What do you think?
Hoping to make automated clearing house (ACH) processing more appealing to businesses – especially smaller ones – NACHA is doing away with its outdated opt-out provisions for Accounts Receivable Check (ARC) Conversion and Back Office Conversion (BOC) transactions.
The new rules, which will be effective March 18, reverse a longstanding policy that requires billers and merchants to let consumers choose not to have their checks converted to electronic debits. Merchants and billers will still have to give notice to customers that their checks will be converted.
NACHA sees the rules change as particularly important as smaller merchants and billers look at adopting ACH payments as an alternative to remote deposit capture (RDC), which allows businesses to create images of checks and deposit them electronically to a financial institution.
With ARC, billers are able to convert paper checks they receive from consumers at designated lockboxes into electronic transactions. With BOC, merchants can batch consumer checks throughout the day and convert them later—typically, in a back office rather than at the point of sale—into electronic debits. While ARC and BOC opt-out rates have been marginal, typically running well under 1 percent of all consumers, the handling of these exception items was a big hassle for billers.
“This is a step in the right direction for businesses,” says US Dataworks Product Manager Leilani Doyle. “Businesses no longer are required to offer opt-out indicators on their remittance documents or worry about honoring an opt-out provision, if they don’t want to. This simplifies remittance processing. But the fact is, a miniscule number of opt-outs have been requested since the ARC rule was introduced. And, consumers are only becoming more comfortable with electronic payments.”
What do you think?
Tuesday, January 4, 2011
10 Habits of Highly Effective Managers
By Wes Friesen, Portland General Electric
“Sow a thought and you reap an act; sow an act and you reap a habit; sow a habit and you reap a character; sow a character and you reap a destiny.”
Right in the middle of the quotation above is the importance of our habits. A habit is “an acquired mode of behavior that has become our common practice.” Our habits mold our character and ultimately determine our destiny in the world. Want to further develop your character and develop in to a highly effective manager? Intentionally pursuing and building worthwhile habits is the key.
Following are ten of the habits of highly effective managers. This is not an exhaustive list – but these will build a strong foundation on your road to increased management effectiveness:
1) Habit #1: “Expanding Self-Awareness.” Having a high level of Emotional Intelligence (EQ) is essential to being an effective Manager – and EQ starts with having accurate self-awareness. Self-awareness can help us gain self-control and be helpful to people around us – not hurtful. Some tools to help expand our self-awareness include: get feedback from others such as using 360 degree surveys; have a mentor to speak into your life; and constantly seek feedback from others on how we are doing.
2) Habit #2: “Pursue Continuous Learning and Continuous Improvement.” Are you a perfect manager and person? Me neither! What we can do is to commit ourselves to be like-long learners and seek to continuously improve ourselves as managers and as human beings. I have been inspired by this quote from Dr. Martin Luther King: “I may not be the man I want to be; I may not be the man I ought to be; I may not be the man I can be; but praise God, I’m not the man I once was.”
3) Habit #3: “Always do the Right Thing.” Too many people have been victimized by the unethical behavior of those in leadership roles. Remember Enron? My co-workers and I at Portland General will never forget – we were owned by Enron at time of their bankruptcy and our retirement savings were decimated. Mark Twain said “Always do what is right. It will gratify half of mankind and astound the other.” My former pastor Loren Fischer said “it’s always right to do right” – and I agree.
4) Habit #4: “Be Results AND Relationship Oriented.” As leaders we are expected to get results – and we should. At the same time, building positive relationships is the right thing to do – and it leads to great results. One tool to help build relationships is to consistently practice the 3 Rs with people. Recognize people for who they are and what they do; Reward people for individual and team achievements; and show people Respect – everybody wants to be respected as the classic Aretha Franklin song emphasizes.
5) Habit #5: “Achieve Big Goals one small step at a time.” I remember a grade school friend telling me the following riddle: “Question: how do you eat an elephant? Answer: one bite at a time”. Get the point? We need to set long-term visions and big goals for ourselves and our teams. And we need to break down the journey towards the vision and goals into manageable steps that inspire others to move forward.
6) Habit #6: “See the glass as half-full.” Are you normally a pessimist or an optimist? Studies have shown that the most effective leaders are strong optimists. Being optimistic does not mean that we ignore the half of the glass that is empty. It does mean we are thankful for the half that is full, and we work together to fill the rest of the glass as best we can.
7) Habit #7: “Look for the win-win.” Effective managers don’t get locked into specific positions, but look for ways to meet interests of themselves and others so everybody gets something (a “win-win” versus a “win-lose”).
8) Habit #8: “Spend much time in Quadrant 2.” Stephen Covey popularized the importance of intentionally spending significant time doing “Important, Not Urgent” items. These include things like building relationships, reading and other learning activities, planning and thinking, exercise, etc. To spend more time in Quadrant 2, we need to spend less time in Quadrants 3 & 4 (i.e. “Urgent, Not Important” and “Not Urgent, Not Important”) activities like watching TV, playing video games and wasting time doing things that add no value to our lives or the lives of others.
9) Habit #9: “Enjoy the journey.” Management (and life!) is a journey – filled with both positive and negative experiences. The journey will be much more pleasant and we will go farther if we learn to laugh and be thankful. A Yiddish proverb says “what soap is to the body, laughter is to the soul.” Studies have shown that laughter makes us physically and emotionally healthier – and more fun to be around too. Find a funny friend; enjoy a funny TV show or movie – and just laugh! Being thankful is also important. The reality is that we all have much to be thankful for, and our lives will be more joyful and productive if we learn to develop an “attitude of gratitude.”
10) Habit #10: “Remember - your health is your wealth.” Gandhi said “It is health that is real wealth and not pieces of gold and silver.” Living a healthy lifestyle will increase your energy, stamina and emotional well-being – and help us be more effective in all that we do. A holistic healthy lifestyle includes developing and using our mental capabilities (read a good book lately or taken a class just for the learning?). We are also spiritual beings, and finding faith and serving others can nourish our spiritual health.
