NACHA Online Payment Initiatives: Joint Payment Center Conference Rob Unger, AAP Sr. Director...
-
Upload
cecil-gordon -
Category
Documents
-
view
219 -
download
0
Transcript of NACHA Online Payment Initiatives: Joint Payment Center Conference Rob Unger, AAP Sr. Director...
NACHA Online Payment Initiatives:
Joint Payment Center Conference
Rob Unger, AAPSr. Director Network ServicesNACHA703-561-3913, [email protected]
(c) NACHA 2
Agenda
NACHA/ACH Overview EBIDS (Electronic Billing and Information
Delivery Service) Secure Vault Payments Exception Processing Mitigation
(c) NACHA 3
Introduction to NACHA
Not for profit association Two primary functions
Establishes operating rules for Automated Clearing House Network
Trade association to promote electronic payments
(c) NACHA 4
What is the ACH Network?
“ACH” stands for Automated Clearing House. The ACH Network is an electronic banking system:
Batch processing, store and forward Transactions are stored during the day and sent to the
network in batches, usually in the afternoon and/or evening
Transactions are not real-time or online.
The ACH Network processes both credits and debits.
(c) NACHA 5
Scope of ACH Rules
18,000 Financial Institutions 6 million companies 145 million consumers 16 billion transactions in 2006 33 trillion dollars in 2006
Direct Deposit Direct Payment Corporate payments And more
(c) NACHA 6
ACH Volume Growth
Growth of selected ACH transactions update
2005 2006 Increase
Total ACH 13,957 15,984 14.5%
POP 224 356 59.0%Avg $ 79
WEB 1,343 1,807 34.5%Avg $ 385
ARC 2,154 2,839 31.8%Avg $ 290
TEL 319 388 21.5%Avg $ 403
(c) NACHA 7
Agenda
NACHA/ACH Overview EBIDS (Electronic Billing and Information
Delivery Service) Secure Vault Payments Exception Processing Mitigation
(c) NACHA 8
1. EBIDS Concept
2. Processes1. Biller Enrollment
2. Consumer Enrollment
3. Bill Presentment
4. Bill Payment
3. Benefits
4. Pilot Status
EBIDS Discussion
(c) NACHA 9
Electronic Billing and Payment Needs Despite significant gains, overall EBPP adoption still low
compared to entire possible volume Current state bill presentment/delivery
Unique customization requirements for bill Proprietary channels are the only option for bill delivery Greater adoption requires interoperable, secure method for bill
distribution Current state bill payment
Check payments still generated from online banking because banks don’t know how to send electronic payments to all billers
Lack of data/incorrect data from online banking systems increases exception processing
Bill payment is a costly “free” service for banks to provide
(c) NACHA 10
The EBIDS Breakthrough
Bill delivery: The ACH is an interoperable, rules-based, secure network that can provide a ubiquitous bill delivery/payment channel to thousands of FIs and millions of businesses
Bill payment: The ACH credit model is a low-risk, low-cost option that eliminates non-electronic payments and user-based exceptions from online banking when coupled with bill presentment.
New revenue paradigm: EBIDS proposes a business model for banks to be compensated for enrolling consumers and presenting consumers’ bills, and provides a least cost routing option for payment.
Pilot sponsored by NACHA’s Council for Electronic Billing and Payment
(c) NACHA 11
Electronic Billing Information Delivery Service (EBIDS)
Consumer enrolls for ebill via Internet banking with consumer’s bank
Biller (via a bank) sends summary billing information/remittance data in an ACH addenda record with a URL to provide access to bill detail
ACH network serves as ‘switch’ and delivers summary bill information to consumer’s bank
Consumer’s bank provides billing information to consumer via Internet banking system
Consumer authorizes credit payment, transacted through normal ACH processes with remittance data
(c) NACHA 12
EBIDS Summary Process Flow
Consumer
ACH OperatorConsumer Financial Institution (CFI) Biller Financial Institution (BFI)
4. Bill PaymentConsumers will connect to CFI system to view summary bills and authorize payment to Biller
3. Bill PresentmentBiller to route the consumer’s next bill to the CFI using a zero-dollar CTX transaction, with the summary bill info embedded in an addenda record
2. AcknowledgementBillers need to acknowledge EBIDS enrollment requests. Biller confirms/rejects an enrollment using the ENR entry
1. EnrollmentConsumer enrolls through CFI to receive summary bills from Billers via ACH using ENR
1 2
Biller
3
4
(c) NACHA 13
Allows for data capture, storage and retrieval of biller and bank information.
