Full text of News from FedACH : Vol. 2, No. 3, September 2005

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f e d a c h n e w s @ a t l . f r b. o r g

News from

VOL. 2, NO. 3, SEPTEMBER 2005

FedACH

The Financial Services logo, “FedACH,”
“FedACH International,” and “FedLine” are
either registered or unregistered trademarks
or service marks of the Federal Reserve Banks.

Q&A: ANDREW J. McDEVITT

DIRECTO A MÉXICO

5

2

The American Payroll Association
and Direct Deposit

NEWS KIOSK
AAP EXAM TIPS
WHAT’S COMING UP

Promotional campaign launched

3
3
4

CUSTOMER IN THE SPOTLIGHT

BankAtlantic
Convenience and Service
that ‘Wow’ Customers
eginning with just a single office in Fort
Lauderdale in 1952, BankAtlantic is
now one of Florida’s oldest and largest
financial institutions. With 78 stores—the
term BankAtlantic uses when referring to its
locations—throughout Florida, BankAtlantic
prides itself on being “Florida’s Most Convenient Bank.” As the only Florida bank open
seven days a week (with some locations open
until midnight) BankAtlantic knows how to
provide customers with exceptional service
and a unique customer experience each
time they enter one of its stores. Much evidence confirms the success of this approach.
BankAtlantic recently announced that it had
opened more than 500,000 new checking and
savings accounts since January 2002.
When we talked with Tony Gautney,
senior vice president and manager of relationship sales support at BankAtlantic,
he explained that this unique customer
experience might best be compared to the

B

experience one has when walking into his
or her favorite coffee shop fully expecting
exceptional customer service.

Finding Its Niche
With 25 years’ experience in cash management, Gautney started BankAtlantic’s cash
management services in 1998 and acknowledges that BankAtlantic’s core remains its
small and micro-business customers. With
that understanding, the approach has been
to provide cash management products similar
to those of the largest banks but with that
“down-home, intimate touch of a community
bank.” With convenience as a cornerstone of
the institution, BankAtlantic makes its cash
management products available through an
Internet-based solution known as CashLink
Web. The application provides corporate customers with a number of cash management products. Naturally, key among these
products is ACH origination supporting a
News from FedACH | 1

variety of applications or payment types
including direct deposit of payroll, preauthorized bill payments, cash concentration
and disbursement, state and federal tax payments (EFTPS), and child support payments.
BankAtlantic serves as the Originating
Depository Financial Institution for approximately 325 business customers, and that
business is constantly growing. While
BankAtlantic sees the value in providing
ACH origination capabilities to its customers,
the institution never loses sight of the
importance of closely monitoring this business and the customers it serves. As Gautney
explained, BankAtlantic has a formal credit
policy for ACH originators, reviews each
customer before agreeing to provide ACH
services, and even establishes debit and
credit limits for originators. “We believe
firmly that what we have uniquely as a
banking franchise is access to the payments
system. We feel obligated to do things around

CUSTOMER IN THE SPOTLIGHT
that access. We’re facilitating our business
customers’ access to the payments system,
but only in an environment that’s secure
for both of us.”

The Value Proposition
BankAtlantic’s support of ACH is evident
when Gautney says, “We understand the value
proposition of electronifying payments—
many providers charge much the same price
for electronic and paper transactions, and in
some cases the price for electronic payments
is higher. That’s quite amazing. We encourage
electronic transactions by making them
affordable for businesses—that’s just part of
our strategy.”
To effectively serve the needs of its customers, both business and retail, BankAtlantic
conducts an annual evaluation of its product
offerings to determine additional products
that might be needed. Once the decision
is made to offer a new product, BankAtlantic
works to quickly roll out that product and its
benefits. One example of this nimble reaction to customer needs is the development of
a Convenient Switch Kit, designed to provide
new customers with all the tools they need
to switch existing Direct Deposit and Direct
Payment arrangements from an existing
account to a new BankAtlantic account.

More recently, BankAtlantic embarked on a
project to become a processor for Mastercard
Remote Payment and Presentment Service
(RPPS), initially serving as its own concentrator for loan payments. According to
Gautney, the goal is to build on that experience and eventually become a concentrator

“We’re facilitating our
business customers’
access to the payments
system, but only in an
environment that’s
secure for both of us.”

for BankAtlantic’s lockbox customers. Recognizing that many consumer bill payments
are shifting from lockboxes to online bill
payment arrangements, BankAtlantic plans
to offer its corporate customers a service that
will bring the two payment types together
for processing.