Let me leave you with a challenge to not settle for mediocrity, but to get in the game and go for management excellence. Listen to this President Teddy Roosevelt quote “It is not the critic who counts, nor the man who points out how the strong man stumbles or where the doers of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly … who spends himself in a worthy cause.”
Wes can be contacted at Wes.Friesen@pgn.com.
“Sow a thought and you reap an act; sow an act and you reap a habit; sow a habit and you reap a character; sow a character and you reap a destiny.”
Right in the middle of the quotation above is the importance of our habits. A habit is “an acquired mode of behavior that has become our common practice.” Our habits mold our character and ultimately determine our destiny in the world. Want to further develop your character and develop in to a highly effective manager? Intentionally pursuing and building worthwhile habits is the key.
Following are ten of the habits of highly effective managers. This is not an exhaustive list – but these will build a strong foundation on your road to increased management effectiveness:
1) Habit #1: “Expanding Self-Awareness.” Having a high level of Emotional Intelligence (EQ) is essential to being an effective Manager – and EQ starts with having accurate self-awareness. Self-awareness can help us gain self-control and be helpful to people around us – not hurtful. Some tools to help expand our self-awareness include: get feedback from others such as using 360 degree surveys; have a mentor to speak into your life; and constantly seek feedback from others on how we are doing.
2) Habit #2: “Pursue Continuous Learning and Continuous Improvement.” Are you a perfect manager and person? Me neither! What we can do is to commit ourselves to be like-long learners and seek to continuously improve ourselves as managers and as human beings. I have been inspired by this quote from Dr. Martin Luther King: “I may not be the man I want to be; I may not be the man I ought to be; I may not be the man I can be; but praise God, I’m not the man I once was.”
3) Habit #3: “Always do the Right Thing.” Too many people have been victimized by the unethical behavior of those in leadership roles. Remember Enron? My co-workers and I at Portland General will never forget – we were owned by Enron at time of their bankruptcy and our retirement savings were decimated. Mark Twain said “Always do what is right. It will gratify half of mankind and astound the other.” My former pastor Loren Fischer said “it’s always right to do right” – and I agree.
4) Habit #4: “Be Results AND Relationship Oriented.” As leaders we are expected to get results – and we should. At the same time, building positive relationships is the right thing to do – and it leads to great results. One tool to help build relationships is to consistently practice the 3 Rs with people. Recognize people for who they are and what they do; Reward people for individual and team achievements; and show people Respect – everybody wants to be respected as the classic Aretha Franklin song emphasizes.
5) Habit #5: “Achieve Big Goals one small step at a time.” I remember a grade school friend telling me the following riddle: “Question: how do you eat an elephant? Answer: one bite at a time”. Get the point? We need to set long-term visions and big goals for ourselves and our teams. And we need to break down the journey towards the vision and goals into manageable steps that inspire others to move forward.
6) Habit #6: “See the glass as half-full.” Are you normally a pessimist or an optimist? Studies have shown that the most effective leaders are strong optimists. Being optimistic does not mean that we ignore the half of the glass that is empty. It does mean we are thankful for the half that is full, and we work together to fill the rest of the glass as best we can.
7) Habit #7: “Look for the win-win.” Effective managers don’t get locked into specific positions, but look for ways to meet interests of themselves and others so everybody gets something (a “win-win” versus a “win-lose”).
8) Habit #8: “Spend much time in Quadrant 2.” Stephen Covey popularized the importance of intentionally spending significant time doing “Important, Not Urgent” items. These include things like building relationships, reading and other learning activities, planning and thinking, exercise, etc. To spend more time in Quadrant 2, we need to spend less time in Quadrants 3 & 4 (i.e. “Urgent, Not Important” and “Not Urgent, Not Important”) activities like watching TV, playing video games and wasting time doing things that add no value to our lives or the lives of others.
9) Habit #9: “Enjoy the journey.” Management (and life!) is a journey – filled with both positive and negative experiences. The journey will be much more pleasant and we will go farther if we learn to laugh and be thankful. A Yiddish proverb says “what soap is to the body, laughter is to the soul.” Studies have shown that laughter makes us physically and emotionally healthier – and more fun to be around too. Find a funny friend; enjoy a funny TV show or movie – and just laugh! Being thankful is also important. The reality is that we all have much to be thankful for, and our lives will be more joyful and productive if we learn to develop an “attitude of gratitude.”
10) Habit #10: “Remember - your health is your wealth.” Gandhi said “It is health that is real wealth and not pieces of gold and silver.” Living a healthy lifestyle will increase your energy, stamina and emotional well-being – and help us be more effective in all that we do. A holistic healthy lifestyle includes developing and using our mental capabilities (read a good book lately or taken a class just for the learning?). We are also spiritual beings, and finding faith and serving others can nourish our spiritual health.
Let me leave you with a challenge to not settle for mediocrity, but to get in the game and go for management excellence. Listen to this President Teddy Roosevelt quote “It is not the critic who counts, nor the man who points out how the strong man stumbles or where the doers of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly … who spends himself in a worthy cause.”
Wes can be contacted at Wes.Friesen@pgn.com.
Thursday, December 23, 2010
Municipalities eager to automate RP
Posted by Mark Brousseau
Municipal governments are showing strong interest in purchasing automated remittance solutions, and it appears that the sluggish economy -- and its impact on municipal budgets -- is the primary reason, according to Tony Rapaglia, regional manager for Creditron (trapaglia@creditron.com). Municipalities are looking to automate functions such as tax and utility payment processing, Rapaglia explains, adding that he expects the strong demand to carry over into the new year.
"Especially after the recent elections, municipalities are extremely conscious about the amount of money they are spending on back-office functions such as remittance processing," Rapaglia says. "Many are focused like a laser-bean on cutting costs and improving service to taxpayers. They recognize that they can pass along any savings from more efficient processing to their taxpayers."