Supports consumer banks’ need to know which billers are participating
Supports consumer enrollment and delivery of electronic payments with remittance data
Support delivery of epayments without e-bills Ensure e-payment and remittance data go to most
current and correct electronic lockbox A web-based application
Biller Enrollment
B i l l e r / C o n s u m e r F i n a n c i a l I n s t i t u t i o n THE PROFILE INFORMATION FOR YOUR INSTITUTION MUST BE COMPLETED BEFORE CONTINUING.
Please enter the following contact information and click Submit to update your financial institution contact information.
* Indicates required field
Institution Name: ABC Bank
Financial Institution Type: Biller/Consumer Financial Institution
*Business Contact Name:
*Business Contact Phone: (xxx-xxx-xxxx)
*Business Contact Email:
*Technical Contact Name:
*Technical Contact Phone: (xxx-xxx-xxxx)
*Technical Contact Email:
*Consumer Business Contact Name:
*Consumer Business Contact Phone: (xxx-xxx-xxxx)
*Consumer Business Contact Email:
*Consumer Technical Contact Name:
*Consumer Technical Contact Phone: (xxx-xxx-xxxx)
*Consumer Technical Contact Email:
Public Key:
*Automatic Notification of Changes? Yes No
Email Address for Automatic
Notification of Changes:
Submit
Reset
Biller Profile Information
Consumer FIsdownloadbiller directory data via XML file,add biller to theirbillpay system
(c) NACHA 16
Consumer Enrollment
1. Consumer enrolls through CFI providing the required enrollment info
2. Consumer Financial Institution (CFI) initiates ENR for each biller and transmits entries to ACH Operator
Consumer Biller
ACH Operator
3. ACH Operator routes ENR to appropriate BFI
4. BFI delivers ENR to biller – biller enrolls consumer
Consumer Financial Institution (CFI) Biller Financial Institution (BFI)
Automated Enrollment Entry (ENR) via the ACH
MAINTENANCEConsumers may deactivate their EBIDS enrollment through the same process flow through the CFI
(c) NACHA 17
(c) NACHA 18
(c) NACHA 19
(c) NACHA 20
(c) NACHA 21
(c) NACHA 22
Record Type Code
Addenda Type Code
Enrollment Related Information Addenda Sequence Number
Entry Detail Sequence Number
M M R M M
Contents ‘7’ ‘05’ Include characters of addenda noted below in 80 character segments in multiple addenda See Field Defs.
See Field Defs.
