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Technology an enabler of
I n n o v a t i v e
s o l u t i o n s
t o
h e l p
b u i l d
y o u r
b u s i n e s s
Trends
FROM THE
Letter
Technology has been and continues to be an enabler of innovative products and services. In this edition of VAQ, you can read about some of Scotiabanks new offerings made possible by advanced applications. Our feature story is on Scotiabanks VISA Cash card a chip card with an embedded microchip that allows users to transfer monetary values from their bank account to the card that is now being used in a successful pilot program in Barrie, Ontario. With over 40% of the citys population using the card as a form of payment, theres no doubt this is one new technology that has really caught the publics imagination.
Vortal Intelligence:
Procurement in the Age of E-Commerce
hanks to the Internet, consumers can search the world for the lowest prices on everything from books and CDs to cars and vacations online and in real time. Now, big business is catching on.
publisher
price, and order. All the relevant notifications about delivery and payment can be made electronically with the proper approvals, and the transaction may be completed in minutes. The major impact of this use of technology will be to drive sustained operational improvements that will lower overall costs by reducing the number of steps in the supply chain, says Phil Griffiths, Scotiabanks Vice-President of Electronic Commerce,
Were also reporting on Positive Pay, Scotiabanks cheque reconciliation service, and how it helps customers control the incidence of cheque fraud. Plus, youll learn about Scotiabanks exciting new service offering with Microsoft, and how our combined resources are changing e-commerce north of the 49th parallel. Finally, well give you a taste of the efficiencies and cost savings that banking clubs can offer companies that are establishing international operations, in an introduction to our feature story for the next edition of VAQ. There are businesses arising daily that couldnt have existed without the Internet, and people dreaming up new ideas all the time. We intend to keep using and championing new technologies to create services which deliver value to our customers to make it straightforward for you to conduct your business, whatever it happens to be.
One of the latest trends in e-commerce is the development of specialized vertical industry portals, or vortals. Vortals, also called net marketplaces, are gathering places for an entire industry. They are serving industry groups not only as a resource for news and research, but also by supporting business-to-business services uniting buyers and sellers and enabling transactions. These online marketplaces enable businesses to more effectively monitor prices and product availability, and, in theory at least, reduce procurement costs. The net result? Forrester Research estimates that business-to-business e-commerce will grow to $1.3 trillion in 2003 from $109 billion in 1999. The Internets advantages of greater speed, lower cost and ease of use have not only improved access to all sorts of materials but have also expanded upon the benefits of e-commerces hard-wired predecessor, EDI (electronic data interchange). If, for example, a company needs an everyday item such as pencils, an employee can get on the Web, browse through online catalogues, find the lowest
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Cash Management
A Positive Approach
to Fraud Prevention
C
heque fraud has become an increasingly common occurrence in our society, largely due to modern technology. Technological advancements in colour copying and desktop publishing have made it easier to produce phony cheques, and criminals are taking advantage of the available technology to acquire ill-gotten gains at the expense of some of Canadas largest companies. suspicious incidents so that customers can be immediately notified and transactions can be halted. of the fraud had obtained a copy of a legitimate company cheque, made a photocopy, changed the amount on the cheque and tried to cash it. The company did not dispute transactions when the amounts in question were relatively small, says Ward. It took an incident involving a larger sum of money to make the company managers take notice, which is a typical situation for many clients. Positive Pay acts as a deterrent to cheque fraud since it largely removes the process of cheque reconciliation from human hands.
continued on page 6
Electronic Commerce
Ontario
Get Smart!
Barrie,
pilot program
Scotiabank. Having learned from the experience of other chip card pilots, we decided from the outset not to limit the card to the banks existing customer base. By offering an anonymous, reloadable card that could be available to anyone with an Interac card through a variety of distribution channels, we really opened up the market.
arrie, Ontario is a model for the rest of the world as a cashless society, judging by the enthusiastic response to Scotiabanks VISA Cash* card pilot program. Since the pilots inception in October of 1997, more than 50,000 people 48 per cent of the citys population have started using these Smart Cards as a payment method. Developed in partnership with VISA Canada, the Scotiabank VISA Cash card is not a credit card. Instead, the VISA Cash card has an embedded microchip. Users load value onto the cards microchip from loading devices that electronically transfer money from their bank account. Swiping their Interac Direct Payment card through the loading device to access their chequing or savings accounts, users simply select the account and the cash amount they wish to transfer. There are currently 100 loading devices located throughout the Barrie area. Designed to facilitate high volume, low value cash transactions, such as the ones made at fast food or convenience store outlets, the pilot program currently has 350 participating merchants. The card is an accepted payment method on Barrie public transit, as well as for many vending machines and coin-operated laundries. The success of the Barrie pilot can be attributed to Scotiabanks marketing approach, says Bryce Hutt, Senior Manager, Chip Card Programs for
with the student identification card. Georgian College has been issuing the combined VISA Cash/Student card since the fall of 1998. Although card usage was initially restricted to the Barrie campus location, campuses in Orillia and Owen Sound are now included and plans are under way to design a card for Georgian College staff. Georgian College has received visitors from as far away as Japan, the United Kingdom and Mexico who are interested in how were using the chip card technology, Neuss adds. We use students to conduct tours of the facilities, and they always point out that the benefit of the VISA Cash card system is that they can manage and control their own finances. Thats important to students, and its a benefit that credit cards cant offer.