So why is remittance processing, in particular, getting so much attention from municipalities?
For starters, Rapaglia notes that automated remittance processing frees up municipal workers to focus on other activities -- which is critical as they look to become more taxpayer-focused and make do with less staff. Automated remittance processing also helps municipalities make deposits much quicker, delivering immediate gains in funds availability. Even greater gains are on tap for those municipalities that deposit items electronically to their banks via Check 21. And municipalities are drawn to the improved security that an automated remittance system provides compared to paper processes. "In an automated environment, less people handle the checks, and there's less opportunity to lose them," Rapaglia explains, noting a recent case where a courier misplaced paper checks.
"Municipal budgets are certainly tight, but more of them are recognizing that they can achieve big savings by spending relatively little money on an automated remittance system," Rapaglia concludes.
Municipal governments are showing strong interest in purchasing automated remittance solutions, and it appears that the sluggish economy -- and its impact on municipal budgets -- is the primary reason, according to Tony Rapaglia, regional manager for Creditron (trapaglia@creditron.com). Municipalities are looking to automate functions such as tax and utility payment processing, Rapaglia explains, adding that he expects the strong demand to carry over into the new year.
"Especially after the recent elections, municipalities are extremely conscious about the amount of money they are spending on back-office functions such as remittance processing," Rapaglia says. "Many are focused like a laser-bean on cutting costs and improving service to taxpayers. They recognize that they can pass along any savings from more efficient processing to their taxpayers."
So why is remittance processing, in particular, getting so much attention from municipalities?
For starters, Rapaglia notes that automated remittance processing frees up municipal workers to focus on other activities -- which is critical as they look to become more taxpayer-focused and make do with less staff. Automated remittance processing also helps municipalities make deposits much quicker, delivering immediate gains in funds availability. Even greater gains are on tap for those municipalities that deposit items electronically to their banks via Check 21. And municipalities are drawn to the improved security that an automated remittance system provides compared to paper processes. "In an automated environment, less people handle the checks, and there's less opportunity to lose them," Rapaglia explains, noting a recent case where a courier misplaced paper checks.
"Municipal budgets are certainly tight, but more of them are recognizing that they can achieve big savings by spending relatively little money on an automated remittance system," Rapaglia concludes.
Wednesday, November 3, 2010
Social Nation Building Done Right
Posted by Mark Brousseau
When social media first came on the scene, companies couldn't wait to get on board with the new trend, because they saw it as a way to expand their brands and grow their businesses—and, of course, they had high hopes for return on investment. Now, fast-forward several years. Today, many of these same companies have hired employees devoted to using social technologies but are now faced with answering the all-important question, Now what?
"There's no denying that social networking has worked for some companies and been a flat-out flop for others," asserts Barry Libert, author of the new book Social Nation: How to Harness the Power of Social Media to Attract Customers, Motivate Employees, and Grow Your Business. "Most companies are confused about what social networking really is and about how to successfully leverage it.
"The good news," he continues, "is that these companies don't have to give up their goal of building a successful 'Social Nation,' as I call it. They simply have to change the way they think about it and develop effective strategies. Primarily, they have to learn it's not about technology, as is commonly assumed...it's about community."
Libert knows what he's talking about. After all, he's the chairman and CEO of Mzinga, a company that provides social software to businesses. Quite literally, it's his job to be social media savvy. And he's adamant that before you start building your own Social Nation, you need to have a well-researched game plan. In fact, it's that knowledge, gathered through years of Mzinga's real-world experience, that prompted him to write Social Nation, a sort of social networking best practices manual.
"There's no denying that people know how to use tools like Facebook and Twitter—they just do it to no avail," Libert explains. "What they should be doing is focusing their attention on their customers, partners, and employees. Listening, acknowledging, connecting, and rewarding these people—and implementing what they have to say. I can't stress enough that social networking isn't about accumulating followers for the sake of having them—it's about building a community that brings real value and true ROI to your company."
It almost sounds too simple—but when faced with skepticism, Libert points out that a focus on building community spelled success for his company's clients long before the advent of Facebook. To date, Mzinga has worked with hundreds of companies to manage a total of 2.5 billion interactions a month through online communities.
Ready to rethink your own company's social networking strategy and start seeing some real value? Then throw out what you thought you knew about social media and read on to learn what really works in the land of social networking, as explained in Social Nation:
Build your own community. "Social Nation" is a catchy phrase, sure—but what does it really mean? Well, social is the construct of wanting to belong with another, and nation is being part of something that has purpose. Taking that into account, then, your company's social networking goal should be to bring like-minded people together in order to achieve a common purpose.
"It's all about connecting people who need to be connected, allowing them to become a part of your company experience," says Libert. "I've said it before and I'll say it again: Technology is important, but it will never be a substitute for community. If you want to see growth, you've got to develop a social network that helps people grow, engages their minds, satisfies their unmet needs, and connects them to one another."
Don't broadcast but share. Talking to someone whose conversation is constantly "me-me-me" isn't anyone's idea of a good time...and that principle also holds true in the world of social networking. It doesn't matter how frequently you update your company's status or blog about its achievements if you never deliver information that your followers actually want and need to hear.
"Always remember to create and disseminate quality content that helps people make good decisions, improves businesses, and enhances lives," advises Libert. "They want to read about topics that are actionable and applicable—so we always make sure our clients at Mzinga are providing their constituents with information, tools, and tips on subjects that are of interest to them."
Don't be a guest in someone else's home. Think about the differences between a house and a home. A house is only a structure—but a home is a place where you feel like you belong. That, Libert insists, is the difference between joining random social media sites for the sake of doing it and embracing and building a truly social business.
Realize that might does not make right. Just as your company should avoid disseminating "me-me-me" information via social networking, it should also avoid dominating the conversation. And make no mistake—a symbiotic two-way conversation is exactly what's going on here. A successful Social Nation always lets its community be part of telling the story, from start to finish. Look at it this way: Employees, customers, and partners are essentially volunteering their time and energy to serve as developers, sounding boards, and advertisements for your company. They want to belong—so let them, and listen to them.