Length 1 2 80 4 7
Position 01-01 02-03 04-83 84-87 88-94
Example7 05 <RTN>09100001</RTN><CHKDIG>8</CHKDIG><ENRTYPE>E</
ENRTYPE><ENRACTIONCODE>A</EN0001 48296323
Example7 05 RACTIONCODE><ACCTID>123456789</ACCTID><PAYEEID>2234</
PAYEEID><LASTNAME>Lewis</LA0002 48296323
Example7 05 STNAME><FIRSTNAME>Stephanie</FIRSTNAME><ADDR1>925 Grand
Blvd</ADDR1><ADDR2>8th floor</0003 48296323
Example7 05 ADDR2><CITY>KC</CITY><STATE>MO</STATE><POSTALCODE>64198</
POSTALCODE><FIACCT>440004 48296323
Example 7 05 140000009999999</FIACCT><TOKEN1>225415</TOKEN1><TOKEN2>A152CAJ</TOKEN2> 0005 48296323
ENR Sample: “7” Addenda Record
(c) NACHA 23
Enrollment Acknowledgement
4. Consumer connects to CFI system to view enrollment status
3. ACH Operator routes ENR to CFI, CFI updates bill presentment data system with enrollment status
2. BFI transmits ENR to ACH Operator for delivery to CFI
1. After accepting ENR, Biller transmits acknowledgement to BFI to confirm receipt and acceptance (or rejection)
ENR Enrollment Confirmation
Consumer Biller
ACH OperatorConsumer Financial Institution (CFI) Biller Financial Institution (BFI)
(c) NACHA 24
Bill Presentment
4. Consumer logs on to CFI to view bill
3. ACH Operator routes CTX to CFI, CFI updates bill presentment data system with new bill
2. BFI transmits CTX to ACH Operator for delivery to the CFI
1. After receiving ENR and enrolling consumer, Biller transmits zero-dollar CTX with bill summary data embedded in an addenda record
Zero-Dollar CTX Bill Presentment
Consumer Biller
ACH OperatorConsumer Financial Institution (CFI) Biller Financial Institution (BFI)
(c) NACHA 25
Click here to see ebill
(c) NACHA 26
Bill detailfrom Verizon site no sign-in required
(c) NACHA 27
Accessing Full Bill Detail: SAML Server (Strategic Assertion Markup Language) Consumer clicks to “view bill” on the consumer FI
site then receives bill detail from the biller site SAML is a message protocol for passing the
consumer FI credential to the biller, without requiring the consumer to log-in with the biller
Accomplished through the exchange of assertions and seamless to the consumer
Result: a ‘single sign on’
(c) NACHA 28
CTX (Corporate Trade Exchange) for Bill Summary Sent by Biller to Consumer FI – Sample “7” Record
CTX ADDENDA RECORD for EACH CONSUMER
Record Type Code
Addenda Type Code
Ebill Summary Information Addenda
Sequence
Number
Entry Detail
Sequence
Number
M M O M M
Contents 7 05 Include first 80 characters of data noted below See Field Defs.
See Field Defs.
Length 1 2 80 4 7
Position 01-01 02-03 04-83 84-87 88-94
Example 7 05 <PAYEEID>34980</PAYEEID><ACCTID>4899027763</ACCTID><AMTDUE>120.00</AMTDUE><MINAM
0001 7667878
Example 7 05 TDUE>10.00</MINAMTDUE><DTPMTDUE>20060309</DTPMTDUE><DTBILL>20060216</DTBILL><PRE
0002 7667878
Example 7 05 VBAL>478.34</PREVBAL><ACCTBAL>0.00</ACCTBAL><IMAGEURL>http://www.thewebsite.com/getmybi
0003 7667878
Example 7 05 ll.exe?id=xxkkfj3355kj2l4k55LFRT5436KJT23RE4632WF758VJK56E32JK579642L </IMAGEURL><DTEXPIR
0004 7667878
Example 7 05 E>20070309</DTEXPIRE> 0005 7667878
(c) NACHA 29
Bill Payment
1. Consumer authorizes payment to Biller after viewing summary bill on CFI system
2. CFI sends CIE to biller via the ACH Operator
3. ACH Operator routes CIE to appropriate BFI, BFI credits Biller account
4. BFI routes Biller remittance identifier data to Biller; Biller credits consumer account
CIE Bill Payment
Consumer Biller
ACH OperatorConsumer Financial Institution (CFI) Biller Financial Institution (BFI)
(c) NACHA 30
(c) NACHA 31
(c) NACHA 32
CIE (Consumer Initiated Entry) Sent by Consumer FI to Biller – Sample “6” Record
ENTRY DETAIL RECORD (CIE)
Record Type Code
Trans-action code
Receiving DFIIdentification
Check Digit
Account Number
Amount Individual Name
Individual Identification
Discre-tionary Data
Addenda Indicator
Trace Number
M M M M R M R M O M M
Contents 6 (2)22
(3)Biller’s RTN at
BFI
(3)Biller RTN
