Full text of News from FedACH : Vol. 7, No. 3, December 2010

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News from

FedACH
DECEMBER 2010 I VOLUME 7 NO. 3

FAC TS &
FIG URE

3

NEWS KIOSK

6

Q&A- HEALTH CARE PAYMENTS
AND THE ACH

Account to Receiver Payments
Guide Available

CE
UR
SO
RE UIDE
G

2 NEW INTERNATIONAL SERVICE
4 WHAT’S COMING UP
4 NEW YEAR BRINGS NEW RISK SERVICES

Bank of Oklahoma
STILL LEADING THE WAY AFTER A CENTURY
OF INNOVATIVE CUSTOMER SERVICE
In 1910, a group of oilmen who needed funding for
drilling activity in the Tulsa, Okla., area founded Exchange National
Bank of Tulsa. One hundred years later, with a new name and
countless accomplishments to its credit, BOK Financial Corporation is headquartered in Tulsa and serves communities in Oklahoma
and seven surrounding states. As a financial holding company

photo of the Bank of Oklahoma in Tulsa, Oklahoma. Located in the new
Tulsa Hills shopping center on South 71st Street and Highway 75.

comprising seven main bank subsidiaries and nearly 200 banking locations in the Midwest, Southwest and Rocky Mountain

items, and the list goes on. According to Debi Briscoe and Candice

regions, BOK Financial Corporation’s assets total $24 billion. While

Williams, senior product manager and assistant vice president,

BOK Financial can trace its roots back to loaning money to those in

respectively, the bank offers a full range of ACH services to cus-

the oil industry, the holding company’s customer base has expanded

tomers large and small.

to include consumers and a variety of businesses. This diverse
customer base, partly a result of a large geographic footprint and
partly a result of an effective strategy, has sustained BOK Financial throughout the economic challenges in recent years.
One of the seven banks under the umbrella of BOK Financial

Teamwork and Training Are Essential
For Williams, who has responsibility for the bank’s ACH operations area, working closely with Briscoe and her staff in treasury
services is a critical component to managing daily operations and

Corporation is Bank of Oklahoma, the FedACH customer that was

customer service issues. Briscoe echoes that sentiment, underscor-

first to use the FedACH SameDay Service earlier this year. Looking

ing the need for treasury services to stay abreast of new ACH prod-

more closely at Bank of Oklahoma, it is not at all surprising that an

ucts as well as rules and regulatory changes in order to best serve

institution with a history of first-of-its-kind innovations was ready

the bank’s customers and to support the commercial client services

to take advantage of the first material change in ACH schedules

area that has responsibility for fielding customer inquiries.

in 35 years. With a reputation for delivering responsive customer

Key to keeping staff in each area of the bank knowledgeable and

service, Bank of Oklahoma has provided its customers with an

able to respond to inquiries are the bank’s training programs,

array of ACH products and services ranging from origination of

many of which rely upon the resources from Bank of Oklahoma’s

any SEC code to debit blocks to online reporting of incoming ACH

regional payments association, EPCOR. While EPCOR serves as a
NEWS FROM FEDACH
VOL. 7. NO 3

1

MAR KET

S

ING PLA
N

reliable source of periodic training, Williams acknowledged that,

stated, “We have to have players in the game for our customers to

“with seven AAPs on staff, and nearly 200 years of ACH experi-

originate ACH items to, and we remain confident that we will get

ence within the bank, experience allows us to handle many cus-

there.” The bank has customers who keep up with the payments
industry and who have been anticipating the availability of a same-

“Same day credits would be awesome, and
I have high hopes that we will get more
participants.”
tomer inquiries.” “But,” she continued, ”EPCOR is always there for
us, particularly when questions come up concerning more recent
ACH rules changes.”

day ACH, so the customer demand is clearly there. Thinking more
about the need for growing participation in the service, Williams
said, “Same day credits would be awesome, and I have high hopes
that we will get more participants.”

