Andrew Corporation designs, manufactures and delivers innovative and essential equipment and solutions for the global communications market. Andrew's customers are primarily wireless infrastructure providers, such as Bechtel, and require the capability to accept and process purchase card payments.
“3DSI’s solutions are secure, scalable and easy to implement. EC-Zone offers great reporting capabilities and EC-Linx offered easy integration with our existing systems.”
In an effort to streamline the procure-to-payment processes, Andrew’s customer requested they accept and process Purchase Card payments. The customer also needed Level-3 line item detail. Prior to this request, Andrew did not have a process in place to process Purchase Cards or handle Level-3 information. Level-3 contains more detailed information about items purchases, such as Item Part Number, Description, Quantity, Unit of Measure, etc.
In addition to meeting the customer’s Level-3 Purchase Card needs, Andrew also required host-to-host real-time payment processing and authorizations via an SSL connection on the Internet, which offer the speed of a dedicated frame-relay telecommunications line without the cost.
After issuing a Request for Proposal (RFP), 3Delta Systems® quickly surfaced as the best solution to deliver all requirements, including Level-3 detail and host-to-host payments. Andrew leverages 3DSI’s EC-Zone® and EC-Linx® products to meet all its Purchase Card processing needs.
“3DSI’s solutions are secure, scalable and easy to implement,” explains Paul Sengstock, Andrew Corporation Purchasing Director. “EC-Zone offers great reporting capabilities and EC-Linx offered easy integration with our existing systems.”
Andrew Corporation received immediate benefits from the services, including:
BNSF is a subsidiary of Burlington Northern Santa Fe Corporation (NYSE:BNI) and operates one of the largest railroad networks in North America, with about 32,000 route miles in 28 states and two Canadian provinces.
“BNSF required a payment solution that would interface with its existing platforms. As BNSF is poised to expand other Service areas, we are confident that 3Delta Systems will continue to offer the payment solutions we need to support our railway operations.”
BNSF is among the world's top transporters of intermodal traffic – a mode of rail transportation for the movement of trailers and containers. BNSF required a credit card solution to support its Intermodal Service customers who did not have a line of credit with the company. The segment represents about 20% of the total Intermodal business.
Further, BNSF offers Intermodal hubs where the train drops off the unit and a truck then picks-up, to continue transport. If the shipper needs to store the unit at BNSF’s hub, there is a storage fee that applies to the containers.
BNSF needed to implement a credit card solution to:
BNSF implemented EC-Linx® from 3Delta Systems®, which lets users set-up their account and pay for services via the Web. “Customers simply go to the Web site and provide the necessary credit card details and make a guarantee of payment with the card,” explains Sam Phelps-Roper, BNSF Manager.
Implementing 3DSI’s EC-Suite of services, automates the payment process and ensures BNSF is paid on-time by Intermodal Service customers who do not have established credit with the company.
Bosch Security Systems is one of the five largest suppliers of equipment for global electronic security systems and develops technology and services that help improve the quality of peoples’ lives. Bosch requires a secure and reliable payment processing partner to manage the large volume of credit card transactions created from the sale of their products & services.
“3Delta Systems delivered Bosch a great advantage. We are less vulnerable to processing errors and the hosted solution frees-up valuable IT time. EC-Zone is also more cost-effective and did not require any upfront licensing fees or ongoing maintenance charges.”
Bosch had been using installed software to manage and process credit card transactions and experienced major processing problems, following an upgrade to the software. The problems ranged from incorrect charges appearing on customer invoices, to credit cards locking-up. Bosch sought to rectify the software processing issues and restore confidence in the processing system and with their customer base.
After consultation with their Acquirer, Bosch elected to implement a hosted processing solution, to eliminate the inherit problems experienced with the software-based environment, which had vulnerabilities and management issues. Additionally, Bosch required a processor who could support and process Level-3 data. The two requirements quickly narrowed the pool of candidates and 3Delta Systems® quickly emerged as the ideal partner for their unique business needs.
After implementing EC-Zone®, 3Delta Systems’ Internet-based and hosted payment processing solution, Bosch quickly resolved and eliminated the processing issues that had plagued them with the software solution.
