NACHA's Wheels

By Mark Brousseau





NACHA's Pay It Green sport utility vehicle (SUV) at its Payments 2011 conference last week in Austin, Texas.

Same-day ACH suffering from “chicken and the egg” syndrome?

By Mark Brousseau

With remote deposit capture continuing to enjoy strong growth, some attendees at this week’s NACHA Payments conference in Austin, Texas, were left wondering what has become of same-day Automated Clearing House (ACH) transactions – the hottest (and arguably most controversial) topic at NACHA Payments a few years back. The answer may be sobering for those who thought same-day ACH would be a clearly more appealing alternative to the same-day availability afforded by remote capture.

“The lack of same-day availability has always been a weakness of ACH,” notes Affirmative Technologies Chief Technology Officer George Bassous.

“Same-day ACH should be a magic bullet when it comes to turning back the rising volume of deposits made via Check 21 remote capture,” he says. “After all, Check 21 remote capture is a case of moving forward by taking two steps back: in order to get same-day availability, it requires the biller to continue dealing with checks.”

Bassous says there are a lot of advantages to same-day ACH. Chief among them, he said, is the ability to know much sooner whether a transaction is being returned. “Virtually any biller would be very interested in same-day ACH,” Bassous claimed.

So why hasn’t same-day ACH had better traction, much less driven back the growth of Check 21 remote capture transactions? “The issue is that the systems used by the ACH banks – particularly large ones – are so tied into old technology that when something new like same-day ACH comes along, they can’t do anything about it. This is the same issue that Secure Vault Payments is having. The situation with same-day ACH is a classic case of ‘chicken and the egg,’” Bassous explained.

Bassous doesn’t buy the argument that some banks won’t offer same-day ACH because they are afraid of cannibalizing their lucrative wire transfer volumes: “I haven’t heard that from banks and I think cards would be the bigger threat there.”

The bottom line is that many banks are not set-up for same-day ACH.

What do you think?

EIPP takes center stage at NACHA Payments

Mark Brousseau

As businesses continue to push for reductions in operations costs and look for ways to support green initiatives, it’s no surprise that more of them are turning to electronic invoice presentment and payment (EIPP) as a solution. EIPP is a hot topic this week at NACHA’s Payments 2011 in Austin, Texas – great timing with Earth Day just a few weeks away.

“The volume of paper required to support traditional invoice and payments processes can be enormous,” said Michael Lane, CEO for EIPP solutions provider Data Impact. “According to NACHA’s PayItGreen Alliance, a firm initiating 260,000 paper payments annually could save significant resources by converting just 20 percent of those payments to electronic. And similar savings can be gained through electronic invoicing as well.”

Data Impact’s electronic invoicing solution allows suppliers to upload invoices and related documents to a secure site, and then customers can access the website and make a payment.

Considering the high amount of paper invoices that are wasted every year, the benefits to electronic invoicing are substantial, Lane said. International Account Payable Professionals (IAPP) and The Association for Work Process Improvement’s (TAWPI) 2011 Account Payable (AP) Automation Study indicates that 90 percent of respondents still receive paper-based invoices in their organization – a situation that Lane says businesses no longer can afford.

With EIPP, companies can solve their excess paper invoice problem while implementing a green solution. Lane said there are several ways e-invoicing support green initiatives:

· Reduced paper processing, printing, and storage
· Decreased duplication of invoices – “You won’t have four copies of the same invoice in four different places,” Lane noted.
· Reduced paper mailing, handling, and postage

“The green factor is obvious with e-invoicing,” Lane said. “But, its real value is streamlining procedures while providing businesses with a major cost reduction in account receivable functions such as invoice delivery, copy invoice and reconciliation.”

What do you think?

Getting comfy at NACHA Payments

Mark Brousseau


Visitors to 3i Infotech's booth this week at NACHA Payments in Austin, Texas, have a chance to win a limited edition Snuggie bearing the company's logo. Here, I model the Snuggie with Kathy Hamburger, president, North America, and global head of BPO for 3i Infotech.