"Recently, a company came to me and asked what they needed to do to become the leader in their industry," Libert recounts. "The first thing they had to do, I told them, was to stop trying to 'lead' everything! Instead, make it your goal to be the definitive 'community.' This will draw people in, and it will turn them into raving fans."
Social Nation tells the stories of companies that have embraced this shift to more open, social business models in substantive ways, forging new paths to workplace collaboration, product development, customer relationship management, brand loyalty, innovation, and profitability.
"What businesses should be doing is focusing their attention not on social media itself, but on how they can use it as a channel in every facet of their business to establish the genuine connections that are increasingly becoming the new path to profitability," says Libert. "As a business leader today, your job is to make sure these things happen, and I believe Social Nation can help you get there."
What do you think?
When social media first came on the scene, companies couldn't wait to get on board with the new trend, because they saw it as a way to expand their brands and grow their businesses—and, of course, they had high hopes for return on investment. Now, fast-forward several years. Today, many of these same companies have hired employees devoted to using social technologies but are now faced with answering the all-important question, Now what?
"There's no denying that social networking has worked for some companies and been a flat-out flop for others," asserts Barry Libert, author of the new book Social Nation: How to Harness the Power of Social Media to Attract Customers, Motivate Employees, and Grow Your Business. "Most companies are confused about what social networking really is and about how to successfully leverage it.
"The good news," he continues, "is that these companies don't have to give up their goal of building a successful 'Social Nation,' as I call it. They simply have to change the way they think about it and develop effective strategies. Primarily, they have to learn it's not about technology, as is commonly assumed...it's about community."
Libert knows what he's talking about. After all, he's the chairman and CEO of Mzinga, a company that provides social software to businesses. Quite literally, it's his job to be social media savvy. And he's adamant that before you start building your own Social Nation, you need to have a well-researched game plan. In fact, it's that knowledge, gathered through years of Mzinga's real-world experience, that prompted him to write Social Nation, a sort of social networking best practices manual.
"There's no denying that people know how to use tools like Facebook and Twitter—they just do it to no avail," Libert explains. "What they should be doing is focusing their attention on their customers, partners, and employees. Listening, acknowledging, connecting, and rewarding these people—and implementing what they have to say. I can't stress enough that social networking isn't about accumulating followers for the sake of having them—it's about building a community that brings real value and true ROI to your company."
It almost sounds too simple—but when faced with skepticism, Libert points out that a focus on building community spelled success for his company's clients long before the advent of Facebook. To date, Mzinga has worked with hundreds of companies to manage a total of 2.5 billion interactions a month through online communities.
Ready to rethink your own company's social networking strategy and start seeing some real value? Then throw out what you thought you knew about social media and read on to learn what really works in the land of social networking, as explained in Social Nation:
Build your own community. "Social Nation" is a catchy phrase, sure—but what does it really mean? Well, social is the construct of wanting to belong with another, and nation is being part of something that has purpose. Taking that into account, then, your company's social networking goal should be to bring like-minded people together in order to achieve a common purpose.
"It's all about connecting people who need to be connected, allowing them to become a part of your company experience," says Libert. "I've said it before and I'll say it again: Technology is important, but it will never be a substitute for community. If you want to see growth, you've got to develop a social network that helps people grow, engages their minds, satisfies their unmet needs, and connects them to one another."
Don't broadcast but share. Talking to someone whose conversation is constantly "me-me-me" isn't anyone's idea of a good time...and that principle also holds true in the world of social networking. It doesn't matter how frequently you update your company's status or blog about its achievements if you never deliver information that your followers actually want and need to hear.
"Always remember to create and disseminate quality content that helps people make good decisions, improves businesses, and enhances lives," advises Libert. "They want to read about topics that are actionable and applicable—so we always make sure our clients at Mzinga are providing their constituents with information, tools, and tips on subjects that are of interest to them."
Don't be a guest in someone else's home. Think about the differences between a house and a home. A house is only a structure—but a home is a place where you feel like you belong. That, Libert insists, is the difference between joining random social media sites for the sake of doing it and embracing and building a truly social business.
Realize that might does not make right. Just as your company should avoid disseminating "me-me-me" information via social networking, it should also avoid dominating the conversation. And make no mistake—a symbiotic two-way conversation is exactly what's going on here. A successful Social Nation always lets its community be part of telling the story, from start to finish. Look at it this way: Employees, customers, and partners are essentially volunteering their time and energy to serve as developers, sounding boards, and advertisements for your company. They want to belong—so let them, and listen to them.
"Recently, a company came to me and asked what they needed to do to become the leader in their industry," Libert recounts. "The first thing they had to do, I told them, was to stop trying to 'lead' everything! Instead, make it your goal to be the definitive 'community.' This will draw people in, and it will turn them into raving fans."
Social Nation tells the stories of companies that have embraced this shift to more open, social business models in substantive ways, forging new paths to workplace collaboration, product development, customer relationship management, brand loyalty, innovation, and profitability.
"What businesses should be doing is focusing their attention not on social media itself, but on how they can use it as a channel in every facet of their business to establish the genuine connections that are increasingly becoming the new path to profitability," says Libert. "As a business leader today, your job is to make sure these things happen, and I believe Social Nation can help you get there."
What do you think?
Friday, October 22, 2010
Utilities grow weary of siloed payments solutions
Posted by Mark Brousseau
Rising payment processing costs may be catching up to utilities, if this week’s 13th Annual Utility Payment Conference hosted by Dominion at the Hilton Hotel in Richmond, VA, is any indication.