Using the hosted-model, 3Delta Systems assumes responsibility for all product updates, security updates, database back-up, training, customer support and other maintenance activity by centrally hosting the payment processing system.
Additionally, Bosch receives the best transaction rates for processing Level-3 data and provides their customers the level of information needed to reconcile information on the back-end. Level-3 information contains information about the items purchased such as Item Part Number, Description, Quantity, Unit of Measure, Price and more.
Det Norske Veritas (DNV) is a leading provider of services for managing risk and operates globally in multiple industries, with specific services available to each. DNV requires a solution that can accept and process Purchase Card payments from its corporate and government clients.
“We required a solution that could support a large volume of card payments and would relieve the administrative burden imposed by the terminal solution. DNV currently has three offices using EC-Zone in Houston, New Jersey and Norway. These key payment processing centers benefit greatly from the convenient and time saving solution from 3DSI.”
DNV Houston inherited a physical terminal solution due to an office closure elsewhere. While the terminal initially presented a quick solution to begin accepting credit card payments, it quickly revealed many limitations and short comings. DNV needed to find a payment processing solution that met the following criteria:
After researching various corporate payment acceptance options, DNV selected 3Delta Systems® and their payment solution, EC-Zone® to process and accept credit cards globally. According to Mona Tzur, Customer Financial Services Manager for DNV North America, “we required a solution that could support a large volume of card payments and would relieve the administrative burden imposed by the terminal solution.”
EC-Zone’s intuitive interface is designed specifically for processing purchasing card payments. All that is required is a Web browser and Internet access.
DNV currently has three offices using EC-Zone in Houston, New Jersey and Norway. “These key payment processing centers benefit greatly from the convenient and time saving solution from 3DSI,” continues Ms. Tzur. “The ability to speed-up our collections is a true asset to DNV.” Other benefits:
HauteLook, an online shopping site for luxury fashion at discount prices, needed a way to provide security for its credit card customers. The company’s business model is member-only heavily discounted deals on fashion and household goods — with sales that last typically 1 day or less.
Nordstrom, a Top-30 Internet retailer with $2 billion in online sales in 2014, had recently purchased HauteLook and positioned HauteLook as its leading-edge e-commerce brand. HauteLook began managing Nordstrom Rack Online in 2014 — and now runs e-commerce sites for both brands.
“3Delta Systems helped HauteLook meet our goals for securely processing our customer orders and provides support for mobile, tablet and PC-based checkout. Their willingness and capability for customizing their interfaces for HauteLook made the difference when we were shopping for solutions. 3DSI is a great partner.”
HauteLook notifies its members of deals by email and was specifically seeking a way to tokenize its members’ credit cards for long-term storage with top security.
Among HauteLook’s processing and security requirements:
Out of the box, 3Delta System’s CardVault tokenization service with through-processing could handle most of HauteLook’s requirements. Introduced in 2003, CardVault is a robust, full-featured tokenization platform. Specifically, HauteLook took advantage of 3DSI’s Silent POST card-collection utility, which allows customer card data to move directly from a customer’s browser to CardVault. With Silent POST, the customer never leaves the e-tailer’s website, but the sensitive data never enters the HauteLook or Nordstrom Rack network, keeping the company out of direct risk of a breach.
To prevent excessive chargebacks, 3DSI added verification capability to Silent POST, allowing HauteLook to only tokenize cards that meet their standard for a verified addressed and Card Verification Values — thus saving them money on storage and reducing the chance of a declined purchase.
3DSI’s robust API provided HauteLook the ability to quickly develop mobile apps for iPhone and Android users that support the HauteLook checkout experience with no sacrifice of card tokenization and processing.
Likewise, CardVault could handle the transaction surges without issue. During the 2014 holiday season alone, 3DSI supported more than 30,000 daily transactions from HauteLook and Rack alone.
As part of the Nordstrom family, HauteLook offers customers and employees options for Nordstrom branded gift cards and store cards. Discounts vary based on the type of goods purchased, so the retailer needed transaction detail to travel with the purchase for tracking. This was no problem for 3DSI, which has a large body of experience with B2B companies requiring such advanced reporting to receive discounts on interchange rates for line-item (Level-3) data. 3DSI was able to meet this requirement and provide daily processing for the private-label cards.