Ordinarily, I ask for your opinion at the end of these posts. Don't bother -- I already know.

High-dollar transactions moving to p-cards

By Mark Brousseau

Purchasing card (p-card) volume growth remains strong, Aaron L. Bills, founder and chief operating officer of 3 Delta Systems said this morning during a wide-ranging interview at NACHA Payments in Austin, Texas. “We never saw a slow down as a result of the recession,” Bills said. 3 Delta Systems expects to build on this growth with the release today of a new scalable platform that can handle any payment.

As evidence of the growth of p-cards, Bills points to a milestone that his company reached last month: for time, 3 Delta Systems processed over 1 million p-card transactions, representing more than $1 billion in value, in a single month.

“Part of this growth is the fact the economy is coming back, but the major driver is the increased use of buyer-initiated payments in accounts payables,” Bills said.

For instance, one 3 Delta Systems customer, a healthcare supplies firm, processed $11 million in p-card payments in March, representing just 11 transactions, he said. “And it would have only been two p-card transactions if the company’s payments processor could handle transactions of more than $1 million each,” Bills added.

“This may be an extreme case, but there are versions of this story unfolding all over the place. P-cards are really starting to step up,” Bills said. “P-cards are picking up a greater share of business-to-business transactions at more organizations.”

Bills said he isn’t surprised by the growth of p-cards, given their maturity. “P-cards are established, they are ubiquitous, there is a financial infrastructure in place, and all of the parties understand the rules,” he said. What’s more, merchants are willing to accept p-cards, “as long as they are not getting a 4 percent haircut,” Bills noted.

“From the point of view of the companies using p-cards, they earn a revenue share for every purchase that they make,” said Daniel L. Miner, CTP, general manager, Treasury Services, 3 Delta Systems. “At a time when money is tight for most companies, p-cards provide an opportunity to turn a cost center into a revenue-generating cost center. We’ve seen a lot of companies jump on this concept.”

Miner notes that financial institutions are helping to drive p-card volume growth. “There’s an incentive for issuing banks to get p-cards out there. They are looking for alternatives to consumer cards,” Miner explained. “We’re seeing more banks talking to their corporate customers about moving p-cards to the next level to earn a greater revenue share, and the corporates are responding.”

What do you think?

Are we approaching the "tipping point" for ebill usage?

Posted by Mark Brousseau

When will eBills be more widely used than traditional paper bills? A recent study suggests it might only be five years down the road.

The study conducted by NACHA’s Council for Electronic Billing and Payment (CEBP) and PayItGreen suggests that eBilling – or the electronic delivery of a bill to a customer – is gaining momentum across business industries with more billers expected to come online in 2011 and 2012. The NACHA CEBP and PayItGreen study, completed by Blueflame Consulting in January 2011, quantified the size of the eBill market, indicating that a total of 5.1 billion eBills were delivered in 2010 alone. However, some consumers are moving to adopt eBills more slowly than anticipated.

“After easily converting the ‘early adopters’ to eBills, billers are realizing that the second and third tiers of consumers will take more time to convince,” said Ed Bachelder, director of research for Blueflame Consulting. “However, billers across a broadening range of markets and sizes see eBill adoption as an important program for their companies, and have shown commitment to continuing to try to convert their customers.”

Nine of 10 of the companies surveyed rate eBill adoption to be a significant opportunity for their organizations. Cost-savings serves as a major driver for companies, with projected savings falling between 40 and 50 cents per bill. Another motivating factor, billers also said eBill customers are more satisfied customers and are easier to retain. Collectively, participants in the study distribute 735 million bills in a typical month, which is approximately 25 percent of all bills nationwide.

“eBills have not reached their full potential, but they’re gaining momentum,” said Janet O. Estep, president and CEO of NACHA — The Electronic Payments Association. “With companies’ long-term commitment to converting their customers to electronic bill presentment, we see adoption gaining momentum.”

