A Whitman’s Sampler of Current Electronic Payment Initiatives Hampton Roads AFP Chapter Oct 8,...

A Whitman’s Sampler of Current Electronic Payment Initiatives

Hampton Roads AFP ChapterOct 8, 2013

Norman Robinson, AAP, CTPPresident & CEO

EastPay

Whitman’s Sampler Topics for Today

• General Payment Trends• ACH Growth by Payment Type• International ACH Payments• Healthcare Payments• Same Day ACH

EASTPAY• Not-for-profit Regional Payments Association• Co-owner of the ACH Rules• Educational Programs• Member benefits

– Voice & Representation in National Rule Making and Regulatory Process

– Toll free operational assistance– Professional Services (ACH Audit, Risk, Wire, RDC)

• 9 Accredited ACH Professionals (AAP) on staff© 2013 EastPay. All Rights Reserved 4

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General Payment Trends

• Federal Reserve’s 4th triennial study of non-cash payment– 2000– 2003– 2006– 2009– 2012 – to be released soon

© 2013 EastPay. All Rights Reserved

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Distribution of Non-Cash Payments2003

Checks (paid)46%

Debit card19%

Credit card23%

ACH11%

EBT1%

2000

Debit card11%

Credit card21%

ACH9%

EBT1%

Checks (paid)58%

Source: 2004 Federal Reserve Payments Study, Global Concepts

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Distribution of Non-Cash Payments

2003

Checks (paid)46%

Debit card19%

Credit card23%

ACH11%

EBT1%

2006

Checks (paid)33%

Debit card27%

Credit card23%

ACH16%

EBT1%

Source: 2007 Federal Reserve Payments Study, Global Concepts

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In 2009, nearly 80% of noncash payments were electronic; the most used instrument was debit card, eclipsing check

1 Prepaid includes EBT.

SOURCE: Federal Reserve Payments Study

Distribution of noncash payments in 2006 and 2009

2006 2009

Prepaid14%

ACH

15%Credit card

23%

Debit card

26%

Checkspaid

32%22%

Prepaid1 5%

Credit card

18%

Debit card

20%

Checkspaid

35%

ACH

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Cards were used for 60% of noncash transactions but only 5% by value; ACH and check were the dominant instruments by dollar value

1 Prepaid includes EBT.

SOURCE: Federal Reserve Payments Study

Distribution of noncash payments in 2009

Number Value

22%

Checks paid

35%

Debit card

20%

Credit card

18%

ACH

5%Prepaid1

Checks paid

2%

Debit card

3%

Credit card

51%ACH

0%

Prepaid1

44%

ACH Growth by Payment Type

• 2012 Total ACH Grew to more than 21 Billion Transactions• Volume Increase of 4.19 % from 2011

• Total of $36.9 Trillion dollars transferred• Dollar Increase of 8.76% over 2011

Three factors driving this growth:1. Increase in Native Electronic Payments2. Expanding use of ACH Credit payments by businesses

and consumers3. Rise in Online payments © 2013 EastPay. All Rights Reserved

1. Increase in Native Electronic Payments

What are Native Electronic Payments?

Those payments that start out as an electronic payment

i.e. non-check conversion applications

Conversely, transactions initiated by paper check decreased

• ARC, BOC, POP and RCK• Decreased by 6.75% in 2012


2. Expanding use of ACH Credit PaymentsBoth Consumers and Business increasingly used credit payments

A. Consumer-Initiated Entries (CIE)• Bill Payments grew 7.6% in 2012

B. B2B Transactions• CTX and CCD transactions (with addenda records) grew 13.8% and 5.4%

respectively• Use of Addenda records also grew significantly; 11.2% for CTX and 11.3% for

CCD• Healthcare Payments just began Sept 20, 2013 using CCD +

C. Direct Deposit via ACH (PPD)• Major force driving increase in ACH Credit payments• 5.1 Billion Direct Deposits in 2012• 5.4% growth over 2011• A big reason was U.S. Treasury’s all-electronic initiative – required that all

federal benefit recipients switch from paper checks to Direct Deposit by March 1, 2013 © 2013 EastPay. All Rights Reserved

3. Rise in Online Payments

WEB Transactions•Those made when the authorization to debit and account is given via the Internet•Increased 10.2% over 2011•Accounted for 17.6% of the total ACH Network volume!