ACH Growth Is Inevitable
Bank of Oklahoma has been successful in promoting ACH
services to customers through a number of channels. With a Web

Speaking of rules changes, Briscoe confirmed the bank has a

site that provides information on various ACH product offerings,

well-documented process for deciding whether to offer origina-

existing and prospective customers have 24/7 access to informa-

tion of a particular transaction type. This process includes a close

tion on the bank’s services. Perhaps more important, though, is

analysis of any new SEC code, a thorough risk assessment, and a

Briscoe’s claim that for the treasury sales team, “ACH is one of their

review of any necessary contractual or operational changes. Also

lead products. Whenever they talk to a prospect, ACH is always

factored into the decision is customer demand for the product, as

foremost because so many people need it and want it.”

evidenced in the bank’s recent offering of mobile banking. While

The bank also sponsors internal promotions on a periodic basis

this service has been available to customers for a short time, Bris-

and offers incentives to its sales force for selling specific ACH

coe said that reception of mobile banking has been tremendous.

services. These incentive programs have proven to be quite successful for the bank’s ACH business. In considering the future of

High Hopes for Same-Day Service
Bank of Oklahoma is now hoping to see the FedACH SameDay

ACH at Bank of Oklahoma, both Briscoe and Williams expressed
their desire to see new customers and growth in volume for existing

Service thrive. When the service launched earlier this year, Williams

customers. As we have heard so many times before, Williams went

said the bank went through its usual vetting process and, after

on to say that, “As checks and other payment methods continue to

identifying no downside risks, Bank of Oklahoma signed up for and

decline, ACH volume and all electronic payments will only grow.”

used the same-day ACH service. The plan was to get an early start

Given the bank’s belief that ACH is among the easiest services

with low volume so that any minor problems could be resolved

to sell along with a commitment to identifying new ways to use the

before adding more transaction types or experiencing increased

ACH network as a benefit to customers and to Bank of Oklahoma

volumes.

itself, it seems inevitable that ACH volume will grow. Perhaps Bris-

Since signing up, the bank has kept a watchful eye on the list of

coe summed it up best when she said, “Our goal is always to know

participants, hoping to see the names of other financial institutions

what’s coming in the industry, what our customers need, and how to

with which it exchanges ACH volume. As Briscoe matter-of-factly

make our offerings better and more responsive to their needs.” ■

New International Service for Transatlantic Payments
October 25, 2010, was a landmark for FedACH Services: that was the day on which the Federal Reserve Banks and Equens processed the first ACH payments
between the United States and Europe using a new standardized channel for low-value cross-border payments. The collaboration between these two organizations began in 2009 and enables U.S. financial institutions to send payments in U.S. dollars, euros, and British pounds to 22 countries across Europe via
FedGlobal ACH Payments. Banks across Europe can send U.S. dollar payments via Equens to the United States.
The new channel for cross-border payments represents the first live implementation of the payments framework of the International Payments Framework
Association, a collaborative effort involving public and private payment groups around the world to standardize and improve the efficiency of low-value crossborder payments.
In just the first eight days of the new service, nearly 1,700 payments valued at $13.5 million were processed. For a complete list of countires serve, and to
find out how you can take advantage of the efficiencies offered by FedGlobal ACH Payments, contact your FedACH sales specialist. ■

NEWS FROM FEDACH
VOL. 7. NO 3

2

NEWS KIOSK

FedACH Sales Specialists
Each of these 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.

Atlanta
Boston
New York

■

Following the introduction of the FedGlobal ACH Payments
Account-to-Receiver (A2R) service earlier this year, FedACH

Nedelka Bell, AAP

816.881.2735

Lance Wagner, AAP

816.881.2498

Chicago
Minneapolis
San Francisco

Robb Woldman, AAP

213.683.2468

Lance Wagner, AAP

816.881.2498

St. Louis

Susan Bivens, AAP

901.496.0626

Dallas

Matt Davies, AAP

214.922.5259

Cleveland
Kansas City

Lance Wagner, AAP

816.881.2498

Philadelphia

Carol Chartrand, AAP

215.574.3414

Richmond

Della Tate, AAP, CTP

443.725.4675

customers now have access to a resource guide designed to assist
financial institutions in their efforts to offer remittance services.
Available on FRBservices.org, the guide features facts and figures
about the remittance market to Latin America, ideas on developing a business case and marketing plan, and information on regulatory compliance requirements. Account-to-receiver payments are
an option available to any FedACH customer acting as an ODFI, so
don’t miss your opportunity to offer this service to your customers.
■