Of those surveyed, universities had the most successful eBilling programs by far. Most universities can mandate eBilling for their students or use a customer opt-out approach rather than an opt-in approach.

“Most billers ask their customers to opt-in to the eBilling program,” said Bachelder. “Companies could increase their eBill participation dramatically by changing their new customer enrollment to an opt-out approach. Our study suggests that only 10 percent of customers who have Internet access would choose to opt-out once they experienced eBilling. Study participants identified one obstacle to eBilling is that the sign-up process is often too time-consuming for customers. An opt-out program would simplify that step.”

Participants in the study agree that more customer education is needed about how eBilling works, the security involved, and how significant paper reduction is to improving the environment.

“Once customers truly understand eBilling, they respond positively for a number of reasons,” said Estep. “Convenience is key, and environmental messaging continues to be a supporting motivator for eBill adoption.”

What do you think?

New NACHA rule will streamline remittance processing

By Mark Brousseau

Hoping to make automated clearing house (ACH) processing more appealing to businesses – especially smaller ones – NACHA is doing away with its outdated opt-out provisions for Accounts Receivable Check (ARC) Conversion and Back Office Conversion (BOC) transactions.

The new rules, which will be effective March 18, reverse a longstanding policy that requires billers and merchants to let consumers choose not to have their checks converted to electronic debits. Merchants and billers will still have to give notice to customers that their checks will be converted.

NACHA sees the rules change as particularly important as smaller merchants and billers look at adopting ACH payments as an alternative to remote deposit capture (RDC), which allows businesses to create images of checks and deposit them electronically to a financial institution.

With ARC, billers are able to convert paper checks they receive from consumers at designated lockboxes into electronic transactions. With BOC, merchants can batch consumer checks throughout the day and convert them later—typically, in a back office rather than at the point of sale—into electronic debits. While ARC and BOC opt-out rates have been marginal, typically running well under 1 percent of all consumers, the handling of these exception items was a big hassle for billers.

“This is a step in the right direction for businesses,” says US Dataworks Product Manager Leilani Doyle. “Businesses no longer are required to offer opt-out indicators on their remittance documents or worry about honoring an opt-out provision, if they don’t want to. This simplifies remittance processing. But the fact is, a miniscule number of opt-outs have been requested since the ARC rule was introduced. And, consumers are only becoming more comfortable with electronic payments.”

What do you think?

Information, Please!

Posted by Mark Brousseau

After years of discussion, plans to expand the Automated Clearing House (ACH) Network to facilitate the electronic transfer of supplemental remittance information may finally gain traction.

Initiatives to use the ACH rails to transfer information associated with business-to-business payments and healthcare payments were among the hottest topics at WesPay's Payments Symposium this week at the Renaissance Hotel in Long Beach, California, notes Leilani Doyle (ldoyle@usdataworks.com), product manager at US Dataworks (www.usdataworks.com), a Houston-based solutions provider.

"The ACH Network has proven to be a stable and successful payments channel," Doyle explains. "But as electronic transactions continue to gain acceptance, it is clear that the ACH Network needs to be expanded to more efficiently carry remittance information, as well as payment instructions."

Doyle notes that several initiatives already are underway to allow information to be passed along with payment instructions. The most notable effort is the new International ACH Transaction (IAT) format. "It was necessary for OFAC [Office of Foreign Assets Control] reporting that international payments include enough information with ACH transactions for proper screening. To accomplish this, addenda records were added to accommodate the required information," Doyle explains.

Now, NACHA is extending this concept to business-to-business payments, hoping to eliminate one of the largest remaining obstacles in electronifying business checks: the need to communicate remittance information. "This is not a new concept," Doyle says. "NACHA's CTX [Corporate Trade Exchange] format was a start. But the ANSI standards it relies on are too complex to be effectively used by mid-sized businesses." As an alternative, a plan is under consideration to combine standardized addenda records with XML tags that could be interpreted by both sending and receiving ACH systems. "This approach may be a real solution to the B2B ACH trade payments problem."