Innovative Approaches
Another way BankAtlantic assists its
corporate customers in efforts to promote
ACH transactions is through its Perks@Work
program. This program provides a total
and complete solution for corporate customers as well as their retail customers.
Through Perks@Work, employers are able
to promote Direct Deposit of payroll and
other banking benefits to employees using
tools provided by BankAtlantic. As part of the
recently announced partnership between
BankAtlantic and the Florida Panthers
hockey team, Gautney plans to promote
Direct Deposit to that organization and
its employees through Perks@Work. As
the “Official Bank of the Florida Panthers,”
BankAtlantic will have new opportunities
to promote its products and services at
the sports venue nightly, expanding its
reach to Panthers fans.
Whether promoting ACH services at a
hockey game or in one of its south Florida
stores, it is evident that BankAtlantic’s
strategy of enhancing the convenience and
efficiency of doing business with “Florida’s
Most Convenient Bank” is working. Consider
us wowed!

Directo a México
The Banco de México and the Retail Payments Office (RPO) of the Federal Reserve
Banks have developed a promotional campaign to foster consumer awareness of banked
remittances and the FedACH InternationalSM
Mexico Service. The name of the campaign,
Directo a México, literally means “Direct to
Mexico” and is intended to better communicate the product’s features to the service’s
end users.
The Banco de México and the RPO have
jointly created promotional materials that
are available to depository financial institutions. Banks can use these materials to

promote Directo a México as a product available to their consumer customers.
Beginning September 2005, FedACH customers already using the FedACH International Mexico Service will receive a free
promotional kit. The kit contains electronic
files of Spanish-language materials that the
institution can brand with its logo, name,
and address. Kits include a brochure, poster,
lobby/tent card, and text of a 30-second
radio spot. The kit also includes a guide to
promoting Directo a México as well as a
comprehensive overview of the remittance
market in Mexico.
News from FedACH | 2

For more information on Directo a México,
please contact your local FedACH® sales
specialist.

$

Directo a México is a service mark of the Federal Reserve Banks
and the Banco de México.

NEWS KIOSK

FedACH SALES SPECIALISTS
Each of these regional account executives is an ACH resource expert
and is dedicated to helping customers find just the right FedACH solution.
We encourage you to contact the sales specialist for your district.

Beginning September 18, 2005, subscribers to FedACH
·Information
Services will have access to an expanded
database of ACH items. The item database will increase
from 60 calendar days to 60 business days, meaning that
FedACH customers can research older ACH items. In
addition, returns and notifications of change (NOCs) can
now be derived from items received during the previous
60 business days.

·

As of September 30, 2006, customers will no longer be
able to access FedACH Services via DOS-based FedLine®.
Prior to that date, all FedACH customers will be converted to either the FedLine Web or FedLine AdvantageSM
access solutions. Those customers completing their conversions to either access solution by March 2006 will
avoid price increases for DOS-based FedLine access. If
your institution has not yet scheduled its conversion,
or if you have questions about either access solution,
contact your local FedACH sales specialist.
As FedACH customers convert from DOS-based
·FedLine,
they will now have three means of handling
Treasury reclamations older than 60 business days. These
three options are available: (1) use a vendor software
package with the functionality needed to process the
aged items; (2) send payment via check to the respective Disbursing Office; or, (3) send a paper request to
the appropriate FedACH Central Operations Support
site for processing. For those customers choosing option
3, the $15 fee normally charged for paper returns will
be waived.
A dozen banks are testing the Fed’s risk origination
·monitoring
service that lets ODFIs set debit and credit
caps at the batch level. Caps can be applied for one or
more company IDs across the ODFI’s entire ACH origination. Phase 1 will run through January 2006. The risk
service will be available to all ODFIs by February 2006.
For more information about the pilot or features of the
service, please contact your FedACH sales specialist.

Atlanta

Nedelka Bell

305.471.6472

Boston

Jean Fisher, AAP

617.973.3218

Chicago

Michael Cronkhite

312.322.2145

Cleveland/St. Louis

Susan Bivens

901.579.2405

Dallas

Matt Davies, AAP

214.922.5259

Kansas City

Joni Hopkins, AAP

620.221.2712

Minneapolis

Marilyn Coleman

612.204.6964

New York

Thomas Goodman

201.531.3637

Philadelphia

Carol Chartrand, AAP

215.574.3414

Richmond

Della Tate, CTP

410.576.3384

San Francisco

Dorothy Williams, AAP

801.322.7948

AAP EXAM TIPS

October 18, 2005 is coming soon. Do you know...