•Recently the ACH Rules were modified to allow P2P (person to person) payments using the WEB format•This should add to the increasing growth of WEB transactions going forward•Most P2P payments through ACH have been CIE (customer initiated entries), typically used for consumer Bill Payments.


Average Dollar Value of TransactionsARC $ 268.73BOC $ 98.17CCD Debits $ 12,647.19CCD Credits $ 7,551.79CIE $ 632.17CTX $ 39,826.43IAT $ 1,886.19POP $ 100.16PPD Debits $ 898.16PPD Credits $ 1,461.39RCK $ 211.18TEL $ 346.77WEB $ 436.98


Dripping with Good News

Network Quality is UP!

Even with volume increasing, the rate of Returned Transactions continues to fall

• Overall ACH Network Return Rate was 9.7%, down from 9.8%

Unauthorized Returns Declined as well

• Below 3% for the first time ever to 0.0298%• 10 consecutive years of decline


Who are the Top Users?

The Top 50 Originating Depository Financial Institutions (ODFIs)

• Accounted for 96.5% of the Originated Volume

The Top 50 Receiving Depository Financial Institutions (RDFIs)

• Accounted for 55.6% of the Received Volume


The NACHA TOP 50 Originating FIs for 2012

Debits Credits Total Change

1 Wells Fargo 2,220,893,150 1,255,452,239 3,476,345,389 10.7%2 J.P. Morgan Chase & Co 2,478,265,841 878,191,980 3,356,457,821 5.3%3 Bank of America 1,187,111,918 932,104,122 2,119,216,040 4.2%4 Citigroup, Inc 591,714,462 174,072,941 765,787,403 -8.2%5 PNC 366,149,586 241,431,918 607,581,504 -1.6%6 U.S. Bancorp 321,261,154 283,132,652 604,393,806 -2.4%7 Bank of New York Mellon 367,740,132 173,215,073 540,955,205 3.4%8 Capital One 324,772,821 30,114,171 354,886,992 39.3%9 HSBC Bank USA 222,468,854 118,552,868 341,021,722 -11.1%10 BMO Harris Bank 168,862,473 86,743,414 255,605,887 -8.6%11 First National of Nebraska 97,339,895 81,437,200 178,777,095 9.9%

17 SunTrust Banks 33,229,344 68,054,758 101,284,102 -11.3%

31 BB&T Corporation 21,019,148 26,790,631 47,809,779 26.0%

50 First Citizens Bancshares 6,031,422 6,519,207 12,550,629 -3.7%© 2013 EastPay. All Rights Reserved

The NACHA TOP 50 Receiving FIs for 2012

Debits Credits Total Change

1 Bank of America 899,922,998 756,196,050 1,656,119,048 3.2%2 Wells Fargo 772,266,294 557,997,759 1,330,264,053 -9.6%3 J.P. Morgan Chase 551,484,094 566,343,730 1,117,827,824 6.6%4 PNC 329,334,644 187,353,110 516,687,754 11.5%5 U.S. Bancorp 282,788,048 165,866,571 448,654,619 4.6%6 SunTrust Banks 181,123,217 100,354,244 281,477,461 1.1%7 Regions Bank 163,675,340 105,365,609 269,040,949 -6.8%8 TD Bank 148,224,498 105,930,859 254,155,357 4.6%9 RBS Citizens 154,602,502 87,432,120 242,034,622 0.1%10 BB&T 150,155,059 88,379,785 238,534,844 7.2%

14 Capital One 121,352,639 72,826,880 194,179,519 19.0%

24 State Employees CU 43,280,288 26,772,134 70,052,422 31.4%

41 First Citizens Bank 21,664,657 9,988,886 31,653,543 6.8%


International ACH Payments•Allows for the identification and facilitation of international ACH transactions

•Fundamental change to the definition of international payments

•Enables easier compliance with OFAC & BSA obligations regarding international transactions

•Implemented in September 2009


“Travel Rule” InformationSpecific data elements are defined in the Bank Secrecy Act’s “Travel Rule” so that all parties have necessary information to comply with US law:

– Name and physical address of the originator– Name and physical address of the beneficiary– Originating bank name, identification number, branch

country code– Intermediary bank name, identification number, branch

country code– Receiving bank name, identification number, branch

country code


© 2010 NACHA — The Electronic Payments Association®. All rights reserved.

