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E-Commerce Update

E-Commerce Update. SECP. Office of the State Controller. Statewide E-Commerce Program. David Reavis December 2005. State of North Carolina. Two Components. EFT. Inbound (Collections). Inbound (Collections) Outbound (Payments). EFT Utilization. Biggest Inbound User

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E-Commerce Update

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  1. E-Commerce Update SECP Office of the State Controller Statewide E-Commerce Program David Reavis December 2005 State of North Carolina

  2. Two Components EFT • Inbound (Collections) • Inbound (Collections) • Outbound (Payments)

  3. EFT Utilization • Biggest Inbound User • Dept of Revenue – Started 1992 • 97,000 taxpayers remitting electronically • $13 billion of $20 billion collected = 65% • Biggest Outbound Users • Retirement System – Started 1977 • 179,000 out of 191,000 = 94% • Central Payroll – Started 1979 (Full-time only) • 66,000 out of 71,000 = 92% • NCAS Vendors – Started 1995 • ACH: 160,000 out of 935,000 = 17% • IGT: 16,000 out 935,000 = 1.7%

  4. Paper Warrant Trend Million Good News 18.2 17.6 16.5 14.7 Biggest Decreases Decrease of: 3% 6% 11% FY 2001-02 was peak in paper warrants = 18.2 million FY 2004-05 had biggest % decrease = 11%

  5. 30% Growth Annually $ Million Merchant Card Utilization Dollar Amount #Transactions FY-01 285,000 FY-02 868,000 FY-03 1,573,000 FY-04 2,078,000 FY-05 2,842,000 FY-01 $ 22.8 FY-02 $ 76.7 FY-03 $ 182.6 FY-04 $ 233.7 FY-05 $ 311.4 • Growth rate has been over 30% each year • Currently 84 participants: • 17 Agencies 24 Community Colleges • 15 Universities 28 Local Governments

  6. E-Commerce Policies • October 1, 2005 – Major rewrite of the State’s E-Commerce policies • Intent is to provide foundation for major emphasis on expanding E-Commerce • Federal Reserve Bank study Dec. 2004 revealed that the volume of electronic payments for the first time has now exceeded paper payments • State of NC is somewhere around 30% • Major room for improvementis vendor payments • Good success in payroll – Around 92% • Little success in vendor payments – 17% • Primary policy to pay attention to is entitled “Maximization of Electronic Payments”

  7. ACH – Standard Method of Payment • Vendor Payments – “Each NCAS agency shall develop procedures to require the standard method of payment to all vendors and other payors to be by ACH direct deposit, utilizing either the E-Payment feature of NCAS or a stand-alone system approved by the State Controller. Exemptions for individual payees may be considered if a hardship case can be provided, or if the payments are non-recurring.” • Payroll – “Each payroll center shall utilize ACH direct deposit for all payroll payments to all full-time employees. Exemptions for individual employees may be considered if a hardship case can be provided. Each payroll center is encouraged to offer ACH direct deposit to all part-time and temporary employees.”

  8. Implementation of Policy • Hardship – Definition to be determined by the agency • G.S. 143-3.2 “All disbursements made to non-State entities shall be delivered by the appropriate agency to the entity’s legally designated recipient by United States mail or its equivalent, including electronic funds transfer.” • Allows mailing of paper checks or EFT • Mailing cannot be prior to check date

  9. Master Contracts • Two master contract arrangements to support the SECP • EFT – Wachovia Bank • Merchant Cards – SunTrust Merchant Services • Benefits of master contracts • Support theStatewide Enterprise Approach • Leverage volume pricing • Increase competitive bidding

  10. New EFT Master Contract • RFP issued in June 2005 • Five bidders responding • Wachovia Bank re-selected October 1 • Resulting Benefits of New Contract • Programs previously operating separately brought under the master contract • Central Payroll, DOT Payroll, and universities payrolls • Community Colleges and LEAs using Wachovia • DST still pays costs, but now operate under Master Contract • Price decreased by over one-half of the old pricing • Annual costs will decrease from $1.5 million to $700,000 • Per item cost decreased from 2 1/2¢ to .9¢ • Tiered pricing of .75¢ once total volume > 5 million • Participation • Agencies and universities required to participate unless business case is given • Community colleges and LEAs voluntary, considering local bank arrangements

  11. Merchant Card Contract • Current contract with SunTrust Merchant Services • Since July 2000 • Originally with Wachovia Merchant Services • Acquired by STMS due to Wachovia-FUNB merger in 2004 • New RFP issued December 5, 2005 • Anticipate improvement in pricing – as in new EFT contract • Annual volume is now nearly 3 million transactions per year • Increased competition among NC banks • Proposals due January 12 • Evaluation team comprised of representatives from OSC, DST, ITS, UNC, Wildlife Commission, and DMV • Anticipate contract award April 1, 2005 • Should a new vendor be selected - transition of one year

  12. E-Commerce Structure SECP Learn more about SECP on OSC’s Website www.ncosc.net

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