Same Day ACH and PEP+ Opportunities. August 21, 2015

Transcription

1 Same Day ACH and PEP+ Opportunities August 21, 2015

2 Agenda Review of the NACHA Rule Discussion of considerations and impacts What we are looking at for PEP+ Q&A Hali Jewell Product Manager, Payments Management Solutions 2

3 Same Day ACH 3

4 Same Day ACH Overview All RDFI s will be required to receive Same Day Transactions o Same Day Credits must be made available to ACH Credit Receivers by close of business, and ultimately by 5:00 PM in the RDFI s local time. (Phase 3) Interbank Fees ODFI s must pay RDFI s 5.2 cents per same day transaction, assessed by the ACH Operators Ineligible for Same Day (Eligible transactions account for 99% of ACH Network Volume) o International Transactions (IAT) o Automated Enrollment Entries (ENR) o High-Value (>25,000) o Phase 1 DR Items are ineligible until Phase 2 4

5 Same Day ACH Overview Settlement Deadlines Deadline ACH Submission Deadline ACH Settlement a. Morning 10:30 AM ET 1:00 PM ET a. Afternoon 3:00 PM ET 5:00 PM ET Company Descriptive Date Optional Use of field for customer specified Same Day indicator 6 Positions Company/Batch Header Record Optional SDHHMM a.sd = Same Day Settlement Requested b.hhmm = 1300 or

6 Same Day ACH Returns and Settlement Returns would not be required to be sent on the same day, but would be permitted to be processed through the two new same-day windows, extending the existing time frame for same day settlement Returns would be settled at the next available settlement opportunity, which could be the same day Same-day returns would not be subject to the eligibility limits of forward transactions (i.e., the per-entry dollar limit, and IATs); these returns can already be sent through the ACH Operators existing same-day return services Same-day returns would not be subject to the interbank fee (nor would Notifications of Change (NOCs), which are also sent from RDFIs to ODFIs) 6

7 Same Day ACH Effective Dates The effective dates of the three phases are: Phase 1 September 23, 2016 (16 months from ballot) Introduces Same Day ACH; Credits only Phase 2 September 15, 2017 (28 months from ballot) Expands to include Debits Phase 3 March 16, 2018 (34 months from ballot) Requires ACH Credit Funds Availability to be 5pm local time The effective dates are contingent on FRB approval Previously, the Federal Reserve Board stated that it objected to the inclusion of the category opportunity costs in the calculation of the amount of the interbank fee. A revised methodology for the interbank fee excludes opportunity costs. NACHA believes this revision addresses the concerns of the Federal Reserve Board. Comment period ended July 2, comments received 7

8 So, now what? 8

9 What do we see? What it means to be an ACH entry is changing While still a batch and forward payment mechanism, settlement is part of the foundation of everything we know today Systems need to expect and be able to predict both types of ACH transactions, Same Day ACH and Next Day ACH, and handle appropriately Changes to how we predict and calculate settlement are impactful - far beyond systems alone 9

10 What do we see? ACH Originator implications Funding and Account Balance management Complexity of reversals/corrections and differences in settlement for Debit/Credit entries through initial phases of the Rule Changes to processing deadlines and cutoff times New money movement and recovery opportunities Financial Institution Timing of ACH processing activities and implications to other core processes Intraday posting Need for automation and streamlining of existing manual processes Potential lack of control over ACH Originator activity New business opportunities and potential for service offerings 10

11 Breaking it down Implications of the three Phases: Phase 1 (Credits Only) - effective on September 23, 2016 Reversal Debits will not be settled same day. This will delay the reversal by one business day for same day credit entries Reversal Credits may be processed as same day. This may mean that the credit reversal posts at the same time or prior to the original debit entry Resulting Originator Risk o Increased risk that the Debit Reversal will be returned based on the 1-day delay in settlement/posting of same day entries o May be debited for Credit Offset settlement same day, but Reversals will not be credited for one business day o Potentially debited for Same Day Credit Reversals prior to receiving the credit for their originated debit transaction o Counter-point: If the credit reversal is sent as Same Day, there may be decreased risk that the original Debit will be returned. If credit entries are posted first, this may enable the Debit entry to be successful when it otherwise would not have been resulting in an Unintended credit scenario as defined in the Rules 11