IAT Transaction

Batch HeaderFx Codes Company Information Country Information

IAT Entry DetailFx Codes Company Info Country Info RDFI Acct # Amount OFAC Screening Indicator

1 Addenda Tran Code Fx Amount Foreign Trace Receiver

2 Addenda Originator Name and Address

3 Addenda Originator City State and Country Code

4 Addenda ODFI Name and Identification and Country Code

5 Addenda RDFI Name and Identification and Country Code

6 Addenda Receiver Identification and Address

7 Addenda Receiver City State and Country Code

8 Addenda Correspondent Information

7 Mandatory Lines of Addenda

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International Reach

• FedGlobal ACH– 35 countries (FRB’s goal is 200)– Canada, Mexico, Panama, Latin America, South

America, Europe (SEPA)– Account-to-Account– Account-to-Receiver (Mexico & South America)– Compliant with new international remittance rules


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So What’s New?• Dodd-Frank section 1073– International Consumer

Remittances, Consumer Financial Protection Board (CFPB)– Must provide consumer with pre-payment (& a post-

payment) disclosure that includes:• Transfer amount in currency use to fund request• Fees and charges you impose• Transfer amount in currency received by recipient• Exchange Rate• All other fees and charges and taxes (if available)

– For all payments >$15, FIs exempt if < 100 transfers© 2013 EastPay. All Rights Reserved

Healthcare Payments CCD+

• A CCD with an addenda record• Mandatory addenda record

– TRN (Trace Re-association Number)• Effective – September 20, 2013• https://healthcare.nacha.org

24© 2013 EastPay. All Rights Reserved

https://healthcare.nacha.org/

Healthcare ACH Payments

• Unique Identification of Health Care EFTs– “HCCLAIMPMT” in Company Entry Description

field of the CCD• Addition of new EDI data segment terminator

– The tilde (“~”) is now accepted as a second data terminator to any data segment carried in the addenda record of the CCD Entry

5200MEDICAID 3222222222CCDHCCLAIMPMT 231133651000041140000003


Healthcare ACH Payments

• Formatting Requirements for Health Care EFTs– Company Name field of CCD Entry will contain the

name of the health plan as known by the healthcare provider

– Addenda Record will have TRN Data Segment (Reassociation Trace Number) in Payment Related Information field


Delivery of Payment Related Information

• RDFIs must provide or make available no later than opening of business on RDFI’s second Banking Day following Settlement date of Entry

• This is already required for IAT, CIE, CCD and CTX when requested– SUBSECTION 3.1.5.3


Delivery of Payment Related Information

• RDFIs required to provide or make available, either automatically (if such a service is established by RDFI) or upon request of Receiver (health care provider) all information in Payment Related Information field

• Via a secure electronic means– 128 bit RC4 encryption

• FedPayments Reporter service– Formerly FedEDI


TRN Reassociation Trace Number*

*ASC X12N vs. 5010 TR3 Report


Delivery of Payment Related Information (Reassociation Number)

• RDFIs must provide or make available no later than opening of business on RDFI’s second Banking Day following Settlement date of Entry

2 Day

Delivery

Effective September 20, 2013


2 Day

Delivery

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The FedACH SameDay Service

• For FedACH customers only • Opt-In Basis (may change status monthly)• Originating or Receiving Fin Institutions• Previously only for Check conversion (debits

only)• April 1 open to all transactions except (IAT,

TRC, TRX)• Open to Credits and Debits


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The FedACH SameDay Service Processing Schedule (all times Eastern)

• Forward items may be sent between 2:15 a.m. and 2:00 p.m.

• Items received by 2:00 p.m. will settle at 5:00 p.m.

• Returns of forward items may be sent between 2:00 p.m. and 4:30 p.m.

• Items received by 4:30 p.m. will settle at 5:30 p.m.


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A Whitman’s Sampler of Current Electronic Payment Initiatives Hampton Roads AFP Chapter Oct 8,...

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