Another big opportunity for an expanded ACH Network lies in the healthcare space. "Imagine an ACH standard record format that allows EOB [explanation of benefits] information to be linked from within the payment," Doyle says. "Using this approach, there would be no need to send all of the EOB information around on the ACH rails. Instead, an addenda record would provide secure and specific access to EOB information in an XML format," Doyle explains, adding that this "simple and extensible" solution is designed with the healthcare market's fast-changing requirements in mind.

NACHA is hardly standing still as it puts the finishing touches on its information initiatives. The organization introduced Secure Vault, a payment system that allows consumers to pay for goods and services over the Internet, without disclosing their bank account information. "The Secure Vault payment method connects directly to a bank's online banking application where the customer enters their ID and password, and money is then transferred to the merchant using the ACH Network," Doyle says. After a lengthy pilot, Secure Vault is now "ready for primetime," Doyle says. "The Secure Vault concept is sound, but only time will tell whether the adoption rate is high enough for it to become as ubiquitous as credit card and e-check payments for Internet transactions," Doyle adds.

What do you think?

WEB payments up, unauthorized transactions down

Posted by Mark Brousseau

Companies experienced cost savings in 2009 as people switched to lower cost ACH bill payments and companies spent less time managing unauthorized debits.

WEB bill payments (ACH payments initiated at the billing company's website) grew 9.7% in 2009 vs. 2008 and unauthorized WEB debits decreased 13% down to 0.04%.

One utility company in Florida continued their strong growth in 2009. However, this utility company has not always grown their electronic payments at impressive rates. Looking back to 2004, the utility's electronic payment adoption rate was well below industry average. The utility company substantially increased their electronic payment options and integrated the entire payment process resulting in a tripling of their electronic payment adoption rate.

Source: NACHA, April 7, 2010

TAWPI @ NACHA Payments

today Magazine Editor Mark Brousseau looks on as J&B Software's Mike Packer demonstrates the vendor's Mobile Deposit solution at NACHA's Payments 2010 at the Washington State Convention Center in Seattle.

TAWPI @ NACHA Payments

Posted by Mark Brousseau

Mike Packer of J&B Software (pictured) demonstrates the vendor’s Mobile Deposit solution yesterday at NACHA’s Payments 2010 at the Washington State Convention Center in Seattle. The solution, developed by Mitek Systems and incorporating J&B Software’s workflow and check clearing capabilities, enables users to make remote check deposits using mobile smartphones.

“Mobile Deposit makes a lot of sense for companies that don’t have a lot of check volume, such as a business with five to six checks a week,” Packer says, adding that J&B Software would fall into that category since it receives most of its payments electronically. “Banks have been slow to move on this,” he says, noting the vendor has several pilots underway among its customers. “But in five to six months, we expect to have significantly more conversations on Mobile Deposit as bank IT budgets begin to loosen up. SaaS will help adoption by making it easier for banks to set-up mobile deposit.”

Packer says the vendor’s recently introduced SaaS delivery model for Mobile Deposit was generating a lot of interest at Payments 2010. The SaaS delivery model eliminates barriers to entry, allowing organizations to quickly adopt mobile deposit with minimal up-front cost and setup requirements, Packer says. “SaaS extends mobile deposit to millions of potential new users,” Packer says, noting Mobile Deposit is targeted to banks, brokerages, retailers, insurers, consumers and freight companies.

The solution captures check images through a mobile smartphone and prepares them for transmission to the financial institution as Check 21-compliant images using Mitek's mobile IMagePROVE technology. For security purposes, a complete audit trail of where, when and how each check was captured is logged. No data or images are stored on the smartphone, Packer says, and all communication is 128-bit encrypted.

TAWPI @ NACHA Payments

Posted by Mark Brousseau

William Buser, director of sales, Pertech Resources, says he spoke with a “fair amount” of financial institutions at NACHA’s Payments 2010 at the Washington State Convention Center in Seattle that were interested in teller capture solutions. In the short time I was in the Pertech Resources booth, a number of prospects stopped by, as well as an analyst for a top financial services research firm.