Payments 2011 is just months away, and we hope to see many
FedACH customers in Austin, Texas, during the conference.
We invite you to drop by our booth to talk with our account
executives and product managers about FedGlobal ACH Payments, FedACH Risk Management Services, FedEDI Plus Service

Did You Know?

and FedACH SameDay Service and to ask any other FedACH
questions you have. In addition to our booth presence, the Fed
will also have a number of speakers during the conference. The

More U.S. Noncash Payments Now Electronic

topics vary widely, and we encourage you to attend those sessions

According to the results of the Federal Reserve’s 2010 study of noncash

you find most intriguing. Look for details in the next issue.

payments, consumers have demonstrated their growing acceptance
of electronic alternatives for payments in the United States. The data

■

After a major reorganization and redrafting of the NACHA Operating

showed that the proportion of electronic payments to overall non-

Rules referred to as simply “Rules Simplification,” the 2011 Rules

cash payments increased from 67.9 percent to 77.6 percent in the

are expected to be easier to understand, easier to navigate, and

last three years. Sixty percent of all noncash payments in 2009 were

generally speaking, more user-friendly. While the meaning of the

made with debit, credit, or prepaid cards, and ACH payments repre-

Rules has not been altered, it is NACHA’s hope that network par-

sented 17.5 percent of noncash payments. A study of check volume

ticipants will find compliance to be easier as well. For additional

revealed that both the number of, and the value of, checks written

assistance in making the transition from the “old Rules” to the

declined between 2006 and 2009; however, the percentage of checks

“simplified Rules,” consider NACHA’s publication, Navigating the

cleared electronically has more than doubled in that time. Perhaps

Simplified NACHA Operating Rules, available at www.nacha.org.

not at all surprising to this audience is the fact that the number of
business-to-business (B2B) checks declined only slightly in the three

■

Congratulations to all who passed the Accredited ACH Professional

years when compared with the overall decline in checks written. The

(AAP) exam in October. We also applaud those who have retained

obvious conclusion is that there is still work to be done to convert B2B

and renewed their accreditations. If you would like to earn your AAP

check volume to electronic payments.

accreditation, the next exam period is set for October 10–29, 2011.

For those interested in more findings of this latest research effort, a

In the meantime, visit www.nacha.org to find more information and

summary report of the 2010 Federal Reserve Payments Study is avail-

to view a sample of a practice test.

able at FRBservices.org. Detailed reports on the individual studies will
be available in early 2011. ■

NEWS FROM FEDACH
VOL. 7. NO 3

3

FEBRUARY 2011

WHAT’S

COMING

Information Interchange 2011
February 6–8, 2011

Southern Financial Exchange’s
St. Petersburg, FL

www.eastpay.org

21st Annual Conference & Expo
April 12–14, 2011

Biloxi, MS

www.sfe.org

MARCH 2011
Electronic Payments Conference 2011

EPCOR Payments Conference

March 21–23, 2011

April 19–21, 2011

Wisconsin Dells, WI

www.wacha.org

www.epcor.org

APRIL 2011

JULY 2011

Payments 2011

The Payments Institute 2011

April 3–6, 2011
www.nacha.org

Austin, TX

Columbus, OH

July 10–13, 2011

Washington, DC

www.nacha.org

A New Year Brings New Risk Services to FedACH Customers
There are countless ways to mark the beginning of a new year,

instances an alert will result when all

but those of us working to provide FedACH Services to our customers will

defined criteria are satisfied. Criteria

celebrate the newest release of FedACH Risk Services. More than 1,100 cus-

may be defined using one or more of

tomers have already discovered that the FedACH Risk RDFI File Alert Service

seven possible transaction source and

can help alert RDFIs to potential fraud attempts, significant origination

type variables including Company ID

errors, or both by monitoring FedACH output files—one file at a time—

and SEC Code. As part of the RDFI

without interfering with or delaying payments processing. As of February 5,

Alert Service, an Alert Scan Result screen will enable RDFIs

2011, those customers and others will have access to the expanded service

to research alert notifications, to view item-level information, and to derive

offering that will be known as the FedACH Risk RDFI Alert Service.

return items using FedLine Web.