Check Digit
(3)Biller’s Acct. #
at BFI
(4)$ amt. Paid
by the customer; zero filled
(4)Biller’s
CustomerName
(4)Customer’s
account number at
Biller
Blank
Always 0(no
addenda)
Assigned by ODFI
Length/Alpha-
Numeric
1 2N
8TTTTAAAA
1N
17A
10N
15A
22A
2A
1N
15N
Position 01-01 02-03 04-11 12-12 13-29 30-39 40-54 55-76 77-78 79-79 80-94
Example 6 22 23456787 8 12345678901234567
0000008673
STEPHANIE LEWIS
1234567890123456789012
0 455427797657788
(c) NACHA 33
Biller Benefits
Meets preference for multiple channels Increased adoption Reduces unapplied payments Guaranteed funds No administrative returns Accelerated posting of payment Cost reduction Improved customer experience
(c) NACHA 34
FI Benefits Supports online banking: lowers attrition, higher account
balances, increases cross-sell, lower service costs EBIDS leverages ACH Network for enrollment, presentment,
and payment Lowest cost channel and best potential reach Uses industry standards – NACHA rules Non-proprietary
Provides compensation to consumer’s financial institution – new revenue stream
Enables a more direct working relationship between biller and banks for EBPP
New revenue opportunity for bill delivery/remittance services
(c) NACHA 35
Consumer Benefits
Privacy of information – financial account information remains with financial institution
Remains in control of account and timing of payment
Access to more bills, bills are consolidated at one site
Access to bill detail through single sign on
(c) NACHA 36
Pilot Status
EBIDS Product Design complete Processes, rules, and data formats for consumer enrollment,
presentment and payment Biller Directory complete SAML Server – in final testing phase Pilot revenue model complete Participant system update and integration - ongoing Target date for launching transactions: 3rd quarter 2007 NEED MORE BILLERS!
(c) NACHA 37
Agenda
NACHA/ACH Overview EBIDS (Electronic Billing and Information
Delivery Service) Secure Vault Payments Exception Processing Mitigation
(c) NACHA 38
Market Drivers Rapid growth of Internet commerce has led to industry challenges.
Security and privacy concerns 50% of US Internet users avoid making purchases online, afraid
financial information may be stolen (CyberSecurity Alliance Research 5/06)
Nearly half of consumers avoid online Bill Pay due to security concerns (comScore Networks, cited in American Banker 4/20/06)
Alternative online payments will account for 26% of eCommerce volume by 2009 (Celent, 5/06)
Continued fraud and chargebacks 35% of online orders are flagged for manual review related to fraud
detection (CyberSource Corp., cited in Digital Transactions 6/13/06)
6% of good sales lost due to fraud/risk screening (Cardline 2005)
Fraud is the top reason given for chargebacks on several networks (American Banker interviews with network executives, 1/17/06)
(c) NACHA 39
Market Drivers Cont. Businesses want payment options
− 72% of consumers surveyed say the have abandoned an online purchase− 74% of consumers willing to spend $960 more per year (Javelin Strategy
and Research, 7/06)− 24% of consumers report shopping less online (Visa news release, 1/06)
Open new markets− Digital content – music, games, subscriptions, video− Last-minute/expedited payments
Online account opening− Bank reliance on non-bank providers – CashEdge,Yodlee
Guaranteed & authenticated payment options for billers− Card issuers− Mortgage and loan payments− Bank-centric substitute for biller-direct
(c) NACHA 40
The Private, Secure, Bank-Authenticated Payments Solution ‘Secure Vault’ simply refers to using online banking to
initiate Internet payments
Consumers keep financial information private – never disclosed to the seller
Seller receives real-time authorization of guaranteed payment (ACH Credit)
Financial Institution authenticates the buyer, reducing risk, fraud, and charge backs
Relieves seller burden to secure/protect consumer financial information