What an 820 or an 835 Transaction Set is

??
The four types of ACH risk

The deadline for submitting a report of a possible ACH rules violation
Authorization and notification requirements for various SEC codes
Who can originate a Death Notification Entry

The timeframes for returns, dishonored returns and contested
dishonored returns
The disclosure requirements of Regulation E

Whether numeric fields within an ACH file must be right justified
or left justified
For which SEC codes are addenda records mandatory

The retention requirements for the source document of an ARC entry

News from FedACH | 3

WHAT’S COMING UP
OCTOBER 2005

NOVEMBER 2005

®

The AFP Annual Conference
October 9–12, 2005
San Antonio, TX
www.afponline.org

Institute of International Payments
Nov. 29–Dec. 2, 2005
Atlanta, GA
www.nacha.org

UMACHA’s Navigating Payments 2005
October 13–14, 2005
Brooklyn Park, MN
www.umacha.org

DECEMBER 2005
ALACHA’s 15th Annual Corporate ACH Conference
December 1, 2005
Birmingham, AL
www.alacha.org

Mid-America Payments Conference 2005
Making Payment Systems Understandable
October 24–26, 2005
St. Louis, MO
www.mpx.org

JANUARY 2006
NACHA’s Global Electronic Payments Conference
Understanding Market Variables & Opportunities for
Future Success on the International Stage
January 16–17, 2006
Rome, Italy
www.nacha.org

SWACHA’s Brave New Frontiers
in Electronic Payments
October 26–27, 2005
Irving, TX
www.swacha.org

BECOME A FINANCIAL SUPERHERO
FedACH Information Services can turn you into a financial superhero and help you put your FedACH powers to
work for your organization. Now you can navigate a sea of data in a single click and produce reports on the fly.
Sounds incredible, right? When you subscribe to FedACH Information Services, you can harness the information you
need when you need it.
With FedACH Information Services, you are able to instantly track, research, and account for your FedACH
activity as well as derive returns and NOCs using a database containing the last 60 business days of ACH items.
Visit www.frbservices.org at any time to attend a free, informational online seminar that will show you how
various areas within your organization can benefit from FedACH Information Services. Find out how other depository financial institutions have been empowered, and see how you can begin to take advantage of the functionality
available to FedACH Information Services subscribers.
To sign up for access to FedACH Information Services via FedLine Web, contact your local FedACH sales specialist soon. And one last
thing—you’ll have to buy your own cape.

CUSTOMER SUPPORT INFORMATION
For FedACH Customers
in these Districts
Boston (1)
New York (2)
Philadelphia (3)
Cleveland (4)
Richmond (5)
Atlanta (6)
Chicago (7)

Central Operations
Support Site
Federal Reserve Bank
of Atlanta
1000 Peachtree Street, N.E.
Atlanta, GA 30309-4470
Toll Free: 866.234.5681
Local: 404.498.8902

For FedACH Customers
in these Districts

Central Operations
Support Site

St. Louis (8)
Minneapolis (9)
Kansas City (10)
Dallas (11)
San Francisco (12)

Federal Reserve Bank
of Minneapolis
90 Hennepin Avenue
P.O. Box 291
Minneapolis, MN 55480-0291
Toll Free: 888.883.2180
Local: 612.204.5555

News from FedACH | 4

Question and Answer
American Payroll Association
How would you describe the membership of the
APA? We have more than 22,000 members, the
majority of whom work within the payroll departments of mid-size to large employers. Our membership also includes employees of payroll service
providers and software vendors.

As manager of government
relations for the American
Payroll Association (APA),
Andrew J. McDevitt recently
shared with us his thoughts
about Direct Deposit. He
shares the perspective of
payroll administrators, a
group of professionals well
represented by the APA.
McDevitt has been with the
APA for two years, having
previously worked for a
payroll service provider in
California. He is responsible for monitoring payments issues such as
Direct Deposit and payroll
cards as well as child support payments made by
wage garnishment, wage
and hour laws, data privacy
and security, and immigration laws and regulations.
While the APA stakes its
claim as the nation’s leader
in payroll education for over
20 years, McDevitt has his
own claim to fame—he has
visited every state capital
except for Juneau, Alaska,
and every U.S. territory but
American Samoa.