Historically, utility payments were among the easiest and cheapest to process, thanks in large part to the high number of full-pay transactions that included a remittance document with an OCR scan line. In fact, TAWPI’s 2009 Payments Benchmarking Survey showed that the average cost per paper-based remittance payment remained unchanged at $0.15 per item between 2005 and 2009. But the emergence of new payment channels, such as the Web and credit card, has disproportionately “taken out” so-called “clean” transactions, leaving utilities with more complex paper-based remittances. At the same time, utilities must cost-effectively manage this growing number of payment streams.
Not surprisingly, utilities in attendance at this week’s payments conference were keen on finding solutions that would consolidate both paper-based and electronic payment streams onto a single platform. Mario Villarreal, president and COO of US Dataworks, Inc. – an exhibitor at the event – can’t remember a time when utilities have shown as much interest in enterprise payments solutions.
This follows a trend I observed this summer at the Federation of Tax Administrators conference.
“The utility market is clearly thirsting for enterprise payments solutions that provide them with greater visibility, efficiency and consistency in their revenue management,” Villarreal explained.
For utilities, centralized processing is one of the key advantages of an enterprise payments approach. Villarreal says centralized payments processing is especially appealing to utilities that are expanding their geographic footprint; one utility he spoke with at the conference operates in 33 states. With an enterprise approach, utilities gain better visibility into their payments, regardless of their footprint.
Utilities see similar benefits to centralizing the archival of their payments images and data, he adds.
But vendors may be slow in getting the message, Villarreal added. “Most of the exhibitors at the conference are still taking a fragmented approach to automated utility payment processing.” The vast majority of the 38 exhibitors at the Payment Utility Conference strictly offer siloed solutions for payments applications such as remittance, cashiering, remote deposit capture or ACH processing.
In Villarreal’s eyes, that won’t solve the challenge utilities face in their payments operations.
“Until you consolidate systems and apply standard processes and controls across payment channels, you will always be saddled with inefficient and costly payments operations,” Villarreal concluded.
What do you think?
Rising payment processing costs may be catching up to utilities, if this week’s 13th Annual Utility Payment Conference hosted by Dominion at the Hilton Hotel in Richmond, VA, is any indication.
Historically, utility payments were among the easiest and cheapest to process, thanks in large part to the high number of full-pay transactions that included a remittance document with an OCR scan line. In fact, TAWPI’s 2009 Payments Benchmarking Survey showed that the average cost per paper-based remittance payment remained unchanged at $0.15 per item between 2005 and 2009. But the emergence of new payment channels, such as the Web and credit card, has disproportionately “taken out” so-called “clean” transactions, leaving utilities with more complex paper-based remittances. At the same time, utilities must cost-effectively manage this growing number of payment streams.
Not surprisingly, utilities in attendance at this week’s payments conference were keen on finding solutions that would consolidate both paper-based and electronic payment streams onto a single platform. Mario Villarreal, president and COO of US Dataworks, Inc. – an exhibitor at the event – can’t remember a time when utilities have shown as much interest in enterprise payments solutions.
This follows a trend I observed this summer at the Federation of Tax Administrators conference.
“The utility market is clearly thirsting for enterprise payments solutions that provide them with greater visibility, efficiency and consistency in their revenue management,” Villarreal explained.
For utilities, centralized processing is one of the key advantages of an enterprise payments approach. Villarreal says centralized payments processing is especially appealing to utilities that are expanding their geographic footprint; one utility he spoke with at the conference operates in 33 states. With an enterprise approach, utilities gain better visibility into their payments, regardless of their footprint.
Utilities see similar benefits to centralizing the archival of their payments images and data, he adds.
But vendors may be slow in getting the message, Villarreal added. “Most of the exhibitors at the conference are still taking a fragmented approach to automated utility payment processing.” The vast majority of the 38 exhibitors at the Payment Utility Conference strictly offer siloed solutions for payments applications such as remittance, cashiering, remote deposit capture or ACH processing.
In Villarreal’s eyes, that won’t solve the challenge utilities face in their payments operations.
“Until you consolidate systems and apply standard processes and controls across payment channels, you will always be saddled with inefficient and costly payments operations,” Villarreal concluded.
What do you think?
Monday, May 24, 2010
Dot connecting in the new data world
Posted by Mark Brousseau
The flood of digital information increases the need for accuracy -- including knowing which data to leave out. Scott Schumacher, Ph.D., a government security and technology expert with Initiate, an IBM Company, explains:
Remember when we used to ride around in our cars and listen to AM radio? Maybe you’re not quite old enough to remember, but there was a time when AM radio was all we had – and that was fine. There also used to be only a handful of television channels, which we had to get up out of our chairs to change. That was fine, too.
I don’t remember longing for a wider variety of music on the radio, or more channels to watch on TV. We had what we had, and it was all fine – it was all “good enough.”
There was also a time when the level of accuracy that our intelligence and law-enforcement systems offered was “fine.” We connected the dots well enough to eliminate the greatest threats.
Not any more.
Today, there is an intense push for accuracy in our data and, particularly, in our ability to accurately “connect the dots.” Why now? What’s changed? What’s pushing the accuracy button more than it’s been pushed before?
Turn off the radio, put down the remote, and I’ll explain.
What is accuracy?
I’m a mathematician. When I think of accuracy I think of numbers and percentages, of false-negatives and false-positives. But for law enforcement or intelligence officials, accuracy means tracking down and mitigating a potential risk before it happens.
Both perspectives are critical in understanding what accuracy is and how to improve your results.
Mathematically, accuracy is a pair of numbers. Accuracy compares the number of times you “miss” (present a false negative) and the number of times you incorrectly “hit” (present a false positive). Accuracy measures how well your process makes a decision – how well it can find a “true-positive” result amid the false negatives and false positives.
When you hear a phrase like, “our system is 95 percent accurate,” it usually refers to the false-negative rate – or the connections it missed. To gauge the true accuracy of that system, you also need to know the false-positive rate. If the system floods you with false positives, and touts a 95 percent accuracy rate (focusing on the things it missed), that’s not going to get you very far. You’re going to be spending all your time chasing false threats.
