Rebuilding a controls norm.

April 22, 2015 Lynn Larson

Media coverage of the Meitivs—the Maryland parents who have been in the news for allowing their two children to walk home alone from the park—has pushed the concept of free-range kids into the spotlight. It occurred to me that Purchasing Card programs have experienced an evolution similar to parenting. Increasing precautions is the new norm, but is it the right one? I think there is room for some free-range thinking about card program management.

Protection Has a Cost

Earlier this week, Star Tribune columnist Gail Rosenblum observed that, years ago, the so-called free-range parenting style was simply part of a normal childhood. Further, she wrote, “…Western kids never have been safer in countless ways. And more unwittingly endangered in another. In response to the uproar over her free-range actions, she [Danielle Meitiv] spoke of her distaste for how parents today ‘imprison our children inside and wonder why they’re obese and have no focus.’ By trying so hard to protect our kids, we’re cheating them of the coolest part of being a kid.” Read the complete article...

To rewrite that paragraph for P-Card programs:
Robust data-mining/auditing technology and the adoption of EMV cards have taken controls to a higher level, adding to the long-standing fraud protections and chargeback rights associated with cards. Yet, organizations are endangering card program growth when they remain rooted in heavy restrictions or have scaled back what is allowed. They have strangled usage and wonder why they are not seeing the expected card benefits. By trying so hard to protect against fraud, organizations are cheating themselves of the process savings and rebates.

Status of Your Organization

In the past, I have written about both extremes—over- and under-controlling a P-Card program. Where does your organization fall on the spectrum? If you’re right in the middle, that is ideal. How do you know? Evaluate your current controls. Conducting a risk assessment (and taking the necessary follow-up actions) should help you avoid the two broad risks:

a lack of effective controls, which increases the likelihood of fraud, misuse and abuse
applying too many controls, which are costly and impact the process savings inherent to P-Cards

Structure your controls to lock in P-Card benefits and help keep the program protected from fraud, misuse and abuse. — Structure your controls to lock in P-Card benefits and help keep the program protected from fraud, misuse and abuse.

Free-range card programs do not lack controls. Rather, it means management is familiar with, and employs, the effective measures that curtail risk while still allowing the program to grow and succeed.

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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Make your next conference experience count.

April 6, 2015 Lynn Larson

Plan ahead to get the most out of conference networking and educational opportunities. Everyone, including road warrior exhibitors, can benefit from some extra forethought. Motivated attendees can gain something from every conference no matter what the agenda.

Why are You Going?

Answer this question before you even register. Identify your greatest job challenges and/or areas of interest. Plan to attend the sessions that will likely benefit you the most. Review the conference program in advance, if available. If the reason you are going is “my boss told me I have to go,” this leads to the next point.

What are Your Employer’s Expectations?

Be clear about this before you go to avoid disappointing your management team when you return. Will you need to provide:

a summary of your conference experience?
possible solutions for a problem or new initiative?
exhibitor information and any related materials?
business cards from certain organizations?

Also, what are their expectations about your connectivity to the office while away? Ideally, since they are paying for you to attend, they will encourage you to not be distracted by email.

Plan for Effective Networking

Sometimes it can be awkward to mingle and network, especially when you do not know anyone, so have some questions ready. Keep your job challenges and interests in mind. Conversation starters include:

Do you have a solution for _____?
Do you know anyone who could help with ____?
What did you think of the keynote speaker?
Did you attend ______ session? I really liked the tip about _______. Have you tried that?

Resist the urge to keep your phone in hand. For all the good mobile devices have done, they are a crutch when it comes to networking.

“We know that people are less open in conversations if the other conversant puts a cell phone on the table. Even if it’s turned off. The sign is enough to close the mind…”

— Douglas Rushkoff

Unplug from what is happening in the office; get energized at a conference.

A Conference is What You Make of It

As attendees, we cannot control the conference agenda, speakers, venue, food, etc., but we can control our response to these elements, even when something is not ideal for us. Each attendee has the opportunity to:

acquire actionable tips
gain new industry knowledge
share expertise to help others
be inspired
make meaningful professional connections

Take full advantage while there. After all, how often can we do all these things within the span of a few days in the office?