12 Breaking it down Financial Institution Risk Exposure: Effective Dated Settlement customers will receive immediate credit for debit reversals. Risk that funds will not be available to cover debit reversal returns. Reversal Credits may settle same day. Credit Reversal may post/settle prior to the original debit transaction if submitted prior to the same day settlement deadline Phase 2 (Debits & Credits) - effective on September 15, 2017 Brings Debits and Credits back into alignment Additional Same Day volume introduced o Significant number of transactions are now eligible per the Rule and may become Same Day ACH inadvertently Phase 3 (Credits available to Receiver by 5:00pm local time) - effective on March 16, 2018 Posting and processing window scheduling implications 12

13 Business Impacts and Considerations 13

14 New Business Opportunities Productization of Same Day ACH Ability to create a suite of new ACH products and services founded on the new Same Day ACH capability Consumer Based Applications such as P2P services and expedited Bill Pay Corporate Applications such as Premium Origination, Flexible Cash Concentration and Capital Management, and Expedited Payments Problem Statements: How do you control who and what can be originated as Same Day activity? How can you assure that certain types of payments are consistently processed as Same Day for internal applications? 14

15 Fleshing out the Premium Origination Potential: A premium origination service may incorporate any of the following: Capability to assess and charge Originators separate service fees Ability to prevent inadvertent Same Day ACH transmissions Potential to operationally identify Same Day Files & Batches, and applying enhanced options to support Same Day processing activity. Earlier Notification of Same Day processing files/batches Escalated Exceptions processing capabilities prioritizing same day exceptions above non-same day processing Additional Analysis/Statistical calculations at a file and/or batch level for Same Day origination activity Additional Customer Reporting for origination activity introduced and settled same day 15

16 What it means to your Corporate Customer Potential for new payment mechanisms and cash flow management opportunities Ability to leverage ACH as an effective payment rail while reducing costs Contingency options enabling faster recovery from missed files or processing deadlines Needs: Flexibility in Same Day ACH processing requirements allowing for differences in Origination capabilities Enhanced transparency in payment processing and clear reporting Ability to manage to and reconcile both next day and same day settlement 16

17 PEP+: Same Day Settlement 17

18 PEP+ : Same Day Settlement Overview Benefits PEP+: Same Day Settlement from Fiserv enables your institution to offer same day ACH settlement to key clients as a value-added service Benefits Same Day Settlement is ideal for institutions interested in generating new revenue while promoting both account retention and new account growth Designed to work with the FedACH SameDay Service, and being expanded for NACHA s ubiquitous Same Day ACH Rule, PEP+: Same Day Settlement enhances the FI experience by providing greater control over your optional Origination program, enabling selected qualified ACH transactions to be originated and settled on the same day based on rules established at the customer level 18

19 Key Product Features The primary features of PEP+: Same Day Settlement include: Key Features Customer Qualification SEC Code Qualification at the Customer Level Customer specific Debit and Credit Qualification Program level Dollar-Amount Cap Automatic Distribution Segregated Stats and Reporting 19

20 How it works An item qualifies for Same Day Settlement routing when it meets the following requirements: 4 1 The originating (ODFI) and receiving (RDFI) institutions are set up as Same Day Settlement participants on the Fed's Participant Pair List 2 The Effective Entry Date is todays date or a stale date 3 It is eligible per the Same Day ACH Rule (Not an IAT or ENR SEC code and the Detail Amount is $25,000 or less) and qualified per PEP+: Same Day Settlement The item is distributed to the ACH Operator in accordance with their established processing schedule for this service PEP+ windows are easily correlated to meet Operator time frames, and you can specify those windows for processing on the Same Day Settlement Distribution Applications Once it is qualified for Same Day Settlement processing, it will be routed to a new Same Day Settlement Distribution Application (DA) in PEP+ 20

21 How it works PEP+: Same Day Settlement performs additional checks to determine If the Standard Entry Class is further qualified based on specifications in PEP+ at the system (SSI Screen) or Batch processing (CA) level That the originated item is qualified based on debit or credit settings defined at either the system or customer level If the Detail Amount is qualified based on the debit or credit cap limit defined at the system level 21

22 Questions? Hali Jewell