From an intelligence perspective, accuracy is just as much about keeping data apart as it is putting it together. If there were a security threat in a particular airport at a particular time, a less-than-accurate system might flag every person who was in the airport at that time as a suspect. A highly accurate system would be able to parse through the vast numbers of individuals in the airport at that time, “connect the dots” between those people and other data points within other records, and present a highly targeted list of suspects.
Accuracy is being able to make the best use of all the information you have – putting data together where necessary, and keeping it apart where necessary, to create a highly targeted list of “true-positive” results.
Why now?
The description of accuracy hasn’t changed since the time of AM-only radio, but the need has changed – because our circumstances have changed. Two primary factors are driving the push for greater accuracy:
• More information. Today’s law enforcement officials have to deal with millions of terabytes more data than they have ever had to work with in the past. Not only are there more records about more people – a simple function of our digital times – there is significantly more travel (international travel in particular), more people traveling on visas, more types of communication and a wider variety of threats.
• More fragmentation. As the amount of information grows, so do the different locations and different types of information. From local police records to state databases to federal watch lists – and all the different types of entities (people, phone numbers, weapons) that reside in each – intelligence and law enforcement officials are faced with a daunting task of connecting dots between and among all this information. Their job is akin to finding a needle in a haystack.
Adding to the challenge, the risks are greater for missing important connections – or, not connecting the dots between data that already exists. Being marginally accurate is no longer good enough.
Finding the right technology
Finding the right solution is all about understanding what accuracy is and what you should expect from a highly accurate system. The most effective technology will let you look at the right 10,000 things, not just the top 10,000 things. The right technology will help you reduce the noise, particularly the signal-to-noise ratio.
The most effective technology also will have a level of intelligence. Technology that produces the most accurate results will be able to account for errors and other misspellings – or purposeful deception, a practice common among persons of interest trying to avoid detection. That technology also will have the ability to recognize and account for cultural anomalies and unique factors in different languages.
The technology you use also has to be adaptable; it has to be able to allow you to introduce new information and new agents, as well as securely exchange information between – and allow appropriate access from – other reliable sources.
Finally, your technology has to be flexible, so you can readjust your priorities according to changing threats, threat levels and resources.
Accuracy involves many factors. And, it’s a moving target. Because of the evolving nature of threats, we must keep working at this – we must keep pushing the envelope.
“Good enough” just doesn’t work any more. As soon as we can do more, we have to do more. And we have to keep pushing for greater accuracy and a greater ability to connect the dots. Our national security is at stake.
The flood of digital information increases the need for accuracy -- including knowing which data to leave out. Scott Schumacher, Ph.D., a government security and technology expert with Initiate, an IBM Company, explains:
Remember when we used to ride around in our cars and listen to AM radio? Maybe you’re not quite old enough to remember, but there was a time when AM radio was all we had – and that was fine. There also used to be only a handful of television channels, which we had to get up out of our chairs to change. That was fine, too.
I don’t remember longing for a wider variety of music on the radio, or more channels to watch on TV. We had what we had, and it was all fine – it was all “good enough.”
There was also a time when the level of accuracy that our intelligence and law-enforcement systems offered was “fine.” We connected the dots well enough to eliminate the greatest threats.
Not any more.
Today, there is an intense push for accuracy in our data and, particularly, in our ability to accurately “connect the dots.” Why now? What’s changed? What’s pushing the accuracy button more than it’s been pushed before?
Turn off the radio, put down the remote, and I’ll explain.
What is accuracy?
I’m a mathematician. When I think of accuracy I think of numbers and percentages, of false-negatives and false-positives. But for law enforcement or intelligence officials, accuracy means tracking down and mitigating a potential risk before it happens.
Both perspectives are critical in understanding what accuracy is and how to improve your results.
Mathematically, accuracy is a pair of numbers. Accuracy compares the number of times you “miss” (present a false negative) and the number of times you incorrectly “hit” (present a false positive). Accuracy measures how well your process makes a decision – how well it can find a “true-positive” result amid the false negatives and false positives.
When you hear a phrase like, “our system is 95 percent accurate,” it usually refers to the false-negative rate – or the connections it missed. To gauge the true accuracy of that system, you also need to know the false-positive rate. If the system floods you with false positives, and touts a 95 percent accuracy rate (focusing on the things it missed), that’s not going to get you very far. You’re going to be spending all your time chasing false threats.
From an intelligence perspective, accuracy is just as much about keeping data apart as it is putting it together. If there were a security threat in a particular airport at a particular time, a less-than-accurate system might flag every person who was in the airport at that time as a suspect. A highly accurate system would be able to parse through the vast numbers of individuals in the airport at that time, “connect the dots” between those people and other data points within other records, and present a highly targeted list of suspects.
Accuracy is being able to make the best use of all the information you have – putting data together where necessary, and keeping it apart where necessary, to create a highly targeted list of “true-positive” results.
Why now?
The description of accuracy hasn’t changed since the time of AM-only radio, but the need has changed – because our circumstances have changed. Two primary factors are driving the push for greater accuracy:
• More information. Today’s law enforcement officials have to deal with millions of terabytes more data than they have ever had to work with in the past. Not only are there more records about more people – a simple function of our digital times – there is significantly more travel (international travel in particular), more people traveling on visas, more types of communication and a wider variety of threats.
• More fragmentation. As the amount of information grows, so do the different locations and different types of information. From local police records to state databases to federal watch lists – and all the different types of entities (people, phone numbers, weapons) that reside in each – intelligence and law enforcement officials are faced with a daunting task of connecting dots between and among all this information. Their job is akin to finding a needle in a haystack.
Adding to the challenge, the risks are greater for missing important connections – or, not connecting the dots between data that already exists. Being marginally accurate is no longer good enough.
