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    late june/early July 07
    "Payments: Chasing The Bugs Out Of Invoicing
    JPMorgan Chase and Banamex are among the banks offering new cards to business customers to improve automated billing and payment accuracy

    By John Adams

    While Terminix has been terminating insects for a long time, killing the bugs in its own bill-ing process has proven even tougher.

    However, Terminix may have finally found a solution in a new tool from JPMorgan Chase, ExacTrac. ExacTrac tightens controls over company spend by completing the procure-to-pay process via an automated payment, reporting and reconciliation process.

    The product allows users to activate a Visa or MasterCard account number for each transaction that requires a two-or three-way match.

    Frank Dombroski, vp of commercial card solutions for JPMorgan Chase, says it's not unusual for a company that has to manage a large volume of small bills, like Terminix, to run into challenges when trying to track those bills.

    "With hundreds of transactions with similar dollar amounts, going through the manual mode to track them takes more time," according to Dombroski.

    Before its recent deployment of ExacTrac, Terminix would pay its subcontractors by giving them a credit card number and expiration date. Under this old system, the company would have no control over how often the subcontractor could charge the card or how much they charged, which created frequent problems.

    "We were running into situations where subcontractors would double-charge us or they would charge us before the work was complete," says Michael Gaffney, director of card services for ServiceMaster, the parent company of Terminix.

    But with ExacTrac, the process is tightened up considerably. After payment using the Visa or MasterCard account numbers, ExacTrac automatically reconciles these account numbers to prepayment documents such as purchase orders or claims. No one can request a card number without proper approval, and the program's controls help to eliminate duplicate charges.

    The product's features also allow the payments team at each Terminix branch to set limits, track and reconcile payments faster and provide subcontractors with faster payments.

    Dombroski says that in a hypothetical example of a firm ordering office supplies, a user will log onto an e-procurement system at his firm, select $300 or so worth of supplies from an external vendor the firm does business with, and then click to enter the purchase.

    The order is processed through ExacTrac, which logs in the order, puts an account number on that specific transaction and transmits the order back to the purchasing company's ordering system.

    When the equipment vendor receives the order, it has a settlement number that allows that order to be tracked by the exact dollar amount and the equipment ordered.

    Since the settlement number is unique for a specific order, there's little chance of that number being used as part of another purchase, or for a purchase that's "beyond" the intent or the original $300 requisition of office supplies.

    "For the buyer, it's a straight-through process," he says. "They place the order and they don't have to touch the transaction again. The unique card number allows for the unique one-to-one match for that order."

    The development of ExacTrac is part of JPMorgan Chase's strategy to address what it believes is a growing need to make the management of payments more transparent through a unified platform, thus giving greater control to the buyer and making the overall payments process faster and more accurate.

    It's a trend that's not lost on many of its competitors, such as Citigroup, which is introducing the issuance of Visa and MasterCard smartcards at its Mexican subsidiary Banamex.

    The smartcards are being issued through Keycorp's MULTOS technology. MULTOS is a smartcard operating system and its features include the ability to co-house multiple, independent applications securely and to remotely load and delete applications throughout the lifecycle of the card, according to Luis Cirerol, the manager of new technologies for Banamex, says the implementation has already led to a pilot program for contactless payments using a MULTOS dual-interface card.

    Richard Cusson, general manager of Keycorp's smart card business unit, says the migration to chip cards is accelerating, though the pace outside the U.S. has been faster than in the domestic market.

    The Banamex adoption "is a further example of a large card issuer taking control over the supply chain by switching to an open smartcard platform and no longer being locked into a single supplier at any state in the supply chain." (c) 2007 Bank Technology News and SourceMedia, Inc. All Rights Reserved.
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