Lincoln Electric is a world leader in designing, developing and manufacturing welders and cutting tools. The company has a 100-year record of business process improvement, has been selected by Harvard Business Review for multiple case studies and has worked with 3DSI to create the case-study framework for this presentation.
Download the full case study here.
By applying Six Sigma business-improvement techniques to its collections cycle, the Lincoln Electric Company achieved impressive cost and operational benefits in three areas:
A full-line manufacturer and reseller of welding and cutting products and a global leader in the brazing and soldering alloys market, Lincoln Electric celebrated its 113th anniversary in 2008 with $2.48 billion in sales and net income of $212 million. The company operates worldwide, with its North American business primarily serviced through distributors.
Like many companies providing goods and services to other corporations or government customers, Lincoln Electric accepts purchasing cards (P-cards) from its customers and vendors as a method of payment.
P-cards are used by buying organizations to streamline their purchasing and payment processes and traditionally have been issued to authorized cardholders for placing routine orders and making payments directly on behalf of their buying organizations. They are also used to make large purchases and payments in conjunction with purchase order and e-procurement systems and to pay invoices from accounts payable systems.
Unlike consumer or retail credit cards, P-cards have more features, capabilities and controls. A typical p-card, for example, can control the number of daily and monthly transactions being processed, the total daily and monthly spend, and where the card may be used based on merchant-code restrictions.
What differentiates p-cards most is that transactions can be processed with the same level of detail normally associated with an itemized invoice, known as Level-3 line item transaction data. The ability to gather and transmit Level-3 payment data is critical for buying organizations because of the need for greater financial accountability. In most cases, Level-3 information is provided by the merchant and submitted electronically to the buying organization's p-card reporting system, where it can be automatically entered into their accounting system and reviewed each day.
P-card transactions also have tiered interchange rates and are priced differently than consumer or retail card transactions. To encourage merchant participation and support of P-card programs, Visa and MasterCard created special interchange rates to reduce a merchant's transaction costs whenever Level 3 line item detail is transmitted with a financial settlement.
In Lincoln Electric's case, what began as a small, card payment exception process grew exponentially. The company realized that, as its P-card volume increased over time, related processing fees became a material expense. Lincoln Electric knew that, if it could reduce its P-card processing fees, the company would realize significant bottom-line savings.
Lincoln Electric applies Six Sigma for process review and control — a business management strategy that seeks to identify and remove the causes of defects and errors in manufacturing and business processes. According to Six Sigma, continuous efforts to achieve stable and predictable process results (e.g., reducing process variations) are critical for business success. Six Sigma also asserts that manufacturing and business processes have characteristics that can be measured, analyzed, improved and controlled and that achieving sustained quality improvement requires commitment from the entire organization, particularly from top-level management.
Six Sigma places an emphasis on achieving measurable and quantifiable financial returns from any Six Sigma project; strong and passionate management leadership and support; and a commitment to making decisions on the basis of verifiable data, rather than assumptions and guesswork.
Six Sigma Methodology:
Define: At first, P-card use by Lincoln's clients was minimal. In 2005, processing volume was $18 million, which represented a small portion of its business. By 2008, however, Lincoln Electric's card processing had increased to $8-$10 million per month, representing approximately 6 percent of its net revenues. Further, business acquisitions had resulted in a range of mixed card-processing technologies and different bank providers.
Initially, the company sought to reduce card fees: if transaction-processing fees could be reduced to 1.6 percent, the company would save $500,000.
Measure: Lincoln Electric's own customer analysis showed that customer use of p-cards increased 3 percent from 2005 to 2006, with 5-6 percent of all customers paying with cards. Even though the number of Lincoln Electric customers using P-cards has remained constant since 2008, the dollar value charged to P-cards by these clients increased significantly as ticket sizes grew along with more widespread use.
Using a data-driven Pareto analysis, Lincoln Electric found that 26 percent of customers using P-cards drove 90 percent of all transaction volume. The company calculated it was paying a blended average of 2.7 percent to MasterCard, Visa and American Express per transaction. Lincoln's customers were paying their invoices, on average, within 32 days — comparable to an average U.S. portfolio. However, many customers were then paying their invoices with a P-card to gain additional float, thereby creating an effective trade-terms rate of 3 percent payable in 30 days.