(c) NACHA 41
Demos Consumer Purchases Bill Payments Funds Transfers
(c) NACHA 42
Key Features Bank customers keep financial information
private – never disclosed to businesses Bank leverages existing online banking
platform and connections to payment networks
Bank receives interchange revenue for authenticating existing customer and guaranteeing payment
Bank is central to its customers’ transactions
(c) NACHA 43
Stakeholder Benefits – Businesses
Real-time authorization of a guaranteed payment (ACH Credit)
Sales lift – new customers, higher tickets, more purchases, less shopping cart abandonment
FI Authentication - reduces risk, fraud and charge backs
Eliminate need to secure/protect customers’ financial data
(c) NACHA 44
Stakeholder Benefit - FIs
Use existing infrastructure - costs to support this channel have increased in the areas of authentication and security (FFIEC Guidance)
Create new potential revenue stream - FIs generate little direct revenue from the online banking channel today
Leverage customer relationships Grow the eCommerce ‘pie’ and enable new
online transactions Take a leadership role in privacy
(c) NACHA 45
Stakeholder Benefits – Consumers
Security and privacy – no financial information shared with the seller
Familiar user interface with online banking More payment control and flexibility Consumers are most comfortable sharing
private financial information and account access with their Financial Institution
(c) NACHA 46
NACHA’s Online Payments Pilot Pilot Participants:
Buyer’s FI (Guaranteeing ODFI) Seller’s FI (Receiving FI)Businesses (online merchants, billers, state
govt. agencies)Third Party providers (enable FI and business
customers)eWise (pilot network provider)
(c) NACHA 47
Participation Requirements Participation Requirements:
Buyer’s FI (Guaranteeing ODFI) must be FFIEC compliant for online banking
Businesses must be sponsored by a Receiving FI Receiving FI warranties performance of sponsored businesses Resources necessary for integration work with eWise
Pilot Fees There is no registration fee to join the pilot Inter-bank and network fees will be collected Fees will vary by transaction type Fee structures have been announced
(c) NACHA 48
Next Steps
INTERESTED IN LEARNING MORE ABOUT THIS PAYMENT TYPE AND THE PILOT?
Check out the new Online Payments Pilot Website at paymentspilot.nacha.org
Contact George Throckmorton at NACHA: [email protected] regarding pilot participation
Contact eWise at [email protected] for technical and implementation information
(c) NACHA 49
Agenda
NACHA/ACH Overview EBIDS (Electronic Billing and Information
Delivery Service) Secure Vault Payments Exception Processing Mitigation
(c) NACHA 50
Exception Processing Mitigation
Purpose: to reduce errors (and costs) and improve straight-through processing for bill payment exceptions that originate from online banking systems Sponsored by NACHA’s Council for Electronic Billing and Payment
Typical issues Incorrect account number (front-end) Biller account number changes (back-end) Biller metrics for identifying costs
Stakeholder costs = $533 million in 2006 Consumers-$25.9 million Consumer service providers-$130.6 million Banks/3rd party processors-$14.1 million Billers-$362.7 million
All data from TowerGroup.All rights retained by TowerGroup.
(c) NACHA 51
Exception Processing Mitigation: What Can We Do? Identify best practices to minimize consumer
errors (front-end) Develop benchmark biller metrics for identifying
the cost of exceptions Define biller/processor processes for account
number changes (back-end) Develop a communications plan for maximizing
industry outreach
(c) NACHA 52
Summary
NACHA seeking to improve the payments process for billers.
More information: NACHA home page
http://www.nacha.org
Council for Electronic Billing and Payment http://cebp.nacha.org
Secure Vault Payments http://securevaultpayments.org