The RDFI Alert Service will offer FedACH customers all the benefits

If your institution is interested in taking advantage of the FedACH Risk

currently available to them for fi le monitoring and will expand their

RDFI Alert Service, please contact your FedACH Sales Specialist or your

monitoring capability to include scanning and notification for designated

FedACH Central Operations Support Site using the contact information

fields at the fi le, batch, and item levels. E-mail alerts or notifications

provided in this publication. ■

will be triggered when the established criteria are met. While at least one
monitoring criterion must be set, multiple criteria may be set, and in those

Customer Support Information
For FedACH Customers
in these Districts

Central Operations
Support Site

For FedACH Customers
in these Districts

Central Operations
Support Site

Boston (1)
New York (2)
Philadelphia (3)
Cleveland (4)
Richmond (5)
Atlanta (6)
Chicago (7)

Federal Reserve Bank
of Atlanta
1000 Peachtree Street, N.E.
Atlanta, GA 30309-4470
Toll Free: 866.234.5681
Local: 404.498.8902
E-mail: achoperations.atl@atl.frb.org

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: 866.234.5681
E-mail: mpls.achcustserv@mpls.frb.org

NEWS FROM FEDACH
VOL. 7. NO 3

4

QUESTION
& ANSWER
Earlier this year, NACHA began
working with standards bodies
and key organizations to facilitate broader health care industry
adoption of electronic payments
and remittance processing
through the ACH network. Serving as project lead for these
efforts is PRISCILLA HOLLAND,
a senior director at NACHA.
Holland has been with NACHA
for 14 years with a background
in standards development—X12
and XML—as well as having
served as vice president and
senior product manager over
electronic products at a large
commercial bank before coming
to NACHA. We talked recently
with Holland about the efforts
she is leading and what financial institutions might need
to know as recent legislation
affects health care payments.
Days before we talked, the
National Committee on Vital
and Health Statistics met with
NACHA and others to continue
discussions on standards and
operating rules for electronic
funds transfers and remittance
advices. As the results of this
meeting will not be available
until early 2011, we fully intend
to follow up with Holland at
that time to gather additional
information to share with our
readers.

Health Care Payments and the ACH

HOW WOULD YOU DEPICT THE CURRENT STATE OF HEALTH

page within NACHA’s Web site, and we have held

CARE PAYMENTS IN THE UNITED STATES? I would say

well-attended teleseminars to discuss HITECH, with

that the current state of health care payments is one

more to come in 2011. There will be a dedicated health

of change and of opportunity. With legislation man-

care track of educational sessions at PAYMENTS 2011,

dating that all Medicare payments be handled via

and we will continue to develop various resources

electronic funds transfer by January 1, 2014, change

around health care and implications for the finan-

is inevitable. The opportunity arises as the health

cial services industry.

care industry looks for ways to automate the way

Another of NACHA’s typical roles is one of advo-

things are done in order to help reduce the adminis-

cacy and collaboration, and we will continue to

trative costs associated with payment processing.

serve in that role when addressing health care payments. As such, we will work with with the Council

WHAT OPPORTUNITIES DO YOU SEE FOR THE ACH NET-

for Affordable Quality Healthcare (CAQH) to pro-

WORK TO PLAY AN INCREASING ROLE IN HEALTH CARE

mote Committee on Operating Rules for Information

PAYMENTS? There are an estimated 400 million

Exchange (CORE) Operating Rules as the platform

health care payments made from health care plans

for the development of health care operating rules.

to providers each year, and current estimates are

Additionally, we will maintain dialogue with the

that only 10 percent of those payments are made

ACH operators about infrastructure requirements

electronically. The U.S. Healthcare Efficiency Index

while continuing our efforts to conduct a series of

has estimated that moving all health care payments

interviews, in conjunction with CAQH, of health care

to Direct Deposit could save $11 billion annually.

industry participants —health plans, health care
clearinghouses, providers, vendors and fi nancial