Georgian College combines VISA Cash card with its student card
One of the reasons Barrie was selected for Scotiabanks chip card pilot program was the location of Georgian College, since young adults represent a key demographic in the marketplace and are typically early adopters of new technology. As fate would have it, administrative personnel at Georgian College were already looking at ways to improve student card access when Scotiabank approached them to participate in the pilot as a merchant. We knew the VISA Cash card would work well in our retail locations, like the bookstore, explains Cathy Neuss, Associate Registrar for Georgian College, so we distributed cards to the students and installed the loading devices. The response was so overwhelmingly positive that we asked Scotiabank to extend the cards applications to vending machines and photocopiers. Finally, it just made sense for us to combine the VISA Cash card
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terms of providing usage tracking capabilities essential for the efficient management of its transit operations. George Kaveckas, Traffic, Transit and Parking Manager for the City of Barrie, points out that his department worked with Scotiabank to develop a transit application designed for smaller and mid-sized communities. In the first phase of the pilot, we provided electronic fare collector terminals on buses so passengers could pay with VISA Cash cards, Kaveckas explains. In the second phase, which
was rolled out in September of 1999, Barrie Transit riders are able to purchase a pass (or tokens) with their VISA Cash card, or other payment methods which are encoded within their cards microchip. We expect to realize a significant cost benefit from this system in terms of reducing our overhead and streamlining administration, since we wont have to print and issue passes. Plus, it will make electronic fare verification on buses more efficient. More significantly, Barrie Transit is now able to tailor ride plans to suit users
needs. Passes can now have a variable start date, adds Kaveckas, which means we can sell seven- or 14-day unlimited use passes, monthly passes, or ride cards which are pre-purchased in groups of 5, 10 or 20 rides. Kaveckas also singles out the benefit of future co-marketing opportunities afforded by the technology. We will look at partnering with other retailers to offer promotions, discounts or rewards for frequent riders.
Vortal Intelligence
In addition to providing current, useful information targeted to these sectors and a way for people to interact over the Internet using available technology, these vortals provide end-to-end e-commerce capabilities buying, selling, credit verification and transaction processing. GeoCommerce President Terry McConnell says industry associations and suppliers are enthusiastically embracing the e-commerce initiative. The front end of our e-business is up and running, McConnell says. The online catalogue at MineOnline.com currently represents hundreds of suppliers and 2.5 million products from heavy equipment to paper clips. GeoCommerce is counting on the potential for significant savings on procurement costs to build business on its vortals which could literally turn into a gold mine.
Maritime Life. We now have more control over this aspect of our financial operation. Problems are identified quickly, within 24 hours. Its a great service, and a real cost-saver. An unexpected benefit of Positive Pay is more efficient processing of financial transactions an advantage Brigley can appreciate personally. Before we started using Positive Pay, reconciliations were done monthly now it happens daily. This has certainly contributed to a more accurate measure of the companys financial status on a day-to-day basis which makes my job a little easier.
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Next in VAQ
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Scotiabanks VAQ is prepared by the Commercial/Corporate Electronic Banking Department of The Bank of Nova Scotia as a courtesy to business customers. While the information is from sources believed reliable, the information shall not be taken as a representation for which the Bank or any of its employees incur responsibility. Publisher: J. Drew Brown, Senior Vice-President/ Division Head, Commercial/ Corporate Electronic Banking Editor: Lisa Hartley, Manager, Marketing Communications, Commercial/Corporate Electronic Banking (416) 866-7053 Wed like to hear from you! Mailing address: Scotiabank, Commercial/ Corporate Electronic Banking, 44 King St. W., Toronto, ON M5H 1H1 E-mail cashmanagement@scotiabank.ca Fax: (416) 933-2382 Visit our Web site at http://www.scotiabank.ca/ctms Trademark of The Bank of Nova Scotia All other service and product names are trademarks or registered trademarks of their respective owners. The display of trademarks herein does not imply that a licence of any kind has been granted. Copyright The Bank of Nova Scotia 2000. All rights reserved.
direct access to foreign banking infrastructures, many international banks provide what is known as overlay services. They serve as
We will examine the different types of international banking clubs and the services they provide in more detail in the next issue of Scotiabank VAQ.
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