Transcript Allstate Insurance Payment Strategies

Utility Payment Conference
September 19, 2011
Amanda Johnson
Utility Payment Conference
• Payments
• Tenders
• Terms
• Acronyms
•
Organizations and Associations
•
Regulations
Federal
Reserve
NACHA
• Central Bank system
• Created in 1913
• Private bank system:
 President appointed
Board of Governors
 Federal Open Market
Committee
 12 regional Banks
 Member banks
 Advisory councils
NACHA-The Electronic Payments Association
(formerly known as the National Automated Clearing House)
• Not-for-profit association
• Direct memberships represented by more than 11,000
financial institutions
 Network of regional payments associations, and 650
organizations through its industry councils
• Develops operating rules and business practices for:
 ACH - Automated Clearing House Network
 EBPP - Electronic Bill Presentment and Payments
 EIPP - Electronic Bill and Invoice Presentment and
Payment
 EDI - Electronic Data Interchange Payments
 EBS - Electronic Benefits Services
Red Flag
Regulation
E
• Issued by the Board of Governors of the Federal
Reserve System
• Implemented in 1978
• Governs electronic fund transfers from a consumer’s
account
• Protects consumers’ rights and sets limits on consumer
liability for unauthorized payments
• Imposes specific obligations to billers for recurring
payments
Indicators
A pattern, practice,
or specific activity
that indicates the
possible existence
of identify theft
1. Alerts, notifications or warnings
from consumer reporting agent
2. Suspicious documents
3. Unusual use of or suspicious
activity related to a covered account
4. Suspicious personal identifying
information
1. IDENTIFY
2. DETECT
Relevant patterns,
practices and specific
forms of identifying
possible red flags
Red flags that
have been
incorporated into
the program
3. RESPOND
4. UPDATE
Program
Appropriately to
periodically to
any RED FLAG(s)
capture lessons
detected
learned and
changes in risks
Your program must be reasonable
For additional information go to: www.ftc.gov/redflagsrule
• The ACH network is a highly reliable and efficient nationwide
batch-oriented electronic funds transfer system
• Governed by the NACHA operating rules
• Provides for the inter-bank clearing of electronic payments for
participating depository financial institutions
• The ACH network can be used to send either debits (payments) or
credits (refunds)
• A credit sends funds to a Receiver’s account
• A debit takes funds from a Receiver’s account

Originator: Company /individual initiating an ACH transaction
according to Receiver agreement

Originating Depository Financial Institution (ODFI): Financial
institution transmitting ACH files for the Originator into the ACH
Network

ACH Operator: Central clearing facility operated by a private
organization or Federal Reserve Bank for participating financial
institutions, to or from which financial institutions transmit or receive
ACH entries.

Receiver: A person or organization that has authorized the
Originator to initiate an ACH entry (debit or credit) to the
Receiver's account with the RDFI.

Receiving Depository Financial Institution (RDFI):
Financial institution that receives ACH entries from the ACH
Operator and posts the entries to the accounts of the
depositors (Receivers).