Finding the right technology
Finding the right solution is all about understanding what accuracy is and what you should expect from a highly accurate system. The most effective technology will let you look at the right 10,000 things, not just the top 10,000 things. The right technology will help you reduce the noise, particularly the signal-to-noise ratio.
The most effective technology also will have a level of intelligence. Technology that produces the most accurate results will be able to account for errors and other misspellings – or purposeful deception, a practice common among persons of interest trying to avoid detection. That technology also will have the ability to recognize and account for cultural anomalies and unique factors in different languages.
The technology you use also has to be adaptable; it has to be able to allow you to introduce new information and new agents, as well as securely exchange information between – and allow appropriate access from – other reliable sources.
Finally, your technology has to be flexible, so you can readjust your priorities according to changing threats, threat levels and resources.
Accuracy involves many factors. And, it’s a moving target. Because of the evolving nature of threats, we must keep working at this – we must keep pushing the envelope.
“Good enough” just doesn’t work any more. As soon as we can do more, we have to do more. And we have to keep pushing for greater accuracy and a greater ability to connect the dots. Our national security is at stake.
Wednesday, April 28, 2010
TAWPI @ NACHA Payments
R. Edwin Pearce, executive vice president of sales and corporate development for eGistics, hands Michele M. Naghoon, AAP, vice president, ACH production manager, SunTrust, the Flip camcorder that she one through eGistics' prize drawing at NACHA's Payments 2010 at the Washington State Convention Center in Seattle.
Wednesday, July 2, 2008
IRS Wants Payment Information
Posted by Mark Brousseau
An interesting article from the Washington Business Journal:
IRS may get reports on credit card payments
Kent Hoover, Washington Bureau Chief
Congress is on the verge of requiring payment card processors to tell the Internal Revenue Service how much money merchants receive through credit card and debit card transactions.
The Bush administration thinks this kind of third-party reporting of revenue would encourage more businesses to report their income accurately.
This could help close the tax gap -- the difference between what the government is owed in taxes and what it actually collects.
Congress views the requirement as an easy way of raising revenue to pay for other tax cuts or additional government spending. It estimates the proposal could raise nearly $10 billion over 10 years.
Under pending legislation:
... Financial institutions that reimburse merchants for credit card or debit card purchases would report annual payments for each merchant to the IRS
... These payment processors would be required to validate the Taxpayer Identification Number (TIN) for each merchant
... If the TIN couldn't be validated, the payment processors would be required to withhold taxes from the merchant
... These requirements also would apply to third-party organizations, such as PayPal, that serve as intermediaries for purchases. In this case, reports would not have to filed for merchants who have $10,000 or less in transactions or 200 or fewer transactions.
Both the House and the Senate included the reporting requirement as a revenue raiser in separate bills that appear headed for passage: House legislation to shield 21 million taxpayers from the alternative minimum tax (H.R. 6275) and Senate legislation to help homeowners and the housing industry (H.R. 3221).
The new requirement, however, couldn't help fund both bills, so the House and Senate would have to resolve this issue before the reporting rule could become law.
This gives small business groups and credit card processors more time to fight the requirement. They contend the proposal would be costly to implement and lead to unfair audits of small businesses that report their income accurately.
It may be too late to stop the requirement, however.
"This becomes very difficult to defeat because of the fact it's become an item that's accepted as a valid revenue raiser that can be used," said Giovanni Coratolo, director of small business policy for the U.S. Chamber of Commerce.
The appeal of the reporting requirement was summed up by Sen. Max Baucus, D-Mont.
"This proposal does not raise taxes on anyone," said Baucus, who chairs the Senate Finance Committee. "These information reports would just cause people to file more accurate returns."
Proposal costly for businesses
Opponents of the proposal doubt it would raise much revenue, however. Credit card receipts already show up on a merchant's bank statement, so tax cheats aren't likely to underreport this income, said Kristie Darien, executive director of the National Association of the Self-Employed.
The legislation, however, would require credit card processors to withhold taxes on payments to a merchant whose taxpayer identification number (TIN) couldn't be verified. But there are bound to be errors in the TIN verification process, Darien said, meaning some small businesses could have 28 percent of their credit card reimbursements withheld until the errors are corrected.
That could "put a severe strain on millions of American families counting on a self-employed breadwinner," she said.
Credit card processors said the proposal would cost them millions of dollars as well.
"Our systems do not currently track merchant payment transaction to TINs, and it will be extremely expensive and time-consuming to reprogram our systems to comply with the new mandates," said Kim Stubna, director of public policy for First Data Corp., a Denver-based processor of electronic payment transactions.
Small businesses fear these costs would be passed on to them through higher fees.
Donald Boeding, general manager of merchant services for Fifth Third Processing Services in Cincinnati, said the requirement "will likely strain the relationship between payment processors and merchant customers." Some merchants might decide that accepting credit cards is no longer worth the hassle. A move to cash would make it "less likely that the IRS will be able to track taxable income," he said.
IRS to profile businesses?
Small business lobbyists fear the IRS would use the reports to create industry profiles and audit small businesses whose credit card usage deviated from the norm.
That is "enormously concerning to us" because of "the great diversity" among small businesses, said Todd McCracken, president of the National Small Business Association. A difference in credit card usage "doesn't mean anything funny is going on," he said.
Plus, a company's actual revenue from credit card transactions would differ from what is reported because of chargebacks, returns, refunds, deposits and cash back on debit card purchases.
Yet small businesses could be audited "for no good reason" on the basis of these reports, McCracken said.
Coratolo said Congress would reject this type of profiling if individuals, not businesses, were being targeted.
"This is the camel's nose under the tent," he said.
Treasury Department spokesman Andrew DeSouza said he "wouldn't speculate" on what the IRS would do with this credit card data. But he said businesses also would get a copy of the reports, which would help them file accurate tax returns.
An interesting article from the Washington Business Journal:
IRS may get reports on credit card payments
Kent Hoover, Washington Bureau Chief
Congress is on the verge of requiring payment card processors to tell the Internal Revenue Service how much money merchants receive through credit card and debit card transactions.
