Planning for RFP success.

While conducting a request for proposal (RFP) process for a card issuer is typically not on anyone’s list of favorite activities, planning carefully can prevent future pain. At the National P-Cards on Campus Conference last week, I had the pleasure of moderating a general session panel on the topic of RFPs. Between the panelists and participating attendees, I gained a fresh perspective on four key aspects, as described below. Even if you are not doing an RFP any time soon, it never hurts to take notes now, so you are more prepared when the time comes.

Financial Model of Issuers/Banks

We know interchange feeds the revenue share incentives offered by issuers. However, there is the broader economic climate. Interest rates are expected to rise, which puts more pressure on banks. In turn, speed of pay could play a bigger role in proposals and, subsequently, your next contract. Is your organization willing to pay the issuer more quickly or frequently than in the past to maximize revenue share? It helps to understand factors like this when embarking on an RFP.    

Whether to Include Treasury Services

An RFP that combines one or more card programs along with other banking/treasury services could be more appealing to issuers and result in greater benefits for you. A drawback is that one bank may not be the best choice for every piece. Some conference attendees also pointed out the lack of synergy between the card program management team and treasury department that would make RFP collaboration difficult. Nevertheless, it is a worthwhile option to explore in case it might be right for your organization.

Who to Invite to Bid

How do you decide which issuers to include? I was impressed with attendees who retain an active and evolving database of options, so they do not have to scramble later. The session also revealed it can be advantageous to take cold calls from issuers. Hear them out, as it could affect your future RFP and bidder list. In addition, prior to creating an RFP, attend industry conferences and speak directly with card issuers. Besides obtaining contact information (for the appropriate RFP recipient), ask questions that encourage meaningful discussion, such as: 

  • How do you help clients grow their programs?
  • What resources do you offer for “X?” Consider what is most important to your organization, such as on-boarding suppliers, technology for auditing transactions, etc.
  • What do you recommend for solving “X” challenge? You might walk away with actionable solutions to help you today.

Duration to Keep an RFP Open

There were mixed opinions on this aspect. Eight weeks seems to be a good target that gives issuers ample time. Despite some content being boilerplate in nature, issuers (and their respective networks) have to do a lot of customization to properly respond to an RFP. On a related note, the timing of your RFP can matter. Launching one at or near year end (especially if only open for a few weeks) sends a message that your organization may simply be doing a “pricing exercise.” Poor timing and/or too short of a duration may prevent some issuers from responding.  

Panelists and Conference Host

I want to acknowledge and thank the panelists from the session:

  • Larry Andress, Bank of America
  • Orson Morgan, Visa
  • Kathy Ann Sheils, Cornell University

Kudos to the conference host as well: Professional Development Group (PDG)

Use good planning to untangle the maze of a tedious RFP process.

Use good planning to untangle the maze of a tedious RFP process.

Additional RFP Content

The aspects addressed here are just four of many. See other RFP content provided by Recharged Education, including previous blog posts:

RFP Assistance

If your organization is interested in external assistance for its next RFP, submit a contact form to learn how Recharged Education can support your process. 


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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Are end-users placing a burden on issuers?

A study by the Governing Institute indicates the answer to this question might be “yes” for state governments’ prepaid debit card programs (more on this below). I think their findings could apply more broadly. As an end-user, I participated on an RFP team for card issuer selection, so I know firsthand how quickly “desirables” shift into “requirements.” The problem is, excessive requirements can limit the number of issuers who bid on a program and, ultimately, the end-user may lose out. Following are three things driving this issue and tips for avoiding the trap. 

About the Study

The Governing Institute explored challenges confronting the state prepaid debit card market and released a report of their research in 2016 (Is the State Prepaid Debit Card Market in Trouble?). States use these cards to distribute benefits payments tied to various assistance programs, unemployment insurance, child support, etc. Yet, as the report (“Report”) notes, they may be unintentionally pushing issuers out of the market with new requirements, such as increased program support. This leads to the first point...

1. Desires

We dream big. The retail industry has programmed us to want it all and get it on sale. I think of home buyers in an HGTV program. Their budget is $150,000 and they want move-in ready, a convenient location, four bedrooms, outdoor living space, hardwood floors, etc. In the end, they have to compromise by increasing their budget or letting go of some “must haves.” 

Based on the Report, states’ prepaid debit card programs could use more compromise. I imagine the same thing could be happening with card programs elsewhere. 

Tips

When selecting an issuer, carefully consider what is a requirement versus an interest or a nice-to-have. After creating a list of requirements (hopefully short), validate them:

  • Ask yourself if you are willing to completely reject a proposal (no matter how enticing the revenue share incentives) if the issuer cannot meet a stated requirement.
  • Do some fact finding before releasing an RFP to determine how many issuers can accommodate your requirements. If only one or two, you might want to revisit your list.