Third-Party Processors: Processors that participate
between any relationship within the ACH processing flow
(i.e., correspondents, sending-point processors or payroll
processors).
Each type/method of payment in the ACH “world” has its
own rules and guidelines.
These are determined by the SEC (Standard Entry
Code) used in the payment file.
Commonly used SEC codes
 ARC – Accounts Receivable Conversion (mail)
 BOC – Back Office Conversion
 POP – Point-of-Purchase; Includes check serial number
 TEL – Telephone
 WEB – Internet
 PPD – Pre-authorized Payment and Deposit (auto draft)
 RCK – Return Check
 RDFI – Receiving Depository Financial Institution
 ODFI – Originating Depository Financial Institution
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ARC – Mail-in payments
Check 21 – Mail in payments
POP – Walk-up Retail Locations
TEL – IVR (Credit or debit card/Check) Payments
WEB – E-Lock box (Consolidators)
PPD and CCD – EFT – Auto Pay
CTX – EDI 820’s
Accounts Receivable Check (ARC); lock box/drop box
received eligible consumer checks can be converted into
electronic debits and processed through the ACH network.
 Checks drawn on consumer accounts payable in U.S.
dollars are eligible for ARC conversion.
 Checks are machine read to capture the Magnetic Ink
Character Recognition (MICR) information routing
number, account number and check serial number
along the bottom of the check.
 The data elements, along with the check amount, are
used to create an ACH record. Typically, the billers
bank account is credited the next business day.
http://www.federalreserve.gov/pubs/checkconv/#what
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Eligible checks converted to ACH debits
Controlled environment in the back-office
Authorized signature for conversion not required
Scanning equipment installation not required
Customer notification of conversion disclosed at the
register and on documents
• Checks that contain auxiliary on-us fields or those over
$25,000 are ineligible for BOC
http://www.federalreserve.gov/pubs/checkconv/#what
 Location where payment takes place
 Purchaser and seller are both present
 Information from the consumer's check is used to
create the electronic transaction
 One-time or recurring
 Should include Terms & Conditions
 Privacy statement
 Appropriate authorization language
 Receipts / confirmations delivered electronically
upon completion of payment
Can be either PPD or TEL Entry
Requires written authorization if treated as PPD
One-time or recurring for PPD
If no written authorization on file then can complete
only per TEL rules.
 This requires written receipt or tape recording
(actual oral authorization)
TEL = one-time payment
Setting up PPD Payments via IVR is complex,
normally IVR should be a TEL entry
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ACH
Authorized
Check21
Contracted
CTX
EBPP
Electronic
Check
Conversion
 IRD
 MICR
 EDI
 NOC
 Internet
 Non-contracted
payments
 IVR
 M-payments
 P2P
 Unauthorized
 E-Lockbox
 EBIDS
Corporate Trade Exchange
 The CTX payment format combines payment information
and a variable length record (called an addendum record)
 ACH format which allows for up to 9,999 addenda
records with approximately 800,000 characters
 Allows multiple payments to creditors or billers in a
single transfer of funds
The legal equivalent
of the original check
 A set of standards for structuring information
electronically
 Technical conversation between two entities,
either internal or external
 Information is the same displayed on paper
documents
 Transmission method is agreed to by the sender
and recipient
Information sent by an RDFI to notify the ODFI that previously
valid information for a receiver has become outdated or that
information contained in a pre-notification is erroneous
Used to credit or debit a consumer account.
Payroll direct deposits and preauthorized bill payments
Information sent by an RDFI to notify the ODFI that previously
valid information for a receiver has become outdated or that
information contained in a pre-notification is erroneous
A physical check that was presented and returned because of
insufficient funds may be represented as an ACH entry
Enables bills to be created, delivered and paid over the
Internet.
Multiple applications exist for many industries including
financial service providers , communications and utilities.
• Fast
• Secure
• Environmentally responsible
☎ Mobile payment (M-payment) is a point-of-sale (POS)
payment made through a mobile device; cell phone,
Smart phone or personal digital assistant (PDA)
☎ Person to person (P2P) can be a wireless or text
enabled device which can be used to pay a variety of
bills at anytime without interacting with anyone including:
 Ability to transfer monies with a mobile phone from
person-to-person (P2P)
☞ Account number and personal identification number
(PIN) for authorization purposes required
A process in which your check is used as a source of
information for the check number, your account number, and
the number that identifies your financial institution.
Transaction types include:
ARC – Accounts Receivable Conversion
BOC – Back Office Conversion
POP – Point of Purchase
Benefits
• Privacy
• Secure and Protected
• Information of descriptive statement
• Environmental
http://www.federalreserve.gov/pubs/checkconv/#what
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Passed in Oct 2004
•
Produces a digital image by scanning both sides of a
paper check
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If a paper document is needed, a photo-reduced copy
of the original checks is created (“substitute check” or
IRD (Image Replacement Document)
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Check21 is represented by:
 IRD – Image Replacement Document
 POP – Point of Purchase
http://www.federalreserve.gov/pubs/checkconv/#what
In person payment
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Authorized or unauthorized
Utility office location or 3rd party vendor relationship
Receipt issued for payment transaction
Data terminal equipment
 Kiosk – customer initiated
 Terminal – store or cashier initiated
Potential 'real-time' payment posting
An official contract/agreement with a 3rd party
payment vendor
• The vendor authorize business or retailer to accept
payments for the utility
• Cash, Check and Money Order tenders accepted
• Advertised by utility
•
No official contract or agreement with 3rd party
payment vendor
• A business or retailer who accepts biller/utility
payments without contract
• Typically only accepts cash as tender
• Usually 2 - 5 (business) day delay of payment to
biller
• Consumer funded convenience fee of $1 - $9.95
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Channels
Methods
Frequency
Mail In
Customer
Credit / Debit Card
One-Time
In Person
ACH
Scheduled
Web
eCheck
Recurring
Assisted Phone
Mobile
Check
Cash
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Are you currently looking to issue an RFP or RFI?
Are you satisfied with your service provider?
Are they providing exemplary service?
If not, what are you going to do about it?
Is it really too much effort to sever relations and/or add
another service provider?
• Do you ask questions?
• Are they licensed? Is that really important?
• Are they doing exactly what you contracted with them to
do?
Amanda Johnson
Utility Payment Conference
309-762-2854 Office (CST)
[email protected]
[email protected]
Visit the Utility Payment Conference Exhibit Hall
and learn more about the services available to
you from your current and potential service
providers