The Bush administration thinks this kind of third-party reporting of revenue would encourage more businesses to report their income accurately.
This could help close the tax gap -- the difference between what the government is owed in taxes and what it actually collects.
Congress views the requirement as an easy way of raising revenue to pay for other tax cuts or additional government spending. It estimates the proposal could raise nearly $10 billion over 10 years.
Under pending legislation:
... Financial institutions that reimburse merchants for credit card or debit card purchases would report annual payments for each merchant to the IRS
... These payment processors would be required to validate the Taxpayer Identification Number (TIN) for each merchant
... If the TIN couldn't be validated, the payment processors would be required to withhold taxes from the merchant
... These requirements also would apply to third-party organizations, such as PayPal, that serve as intermediaries for purchases. In this case, reports would not have to filed for merchants who have $10,000 or less in transactions or 200 or fewer transactions.
Both the House and the Senate included the reporting requirement as a revenue raiser in separate bills that appear headed for passage: House legislation to shield 21 million taxpayers from the alternative minimum tax (H.R. 6275) and Senate legislation to help homeowners and the housing industry (H.R. 3221).
The new requirement, however, couldn't help fund both bills, so the House and Senate would have to resolve this issue before the reporting rule could become law.
This gives small business groups and credit card processors more time to fight the requirement. They contend the proposal would be costly to implement and lead to unfair audits of small businesses that report their income accurately.
It may be too late to stop the requirement, however.
"This becomes very difficult to defeat because of the fact it's become an item that's accepted as a valid revenue raiser that can be used," said Giovanni Coratolo, director of small business policy for the U.S. Chamber of Commerce.
The appeal of the reporting requirement was summed up by Sen. Max Baucus, D-Mont.
"This proposal does not raise taxes on anyone," said Baucus, who chairs the Senate Finance Committee. "These information reports would just cause people to file more accurate returns."
Proposal costly for businesses
Opponents of the proposal doubt it would raise much revenue, however. Credit card receipts already show up on a merchant's bank statement, so tax cheats aren't likely to underreport this income, said Kristie Darien, executive director of the National Association of the Self-Employed.
The legislation, however, would require credit card processors to withhold taxes on payments to a merchant whose taxpayer identification number (TIN) couldn't be verified. But there are bound to be errors in the TIN verification process, Darien said, meaning some small businesses could have 28 percent of their credit card reimbursements withheld until the errors are corrected.
That could "put a severe strain on millions of American families counting on a self-employed breadwinner," she said.
Credit card processors said the proposal would cost them millions of dollars as well.
"Our systems do not currently track merchant payment transaction to TINs, and it will be extremely expensive and time-consuming to reprogram our systems to comply with the new mandates," said Kim Stubna, director of public policy for First Data Corp., a Denver-based processor of electronic payment transactions.
Small businesses fear these costs would be passed on to them through higher fees.
Donald Boeding, general manager of merchant services for Fifth Third Processing Services in Cincinnati, said the requirement "will likely strain the relationship between payment processors and merchant customers." Some merchants might decide that accepting credit cards is no longer worth the hassle. A move to cash would make it "less likely that the IRS will be able to track taxable income," he said.
IRS to profile businesses?
Small business lobbyists fear the IRS would use the reports to create industry profiles and audit small businesses whose credit card usage deviated from the norm.
That is "enormously concerning to us" because of "the great diversity" among small businesses, said Todd McCracken, president of the National Small Business Association. A difference in credit card usage "doesn't mean anything funny is going on," he said.
Plus, a company's actual revenue from credit card transactions would differ from what is reported because of chargebacks, returns, refunds, deposits and cash back on debit card purchases.
Yet small businesses could be audited "for no good reason" on the basis of these reports, McCracken said.
Coratolo said Congress would reject this type of profiling if individuals, not businesses, were being targeted.
"This is the camel's nose under the tent," he said.
Treasury Department spokesman Andrew DeSouza said he "wouldn't speculate" on what the IRS would do with this credit card data. But he said businesses also would get a copy of the reports, which would help them file accurate tax returns.
Friday, June 8, 2007
Convergence of Payments and Document Processing
Probably my most anticipated educational session at the TAWPI Show this August in Boston will be (believe it or not) taking place at 3:30pm on Sunday. If you haven't yet checked out the session's taking place on Sunday you better look again at the program. Some great stuff there.. The session I'm talking about is entitled; The Convergence of Payments & Document Processing- Opportunities & Challenges.We've got some heavy hitters from the TAWPI board sitting on this panel namely Bob Young from Verizon, Joe Sass US Bank, Linda Dollens Indiana Department of Revenue, Mark Stevens OPEX, Bruce Wallace Wells Fargo and our moderator will be Doug Hartsema JP Morgan Chase.
What's more interesting however is the topic and really how much of a reality the convergence of payments and document processing is today. It is interesting for me to sit in the middle and look over both sides of the fence. With Check 21 becoming a reality it opens the doors to all sorts of providers out there to jump into the fun. Some vendors who have traditionally been looked at as only document capture guys cannot be categorized as such anymore like a, Kofax, ReadSoft, AnyDoc, etc. and other's who have been looked at more as strictly check capture folks, WAUSAU, Metavante, NetDeposit, J&B Software, Alogent, etc. are or will soon begin to cross-pollunate into both business applications. The landscape is getting hazy when it comes to who to go with for a check or document capture provider and more and guys who have never clashed against each other in RFP's will begin to do so. It won't matter anymore whether the document is a Check or an EOB.
Another interesting trend to think about in this convergence game between check and document and seems to be more under the radar screen are these large outsourcing check processing and remittance processing companies offering more traditional forms processing services on top of their check processing services. Not a far jump for them either. The thing is, I don't think the Service Bureau's who are strictly focused on forms processing are seeing this coming down the road...
Regardless, this session on Sunday shouldn't be missed.
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