At this point, Lincoln Electric expanded the project scope to explore and quantify the potential benefits of modifying payment terms and card processing fees for its P-card transactions, with a goal of improving working capital.
Analyze: By conducting a thorough situational analysis, Lincoln Electric made some startling findings. For example, a review by the Credit Research Foundation found that:
Lincoln also found internal confusion about bank card interchange fee structures (how the card processing fees are assigned) and a lack of information about the difference between consumer and commercial transactions.
Through its own research and by working with different bank providers, Lincoln Electric learned about less-expensive Level-3 interchange rates for B2B transactions. They also became aware of large-ticket, reduced-fee P-card programs.
Expanded Findings: Beyond the economics of card fees, Lincoln discovered other issues that impacted the effectiveness of their card operations:
Improvement: Both a competitive analysis and customer interviews were conducted to gain insights and preferences about P-card usage.
Customers revealed that P-cards were gaining traction and that a reward of some type would encourage their use. Lincoln's competitors allowed their customers a cash discount whenever the card was used for payment — resulting in an effective 5 percent card discount — but this offer was eventually withdrawn. Lincoln also found that a full threequarters (76 percent) of its distributors accepted P-cards at the point of purchase.
As a result, Lincoln Electric hypothesized that its P-card program could be better managed using more favorable payment terms. That is, if a client used a P-card, the payment would be Net 15 days versus Net 30 days if paying by check. The potential improvement in working capital appeared very favorable — a scenario that could produce $3 million per month in cash flow. Factored against Lincoln Electric's monthly accounts receivables totaling $125 million, a potential 2.4 percent ($3 million/$125 million) reduction was significant. For these clients, that equated to a 64 percent reduction in Days Sales Outstanding (DSO).
Lincoln Electric then set out to select a technology provider, taking into consideration the issues uncovered in its analyses. Ultimately, the decision would be driven by the provider's ability to offer Level-3 card processing, compliance with Payment Card Industry Data Security Standards (PCI DSS), business expertise and customer responsiveness.
During the provider search, Lincoln Electric decided that a Web-based SaaS payment model would provide the optimum solution for its P-card program. The online SaaS approach offered important deployment and support advantages, an easy migration path, scalability, growth options, various online applications and the flexibility to handle any of Lincoln's future Web-based initiatives.
After careful consideration, Lincoln Electric determined that 3Delta Systems Inc. met all of Lincoln Electric's criteria, plus some. A leader in payment solutions, 3DSI services are designed to provide the most cost-efficient card processing solutions by offering multiple payment interfaces that are secure, scalable and easy to implement; on-demand real-time reports; and transaction management through its Webhosted SaaS delivery model.
The results of a "pilot run" launched in 2008 were overwhelmingly positive. Lincoln Electric saw its baseline interchange fee reduced from 2.7 percent to 1.4 percent, thereby saving $1.4 million in direct interchange fees, with an average 19 days DSO on card customers. In addition, all U.S. entities of Lincoln Electric experienced significant process improvements due to Web consolidation and automation of card payments — whether it was on sales from Lincoln's welding school (books, class fees and apparel) or product sales at tradeshows. And, instead of a time-intensive process of producing receipts for customers following a sale, receipts were now being generated automatically.
Control: One of the most significant operational improvements Lincoln experienced was reporting functionality and multi-user traceability, enabling a crucial "monitor and control" function. Having access controlled by user permissions helped support financial control requirements. Real-time custom and standard reports were downloadable, making it easy to track different types of cards being used by each client and to reach out to them, if need be. Improved interchange compliance reports from the bank provider enabled prompt review and audit of the processing system to ensure that the expected returns and gains were maintained. Flagging of non-compliant data was also available, making immediate troubleshooting and corrective action possible while ensuring overall Six Sigma project objectives were maintained.