How does the APA encourage adoption of Direct
Deposit among its members? The majority of our
members already offer Direct Deposit, so this isn’t a
challenge. We have an active ACH committee made
up of a cross-section of our membership. That committee discusses Direct Deposit and other ACH
issues and promotes the standardization of laws and
regulations nationwide. Annually, we publish The
Guide to Successful Direct Deposit, and our monthly
PAYTECH publication includes a column titled
“Direct Deposit Directions.” Also, as part of this
year’s National Payroll Week—Sept. 6–10—the
APA promoted Direct Deposit and all its benefits.
For a payroll administrator, what do you see as
the primary benefits of Direct Deposit? Payroll
professionals are busy people who want to reduce
the administrative burden associated with paper
paychecks. Direct Deposit alleviates the need to
purchase, store, and monitor check stock. There is
no need to print, mail, or otherwise distribute paper
checks, and payroll staff no longer needs to concern
itself with manual tasks surrounding replacement of
lost or stolen paychecks.
What do you find to be the single most impressive statistic surrounding Direct Deposit? There
are many statistics about Direct Deposit, but one
stands out. Based on a recent APA survey, 71 percent
of employees with access to Direct Deposit choose
to use it.
What concerns or objections might employees
have about Direct Deposit? We hear a wide variety
of responses to this question and similar ones. Some
employees do not have bank accounts. Others may
have a fear of the banking system or concerns about
privacy. And, finally, there are those employees who
just love to receive a tangible, paper paycheck.
News from FedACH | 5

How might an employer encourage acceptance
of Direct Deposit among employees who are
reluctant to try it? It can be as simple as telling
employees about the cost-saving potential for the
company. Another option is to offer employees an
enrollment incentive such as a gift card to their
favorite coffee shop. In an indirect way, payroll
cards have proven to be effective in promoting
Direct Deposit.
Can you further explain the role of payroll cards
and how they may lead to the acceptance of
Direct Deposit? Payroll cards are generally well
received because the employer deposits money into
an account linked to the card, and the employee
can use the card for purchases or ATM withdrawals.
Some employees even split their pay among multiple
payroll cards for the purpose of funding a college
student or to otherwise assign their pay. But perhaps
the most interesting effect of instituting payroll cards
has been the willingness of employees to sign up for
Direct Deposit. After all, if they are able to open an
account on their own, and their employers—within
states that allow them to mandate Direct Deposit—
give them a choice of either Direct Deposit or a payroll card, many employees opt for Direct Deposit.
Turning back to the payroll administrators, we
often hear about the challenges of using Direct
Deposit for hourly payroll processing. Would you
anticipate a positive reaction to the availability
of a same-day ACH? Our membership would be
ecstatic to hear of the availability of a same-day ACH
service. It would make Direct Deposit a feasible
option for hourly payroll. The later cutoff time for
depositing an ACH file would provide timely pay for
hourly staff and would also provide payroll administrators with the ability to adjust the payroll for an
employee who suddenly terminates employment.
Do you have any closing thoughts on Direct
Deposit? I would just say that payroll professionals
are very interested in electronic payments, especially Direct Deposit, and are looking for ways to
promote their use. They share an appreciation of
the cost savings and other benefits of Direct Deposit.

FedACH SERVICES PERFORMANCE MEASURES

HELPFUL HINTS

Year-to-Date through 2nd quarter 2005

Did you know that FedACH Information Services via FedLine
Web or via FedLine Advantage provides a quick and easy way to
access information on the status of your originated files? As a subscriber, you can quickly get a snapshot of your input files. Information is available as soon as a file completes processing, and you
have real-time access to important and useful data. Files, batches,
or items requiring your attention can be easily identified and
accessed through powerful links to detailed information. This
detailed information allows you to pinpoint errors via our “ACH
Ruler,” which displays the specific record generating the error condition along with a detailed description to help you resolve the
error. You can print or download this information for audit purposes.
If you have any questions about FedACH Information Services,
please contact your FedACH sales specialist.

Performance

Quality Measure

99.86 %

Transaction files processed and available timely

99.98%

ACH service availability (uptime)

100%

Online transaction files processed and delivered
electronically by the scheduled delivery times

Percentage of time FedACH service was available

Research and trace requests resolved timely
Accounting and billing research requests and trace
requests concerning ACH items or files responded to
within 24 hours

FedACH Volume Statistics

Volume
(000)

Dollar Value
(000,000)

Commercial Forward
Value Items Originated

3,567,471

$6,243,497

Government Forward
Value Items Originated

502,462

$1,606,689

Commercial Return
Items Originated

45,800

$24,343

Government Return
Items Originated

3,905

$4,339

51,344

N /A

4,170,982

$7,878,868

Total Commercial and
Government Non-Value
Items Originated
(includes NOCs, DNEs, ENRs,
prenotes and zero-dollar entries)

Total Items Originated

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