“Some solutions vendors are saying that teller and back-counter branch capture are dead,” Buser says. “But many financial institutions, particularly smaller ones, still aren’t doing either one. What’s really happening is that financial institutions are telling these vendors they aren’t going to purchase a big, expensive batch-feed scanner for the branch. And we’re saying that they don’t have to.”

At Payments 2010, Pertech Resources was demonstrating a new compact workstation (pictured with Buser) for teller and branch capture that costs a fraction of the price of batch-feed scanners, and has the ability to swipe any magnetic card, including credit and debit cards. The workstation already is interfaced to a number of core processing solutions, including Fiserv, Jack Henry & Associates, and FIS, and soon Pertech anticipates that a core processing vendor will offer scanning software as part of a package for the workstation (meantime Pertech Resources offers it own). In addition, Buser says Pertech Resources plans to offer a software package for the device to read drivers licenses or healthcare cards.

The bottom line: “Teller and branch capture is alive and well if you have the right solution,” Buser says.

TAWPI @ NACHA Payments

R. Edwin Pearce (pictured, far left) and Dax French (far right), both of eGistics, Inc., greet employees of SunTrust this afternoon at NACHA's Payments 2010 at the Washington State Convention Center in Seattle.

TAWPI @ NACHA Payments

Ed Bachelder, director of research, BlueFlame Consulting, reads the latest issue of his favorite magazine this afternoon at NACHA's Payments 2010 at the Washington State Convention Center in Seattle.

TAWPI @ NACHA Payments

today Magazine Editor Mark Brousseau celebrates his birthday over lunch at the Cheesecake Factory during NACHA's Payments 2010 at the Washington State Convention Center in Seattle.

TAWPI @ NACHA Payments

Rick Krauss, ICP, associate consultant, accounts services in Dallas, Allstate Insurance Company, reads the latest issue of his favorite magazine this afternoon at NACHA's Payments 2010 at the Washington State Convention Center in Seattle.

TAWPI @ NACHA Payments

J.P. Morgan’s Treasury Services business continues to be the industry leader in ACH payments origination volume. J.P. Morgan was ranked first in ACH payments origination for 2009, according to NACHA, The Electronic Payments Association.

“J.P. Morgan’s commitment to quality has set the stage for our continued stability and our capacity to successfully support clients amidst the financial turmoil of the past year,” stated Pat Thelen, executive director, J.P. Morgan Treasury Services. “We are constantly challenging ourselves to improve efficiency, which enables us to help our clients further streamline their payment processes.”

J.P. Morgan continued its online payment growth in 2009, achieving an increase of 16 percent over the previous year. “This growth in electronic payments is a result of the increase in online payment transactions,” explained Thelen. “As consumers and small businesses increasingly adopt online banking tools that deliver a convenient, secure, electronic means of making payments, J.P. Morgan is helping clients manage these rising online banking volumes efficiently. While we continue to enable consumers to make payments electronically through Chase.com, we are similarly helping billers manage the accounts receivable process with products such as eLockbox. We support the entire electronic payments cycle for our clients.”

TAWPI @ NACHA Payments

Posted by Mark Brousseau

Today’s announcement that NACHA was bringing its long-awaited Electronic Billing Information Delivery Service (EBIDS) to market got me wondering whether NACHA was planning to leverage a similar concept to address inefficiencies with health payments. After all, the attributes of the ACH Network that NACHA President and CEO Janet O. Estep cited as key differentiators for electronic bill payment and presentment – ubiquity, efficiency, security and the ability to pass information and payments across the network – also would prove valuable in the healthcare payments space.

“Your intuition is correct,” Estep told me during an exclusive interview at NACHA’s Payments 2010 event at the Washington State Convention Center in Seattle. “Healthcare payments have many attributes that are addressed by the ACH Network: There is a lot of information that must accompany payments. There are a lot of parties involved. And there is a need for security. There are standards available today within the ACH Network that can help transport health payments in a secure way.”

