A Whitman’s Sampler of Current
Electronic Payment Initiatives
Hampton Roads AFP Chapter
Oct 8, 2013
Norman Robinson, AAP, CTP
President & 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
General Payment Trends
• Federal Reserve’s 4th triennial study of noncash payment
– 2000
– 2003
– 2006
– 2009
– 2012 – to be released soon
© 2013 EastPay. All Rights Reserved
5
Distribution of Non-Cash Payments
2000
ACH
9%
Credit card
21%
2003
EBT
1%
ACH
11%
Checks (paid)
58%
Credit card
23%
EBT
1%
Checks (paid)
46%
Debit card
11%
Debit card
19%
Source: 2004 Federal Reserve Payments Study, Global Concepts
6
Distribution of Non-Cash Payments
2003
ACH
11%
2006
EBT
1%
ACH
16%
EBT
1%
Checks (paid)
33%
Credit card
23%
Checks (paid)
46%
Credit card
23%
Debit card
19%
Debit card
27%
Source: 2007 Federal Reserve Payments Study, Global Concepts
7
In 2009, nearly 80% of noncash payments were electronic;
the most used instrument was debit card, eclipsing check
Distribution of noncash payments in 2006 and 2009
2006
2009
Checks
paid
Debit card
32%
Checks
paid
22%
26%
35%
Debit
card
Prepaid1 5%
4%
Prepaid1
15%
ACH
18%
23%
Credit card
ACH
20%
Credit card
1 Prepaid includes EBT.
SOURCE: Federal Reserve Payments Study
8
Cards were used for 60% of noncash transactions but only 5% by value; ACH
and check were the dominant instruments by dollar value
Distribution of noncash payments in 2009
Number
Value
Checks paid
22%
35%
Debit
card
Prepaid1 5%
Debit Credit
card card
2%
3%
Checks
44%
paid
51%
18%
ACH
20%
Credit card
ACH
0%
Prepaid1
1 Prepaid includes EBT.
SOURCE: Federal Reserve Payments Study
9
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 Payments
2. Expanding use of ACH Credit payments by businesses
and consumers
3. 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
© 2013 EastPay. All Rights Reserved
2. Expanding use of ACH Credit Payments
Both 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.
© 2013 EastPay. All Rights Reserved
Average Dollar Value of Transactions
ARC
BOC
CCD Debits
CCD Credits
CIE
CTX
IAT
POP
PPD Debits
PPD Credits
RCK
TEL
WEB
$
268.73
$
98.17
$ 12,647.19
$ 7,551.79
$ 632.17
$ 39,826.43
$ 1,886.19
$ 100.16
$ 898.16
$ 1,461.39
$ 211.18
$ 346.77
$ 436.98
© 2013 EastPay. All Rights Reserved
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
© 2013 EastPay. All Rights Reserved
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
© 2013 EastPay. All Rights Reserved
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
31 BB&T Corporation
21,019,148
26,790,631
47,809,779
26.0%
6,031,422
6,519,207
12,550,629
-3.7%
50 First Citizens Bancshares
© 2013 EastPay. All Rights Reserved
101,284,102 -11.3%
The NACHA TOP 50 Receiving FIs for 2012
Debits
Credits
Total
1 Bank of America
2 Wells Fargo
3 J.P. Morgan Chase
4 PNC
5 U.S. Bancorp
6 SunTrust Banks
7 Regions Bank
8 TD Bank
9 RBS Citizens
10 BB&T
899,922,998
772,266,294
551,484,094
329,334,644
282,788,048
181,123,217
163,675,340
148,224,498
154,602,502
150,155,059
756,196,050 1,656,119,048 3.2%
557,997,759 1,330,264,053 -9.6%
566,343,730 1,117,827,824 6.6%
187,353,110
516,687,754 11.5%
165,866,571
448,654,619 4.6%
100,354,244
281,477,461 1.1%
105,365,609
269,040,949 -6.8%
105,930,859
254,155,357
4.6%
87,432,120
242,034,622
0.1%
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%
© 2013 EastPay. All Rights Reserved
Change
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
© 2013 EastPay. All Rights Reserved
“Travel Rule” Information
Specific 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
© 2013 EastPay. All Rights Reserved
IAT Transaction
7 Mandatory Lines of Addenda
Batch Header
Fx Codes Company Information Country Information
IAT Entry Detail
Fx 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
© 2010 NACHA — The Electronic Payments Association®. All rights reserved.
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
© 2013 EastPay. All Rights Reserved
22
So What’s New?
• Dodd-Frank section 1073– International
Consumer Remittances, Consumer Financial
Protection Board (CFPB)
– Must provide consumer with pre-payment (& a postpayment) 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
23
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
© 2013 EastPay. All Rights Reserved
24
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
© 2013 EastPay. All Rights Reserved
25
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
© 2013 EastPay. All Rights Reserved
26
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
© 2013 EastPay. All Rights Reserved
27
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
© 2013 EastPay. All Rights Reserved
28
TRN Reassociation Trace Number*
*ASC X12N vs. 5010 TR3 Report
© 2013 EastPay. All Rights Reserved
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
Effective September 20, 2013
© 2013 EastPay. All Rights Reserved
30
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
© 2013 EastPay. All Rights Reserved
31
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.
© 2013 EastPay. All Rights Reserved
32
QUESTIONS?
nrobinson@eastpay.org