If a certain round of breakout sessions does not include anything directly related to your goals, consider other options. Attend a session on a topic you know nothing about to learn something new. Go have coffee with a new connection. Visit exhibit booths if applicable. As a last resort, use that hour to catch up on email, so you can focus on the conference the rest of the day.

Two Tips from Others

From Scott Belsky, 5 Tips for Making the Most of a Conference: Distill every talk down to one key takeaway. After each presentation, ask yourself what struck you, what did you learn? What is worth additional consideration upon your return to real life?

From Bill Lampton, Ph.D., Top 10 Tips for Attending a Conference: Become an active participant, asking questions and making comments. The topics will take on new life for you.

Nothing beats preparation, but also be flexible once you are onsite. You might be presented with a great opportunity that was not in your original plans. I’m looking forward to attending the NAPCP conference next week in San Antonio. It will be the first time since 2003 that I simply attend, versus work at, the conference. I hope to see you there!

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Where does card acceptance litigation take us?

March 25, 2015 Lynn Larson

Industry litigation is like a roundabout that we cannot exit. Rulings followed by appeals, followed by more of the same. Last month, U.S. District Judge Nicholas Garaufis ruled that American Express violated antitrust laws by prohibiting merchants from steering customers toward other payment methods, including other card brands. American Express vowed to appeal. I tried to visualize a merchant steering me for any purpose. Imagine…

Merchant: Ma’am, don’t buy television X. We don’t make much money on that one. We get better margins on television Y.
Me: But I like the features of television X and have been satisfied with this brand in the past.
Merchant: But your choice does not make me happy!

The lawsuit involving American Express is, of course, much more complicated and serious, but, overall, I do not think the industry gains much from litigation or government intervention. It seems attorneys are the only beneficiary. Instead of pouring millions of dollars (and time) into litigation, everyone could benefit from more education about card acceptance. Perhaps this would open the door to compromises by all parties or maybe I am just dreaming. As one business person remarked to me, there is a trend of people wanting to socialize the losses, but privatize the gains.

A Bloomberg article about the American Express case reported that, according to the government, card acceptance fees total about $50 billion a year in the United States. Okay, so this is one cost (among hundreds) of doing business; merchants do have some choices.

Maybe brick-and-mortar retailers should consider a surcharge on cash payments since this requires keeping a cash drawer, making change for customers, counting nightly, protecting from theft, and making deposits. Or how about a surcharge on check payments? Risks with consumer checks include insufficient funds and forgeries. In the business-to-business (B2B) realm, checks represent the highest process cost and increased days sales outstanding (DSO) for merchants.

What We Can Do

I know litigation will never end and my opinions will not influence giant corporations or politicians who have initiated, or plan to initiate, a lawsuit or government bill. However, I do hope that those who read this will ensure they are doing their part to maximize the value of card payments, not only for themselves, but also for their business partners in the card process.

As a merchant myself, I declared my love of card acceptance last month and offered advice to suppliers. We cannot forget that card payments have streamlined the store checkout process and created a booming eCommerce industry. In the B2B payments world, cards have also driven efficiency. Review the benefits of cards for end-users and suppliers, including some best practices for both. For worse or for better, we all need each other—buyers, suppliers, and providers of types—to make the card industry work.

Which road are we going down? Who benefits from all the litigation? We might find ourselves at a dead end. — Which road are we going down? Who benefits from all the litigation? We might find ourselves at a dead end.

“I was never ruined but twice—once when I lost a lawsuit, once when I won one.”

— Voltaire

Case Involving American Express

Reportedly, the government’s goal in this case (U.S. v. American Express Co., 1:10-cv-04496, U.S. District Court, Eastern District of New York) is to force American Express to eliminate restrictive rules.

American Express has said that merchants encouraging the use other cards would harm competition and not benefit customers. Some experts do not disagree, but say that most merchants will not steer customers even if allowed to do so. They will not take the time to train sales staff/cashiers on this issue. Nor do they want to slow the checkout process and potentially lose customers. Such thinking is supposed to make American Express feel better?

As PaymentsSource reported, Judge Garaufis designated March 21 as the date by which American Express must reach an agreement with Justice officials to avoid Garaufis imposing his own solution. We are waiting to see what happens now that the deadline has passed.