BY BETH POLLOCK, NAVY CASH® PROGRAM MANAGER
NAVAL SUPPY SYSTEMS COMMAND and
JIM STANSFIELD, SENIOR CONSULTANT, BUREAU OF THE FISCAL SERVICE,
U.S. DEPARTMENT OF THE TREASURY
Navy Cash® is going through significant changes over the next few years. Navy Cash® ships will be outfitted with new equipment and software updates to prepare for the U.S. Department of the Treasury’s initiative for a one-card solution for all Department of Defense (DoD) stored value card (SVC) programs, which takes advantage of the commercial industry-standard EMV® (Europay, MasterCard®, Visa®) technology. As a part of this initiative, Treasury’s Bureau of the Fiscal Service, our long-term partner in cashless operations, is sponsoring the next-generation Navy Cash® system, an innovative solution that will be capable of supporting minimally manned ships, like the littoral combat ship (LCS) and the guided missile destroyer (DDG) 1000, as well. Navy Cash® is also undergoing a major transition, as the Federal Reserve Bank of Boston (FRBB) and PNC Bank replace Navy Cash®’s long-time treasury agent bank, JPMorgan Chase (JPMC), which is leaving the program. The Navy Cash® team is actively managing these activities to ensure there is minimal impact to afloat operations or our customers.
BEGINNINGS OF CASHLESS SHIP CONCEPT
The Navy Cash® program was developed through a partnership between Naval Supply Systems Command and the U.S. Department of the Treasury’s Bureau of the Fiscal Service. Navy Cash® was first installed on two pilot ships in 2001. Approval for Fleet rollout was granted in June 2003. As of Apr. 30, 2016, Navy Cash® is installed on 127 ships. Navy Cash® facilitates electronic money management for deployed Sailors and Marines, who load an average of $12 million a month on their Navy Cash® cards and on average spend $10 million in the ship’s store, and $2M at shore retailers or access cash via local ATMs.
Navy Cash® was an evolution of the old automated teller machines (ATMs)-at-Sea (ATMS) program, which began installing ATMs on ships in 1988. The ATMS program gave each ship an offline ATM system, which provided an automated delivery mechanism for split pay payroll and a local shipboard account for storing personal funds that was secure and available 24/7, but was limited to
use on the ship itself.
In 1996, at the request of the DoD and Navy comptrollers, NAVSUP initiated a prototype project to expand the existing off-line ATMS system to provide on-line ATM access afloat to banks and credit unions ashore. The prototype was called ATMs-at-Sea Online (ATMS-O) and introduced the concept of a “cashless ship”. The ability to transfer funds from a member’s bank or credit union to a shipboard account led to the requirements for a cashless environment aboard ship, reloadable cash cards, and smart card readers in retail locations on the ship. In the end, although technically feasible, online ATM transactions were not a practical alternative for access to bank and credit union accounts ashore.
Navy Cash® replaced bills and coins for purchases on board ship and provided Sailors 24/7 access, afloat and ashore, to all pay and allowances, including split pay. The electronic purse on the chip on the Navy card introduced a cashless environment within the lifelines of the ship. Navy Cash® updated the functions of the ATMS system by providing access to bank and credit union accounts ashore introduced by ATMS-O, but using offline Automated Clearing House (ACH) transactions. ACH transactions could be supported by the limited communications available on small-deck ships and were the least expensive method of processing transactions initiated from a ship. To reinforce the cashless ship concept, Navy Cash card® also provided a branded debit feature using the magnetic stripe on the back of the card Sailors could use to pay for purchases at merchants ashore and to obtain the cash they need during port visits from ATMs that were available in the local area.