2. Perceptions

End-users generally do not think they are asking too much of issuers and, in many cases, they are right. However, as the Report points out, state officials may not be aware of how even small changes in RFP requirements affect issuers’ profitability. Further, the Report shares how issuers may compound the problem by not taking charge of the education process. Overall, there is often a communication gap between issuers and end-users.

Tips

Understand the factors that impact issuers’ profitability. They make money through the fee suppliers pay for card acceptance. Revenue sharing incentives for you mean they give up some of this money. Issuers also provide technology solutions and customer service. They have other overhead costs and incur the cost of floating the funds for your transactions until they receive your payment. 

The weight of end-user requirements might be prove to be too much for some issuers. 

The weight of end-user requirements might be prove to be too much for some issuers. 

Recognize where your program likely ranks in an issuer’s portfolio. Low card spend (as defined by the issuer), slow payments, and regular use of their customer service resources are things that collectively lower your rank. Does your program justify what you are asking of issuers?

3. Losing Sight of the Value

The Report observes how the perception gap creates an urgent issue. In response to an end-user RFP, a single proposal or none at all could mean an organization is “just a short step to the expensive, time-consuming process of paper-based payments.” This makes me wonder how many organizations would be willing to forego card programs altogether rather than reevaluate their “requirements.” How important are card programs to the organization payment strategy?

Tips

Review the benefits of Commercial Cards and identify how they have specifically helped your organization. Quantify as much as possible, such as the process savings. Do not lose sight of the value. Conversely, if you eliminated, or even severely restricted, card payments, how would this affect your operations and employees? Chances are the resulting inefficiencies would require additional staff. 



About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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Bring more focus to your next RFP.

In the life of every Commercial Card program, there will be a time—likely multiple times—when a request for proposal (RFP) process is required or desired. If you have already participated in such a project, then you probably have a list of lessons learned that will benefit future RFPs. Conducting a good RFP process helps establish a good end-user/provider relationship and, ultimately, a successful card program. Before you embark on another RFP project, consider the below tips from industry experts. 

The following content originates from sessions at the 17th Annual NAPCP Commercial Card and Payment Conference.

Preparing the RFP

Tips from the joint session by PayTech Commercial AS and MasterCard

  1. Do not reuse the same RFP as what you used before, especially if you are not happy with the current program/provider.
  2. Identify what matters most and pare down your RFP accordingly. Out of all the possible data points you can include, which ones are most important to your business case and future goals? I could not agree more. I think there is a tendency to ask too many things that do not impact the decision. The opposite problem is not asking key questions, such as ones pertaining to customer service.
  3. Evaluate your RFP for clarity. Unclear questions can result in bidding providers including more information than what is necessary, causing more review work for you and the project team.
  4. Save contract terms for the negotiation stage. When your RFP includes contract terms to which the provider must agree in order to submit a proposal, it will require them to obtain legal review first. This increases the time they need before responding and it could mean they cannot respond at all if your timeline is too tight. 
  5. Provide details about your current card program(s), including as many metrics as possible. See examples...

Evaluating the Responses

Preparing a good RFP is just the beginning. Take equal care when designing the evaluation process.

  • Use a weighted matrix, developed in advance, to evaluate proposals. Place more weight on the items most important to your organization.
  • Each team member should evaluate/score the proposals independently before the team comes together to discuss.
  • Do not be swayed by “bright shiny things” that a provider might include within the proposal. These things can be distracting when they pertain to something that falls outside your requirements. Ensure the provider can meet core competencies first.
  • Proposals offering big checks/payouts can also be distracting. This leads to another important point, as described in the next column.
During your next RFP project, focus on what matters most to your Commercial Card business case.

During your next RFP project, focus on what matters most to your Commercial Card business case.

Dollars vs. Basis Points

Within his conference presentation, Frank Martien, Partner, First Annapolis Consulting, encouraged end-users to look beyond the basis points (bps) noted within a provider’s proposal. He makes the case that end-users can earn more rebate dollars with lower basis points if the provider helps you capture more card spend by acting as a key partner in your program. For example, how will a potential provider specifically help you:

  • convert more suppliers to card payments?
  • further automate internal business processes, as well as key suppliers’ business processes?
  •  obtain program buy-in from your management?
  •  increase your card usage?

More Information

For more RFP resources, visit the related webpage.

Your Experience

If you have RFP experience that you would like to share for possible publication by Recharged Education, please submit a contact form. I would love to hear your advice and lessons learned. Alternatively, provide a comment below.


Contacts

Greg Hamilton
Vice President
Public Sector Business Leader
MasterCard
Phone 303-617-9171
Mobile 303-621-4487
gregory.hamilton@mastercard.com

Vincent P. Eavis
MD, Partner & Global Practice Lead
PayTech Commercial AS
Mobile +44 7721 985700  
vince@paytech.no

Frank Martien
Partner
First Annapolis Consulting
Direct 410-855-8513
Mobile 443-994-1241
Frank.Martien@FirstAnnapolis.com


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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