While NACHA has not had conversations with healthcare organizations, Estep said, “NACHA has engaged in conversations with a lot of direct financial institution members as healthcare payments have become a more important issue. We also have spoken with legislators and other rule-making bodies in healthcare. We even created a very small page on the NACHA Web site on healthcare payments. We’re going to continue this dialogue in the next year or so and see where it leads.”

TAWPI @ NACHA Payments

Posted by Mark Brousseau

During a luncheon presentation for journalists at its Payments conference in Seattle, NACHA shared some key takeaways from its PayItGreen Survey 2010:

Less paper equals less unhappiness!
• Respondents expressing lower levels of satisfaction with primary bank or credit union also report lower “electronic only” rates for key financial institution accounts
• This overall finding extends to billers as well
• Proportion of dissatisfied/neutral customers doubles as ‘electronic’ behavior decreases

In billing, minimalism is everything
• Focus on eliminating clutter, reducing paper waste and easy access to statements

For bill payment, expediency is the bottom-line
• Reduction of time and effort emerges as the primary driver

Don’t rule out the opt-out, because most consumers are OK with it
• 6 out of 10 respondents are open/neutral to billers/banks shutting off paper statements automatically

“Double-dipping” – when consumers receive a bill via paper and electronically – occurs more than twice as often with financial services accounts compared to other billers

Among various types of financial accounts, checking and card accounts leads in paperless while others lag farther behind
• Accounts such as investments, lending and insurance have lower rates of paperless

In general, financial services companies lag their non-financial services billers in getting customers to go paperless
• Some sectors such as utilities need particular attention (perhaps bankers can help their corporate clients!)

Providers can improve paperless behavior with particular site or product changes
• Make higher mention of trying to sign up online but finding the process to be too complicated
• Are twice as likely to not trust their provider’s web site
• Worry over not having access to archived statements as well as a need to be in control over finances

What do you think?

TAWPI @ NACHA Payments

Posted by Mark Brousseau

Fiserv is teaming with MoneyGram International to enable consumers to pay a wide variety of household bills through financial institution websites the same day they are due.

Consumers who pay bills at one of the more than 3,100 financial institutions that use the CheckFree RXP online payment service, which includes 23 of the top 50 financial institutions in the United States, will have access to the integrated same day payment option. Initially, bills from more than 100 well-known national and regional companies will be available for same day payment, with the potential to add more than 1,000 additional bills based on consumer demand. Fiserv will utilize MoneyGram's direct connections with billing companies to deliver the payments.

The bills that will be available for same day payment represent those most common to U.S. households, including auto, mortgage, credit card, utility and mobile phone bills.

Consumers will be able to select same day delivery as part of the normal payment scheduling process, ensuring an uninterrupted user experience at the financial institution website. The expedited payment option will be integrated seamlessly for the user through a drop down menu, and will only appear if a bill is eligible for same day payment.

"Other same day payment offerings currently in the market have suffered from low adoption due to a small number of available bills and a lack of integration into the existing online payment process," said Todd Lesher, division president, Electronic Banking Services, Fiserv. "Financial institutions can now address these issues by taking advantage of the combined Fiserv and MoneyGram networks to offer a substantial number of bills through a same day payment option that is built into the online payment flow. Offering expedited payments for multiple bills at one website is another way financial institutions can enhance convenience and maintain their position at the center of consumers' financial lives."

"Our partnership with Fiserv will enable consumers who pay bills through financial institutions to now also make same day urgent bill payments to the many billers in our extensive network through Fiserv's leading online bill payment service," said Dan O'Malley, MoneyGram EVP, Americas. "This partnership is a great complement to the other payment choices MoneyGram already provides to consumers at our more than 40,000 agent locations in the U.S."

The same-day expedited bill payment option is expected to be available to the more than 3,100 financial institutions that use the CheckFree RXP online bill payment service in the second half of 2010.