NAVSUP investigated other cashless payment systems via a Small Business Innovation and Research (SBIR) initiative. Beep & Eat was developed in 2010 to meet the payment requirements of minimally manned ships like the LCS. CACPay development followed as a replacement for Beep & Eat to provide a more automated solution. Beep and Eat/Common Access Card Pay (CACPay) simplified the cashless payment model and eliminated the need for a separate card. Although the Beep and Eat/CACPay solution worked, the Navy would be responsible for a unique standalone
system and would maintain all the financial risk and workload associated with the system. The user community would have lost the capabilities and the convenience of the card Sailors and Marines were used to under Navy Cash®. The Treasury’s Fiscal Service had been working on an innovative, joint, one-card solution for all the DoD SVC programs. Ultimately, NAVSUP decided the
Treasury’s One-Card initiative would provide the best single solution to meet all Fleet operational requirements, including minimally manned ships. Beep and Eat will continue to operate as a “bridge solution” for cashless payment collections for meals on LCS ships until the Fiscal Service can deliver a one-card solution with the minimal equipment footprint required for minimally manned ships.
TREASURY AGENT TRANSITION
About two years ago, JPMC made a corporate decision to get out of the pre-paid debit card market, including Navy Cash®. Since then, the Navy Cash® Team has been planning for JPMC’s departure in July 2017. FRBB will take over JPMC’s role as the Treasury’s operations manager for Navy Cash®. FRBB has been managing the Treasury’s EagleCashTM and EZpayTM programs for the Army, Marine Corps, and Air Force for many years. They have a great deal of experience with SVC programs. FRBB is not a commercial bank so Treasury has brought in another financial agent bank, PNC Bank, to take over as the open-loop provider for the MasterCard® pre-paid debit feature on the Navy Cash® cards.
Treasury, FRBB, JPMC, and NAVSUP have been working together to make the transition from JPMC to FRBB as seamless as possible, with minimal impact to the Fleet and to our Sailors. Customer service phone numbers, e-mail addresses, and website addresses for cardholders and disbursing officers will remain the same. Many of the Navy Cash® associates at JPMC will transition to FRBB, and contracts with current subcontractors will be maintained, to ensure we retain experience, knowledge, and high level of service to the Fleet. Every effort is being made to make the transition as transparent as possible to the crew.
NAVY CASH 2.0/EMV/ONE-CARD SOLUTION
The Navy Cash® Team is working on a new upgrade for the Navy Cash system. Navy Cash® 2.0/EMV is currently under development and will be ready to deploy in late 2018 as the next-generation cashless environment aboard ship.
The current Navy Cash® system hardware and software are reaching the end of their expected service life and need to be replaced as part of a technical refresh. Navy Cash® 2.0/EMV will replace all the kiosks, the point of sale terminals in all the retail outlets, and the card accepting devices in all the vending machines. On ships with Consolidated Afloat Networks and Enterprise Services compatible networks, the Navy Cash®-specific servers, workstations, and laptops will be eliminated and the system can now operate in a virtualized environment on the ship and run as a web-based application on a ship’s server accessed using ship workstations. This change will reduce the current equipment footprint significantly and enable Navy Cash® to comply with recent direction from the Navy’s CIO to virtualize all current Department of the Navy servers and server-based systems and applications.
Industry-standard EMV chip and PIN cards will replace the proprietary chip cards we use today. EMV is a standard for globally interoperable secure payments that has been adopted by more than 80 countries and has significantly reduced counterfeit card fraud. The new EMV cards are part of a Treasury initiative for an EMV one-card solution for all DoD SVC programs. The Army, Navy, Marine Corps, and Air Force will all be migrating to the common One-Card Solution. Ultimately, Sailors will be able to use their Navy Cash® cards at any Army post or Marine or Air Force base equipped with DoD SVC systems.
Navy Cash® 2.0/EMV will significantly reduce costs, improve the security posture, and reduce the workload and costs associated with certifying and accrediting, installing, operating, managing, troubleshooting, and maintaining the Navy Cash® system we know today. For the cardholder, Navy Cash® EMV chip and PIN cards offer smarter, more secure, and more efficient payments worldwide. As Navy Cash® 2.0/EMV gets closer, we will provide frequent updates on the details about the new system and the transition to Treasury’s One-Card Solution.