Lincoln Electric's P-card business continues to grow, as does the overall B2B market. While it's imperative to charge competitive fees, the ability to offer clients a card model that offers payment terms of Net 15 days is vital. Like Lincoln, many merchants simply sign up for a convenient card program when volumes are small without conducting any real research or analysis. Unfortunately, interchange fees and other costs can quickly escalate as card usage increases. Card acceptance is a complex environment, so it is important for companies to do their homework and choose a partner carefully.
Thermo Scientific Corporation is the world leader in analytical instruments and their technologies help researchers make discoveries that will fight disease or prolong life. With over 30+ business units charged with processing credit card payments, Thermo sought to deploy a centralized approach to manage their global card volume.
“EC-Zone is the ideal solution to serve our multi-location processing needs. The ability to manage card transactions online and give multiple users access to card data is a tremendous value and benefit to our operations.”
Thermo had deployed a decentralized payment processing strategy and was working with more than ten payment processors across 30+ offices. Each processor had a different platform and each presented varying management problems – ranging from software issues to antiquated processes (e.g. dial-up modems). Additionally, processing costs varied among providers and Thermo sought to leverage their combined transaction volume and improve their pricing structure. To rectify these problems, Thermo launched a RFP, with the goal of consolidating and centralizing all credit card activity under one payment processor.
Thermo Scientific established three key criteria for selecting the ideal processor. The payment solution must be:
Implementing EC-Zone®, one of the Integrated Payment System services offered by 3Delta Systems®, provided significant savings as the solution is web-based and eliminates the purchase of software, license fees, access charges and maintenance at each location.
Thermo received a better transaction rate by consolidating all their card volume under one provider. Thermo’s savings continued through implementing a Web-based payment solution; their significant total cost savings were realized by eliminating the purchase of multiple software solutions, license agreements and hardware at each business unit. The selection of one payment systems vendor, 3Delta Systems, streamlined internal operations and yielded about a 30% savings in hard dollars.
Additionally, several business units had one-to-two people dedicated to processing credit cards because it was such a long and tedious process. “The additional savings in time & resources is invaluable to Thermo and difficult to assign a dollar value,” said Jeff Botte, Corporate Finance Manager, Thermo Scientific Corporation.
Headquartered in Lima, Ohio, United States Plastic Corporation has been manufacturing plastic tanks and distributing more than 23,000 plastic products (tanks, bottles, etc.) since 1956 for industrial, commercial and consumer clients throughout America. Most customers place orders using a credit card through U.S. Plastic's call center or online store.
“CardVault was designed to support both real-time and file-based credit card transactions, so the model was a perfect fit for U.S. Plastic. In the world of PCI compliance, CardVault also helped solve our most pressing PCI audit needs.”
U.S. Plastic accepts credit card payments from 63,000 customers, about 30% of whom are repeat buyers. The company keeps cards-on-file for the convenience of their customers and to facilitate payment for orders. Because customers use multiple cards – from credit cards to purchase cards – the total number of cards stored on the company's internal system grew to more than 120,000.
To protect customer payment information, U.S. Plastic's bank and management council required that the company find a secure data solution which met Payment Card Industry (PCI) standards, industry rules that were established to protect cardholders and the integrity of the credit card payment system from incidents of fraud and data theft.
That solution also needed to:
At the same time, U.S. Plastic wanted to retain the legacy applications that run their core business – applications that reside on an IBM i5 system. The company was also eager to integrate their card data security solution with EC-Linx® and EC-Batch® – proprietary electronic payment gateway products from 3Delta Systems® that were already in use at U.S. Plastic to process Internet and call center orders.
U.S. Plastic found the answer to all their needs with CardVault®, the Simply Secure Payment Solution from 3Delta Systems that encrypts and stores customer card information on its secure payment network and works seamlessly with 3DSI's entire suite of payment processing and gateway products.
Using the CardVault interface, the merchant forwards customer credit card and other sensitive data to 3DSI. The data is then encrypted and stored in 3DSI's PCI-compliant processing centers. To retrieve, access or maintain card data, the merchant uses an alias that is assigned by either that merchant or 3DSI.
Outsourced data protection using CardVault allows businesses to focus on their operations while customer payment information remains safely off-site and out of the hands of hackers.
Outsourcing the security and payment solution with CardVault enabled U.S. Plastic to move all card data off their systems, maintain legacy environments and work flows while staying focused on their core business.