NACHA HAS ESTABLISHED A NUMBER OF RESOURCES

institutions—to assess business models and require-

AND EFFORTS AROUND HEALTH CARE PAYMENTS. WHAT

ments of plans and providers. Last, but not least, we

ARE NACHA’S GOALS AT THIS POINT? NACHA’s focus on

will seek additional ways to represent the fi nancial

health care is multi-faceted and I will try to briefly

institution community in health care initiatives.

explain the various facets. First, we have established a rules work group that is already working on

FOR THOSE LESS FAMILIAR WITH THE VARIOUS PIECES

proposed changes to the NACHA Operating Rules to

OF HEALTH CARE LEGISLATION, COULD YOU PROVIDE A

support health care payments. Education, of course,

SORT OF PRIMER? There are essentially three pieces

is a key component in all of NACHA’s undertakings. We

of legislation to which we are responding in one way

have established the Healthcare Payments Resources

or another. The first of these is the Health Insurance

NEWS FROM FEDACH
VOL. 7. NO 3

5

QUESTION
& ANSWER
Portability and Accountability Act of 1996 (HIPAA), which provides

Results of July 2010 Reader Survey
We appreciate the responses we received to our brief online survey on

federal protections for personal health information held by covered

mobile banking in July. With fewer than 100 responses, we acknowledge

entities and grants patients various rights with respect to that

the lack of statistical significance but found the results interesting and

information. The Health Information Technology for Economic and

wanted to share them with our readers.

Clinical Health (HITECH) Act was enacted in 2009 and is intended
to promote the adoption and meaningful use of health information
technology. Last, the Patient Protection and Affordable Care Act

My I Do Not
Use Mobile Banking

Mobile Banking Users

(PPACA) of 2010—often referred to as “health care reform”—
includes numerous health-related provisions scheduled to take
effect over a four-year period. Each of these will have an impact on
financial institutions’ efforts to achieve the objectives laid out in

10%
6%
5%

23%

22%

administrative simplification of healthcare.
18%

79%

37%

WE HAVE HEARD SOME DISCUSSION ABOUT THE EXPANSION OF HIPAA
REQUIREMENTS TO ACH NETWORK PARTICIPANTS. WHAT CAN YOU TELL
US ABOUT THIS? The typical fi nancial institution may continue to
receive health care payments to providers in the CCD+ format, pass
along the re-association key in the “+” addenda record, and experience no major impact. The CCD+ does not carry protected health

Non-users
Users 25 to 44
Users 45 to 54
Users 55+

No interest/need
Not offered by FI
Not supported by mobile device
Security concerns

information and is within the guidelines of “minimum necessary”
for payment processing. To receive and post the CCD+ payment, the
financial institution would not need a business associate agreement
that would, by definition, require HIPAA compliance. Any decision to

Ways I Use Mobile Banking

17%

provide additional services—beyond the basic payment—to a health
39%

care provider will require the financial institution to fully understand
the impact and requirements of HITECH, HIPAA, and PPACA.

Check balances
View transactions
Pay bills/transfer funds

44%

THERE IS TALK OF POSSIBLE EFFORTS TO ROLL BACK SOME COMPONENTS OF THE RECENT HEALTH CARE LEGISLATION SINCE THE NOVEMBER
ELECTIONS. DO YOU HAVE ANY REASON TO THINK THAT THE PROVISIONS
SURROUNDING THE ELECTRONIFICATION OF PAYMENTS ARE AT RISK?
No, not at all, since there is no funding required in Section 1104—
Administrative Simplification—of the legislation, and the industry

FedACH Services Performance Measures

can achieve substantial cost savings by moving ahead with its efforts.

YEAR-TO-DATE THROUGH 3RD QUARTER 2010

Currently, between 20 and 40 cents of each dollar spent on health
care is used to cover administrative costs, so the potential savings

PERFORMANCE

QUALITY MEASURE

are significant.
WHAT RESOURCES ARE AVAILABLE TO ACH NETWORK PARTICIPANTS

99.99%

INTERESTED IN FINDING OUT MORE ABOUT HEALTH CARE PAYMENTS

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

AND THE ACH?
NACHA has created a health care payments resource that we will
continue to maintain and update as new information becomes
available. This resource page can be found on NACHA’s site at
www.nacha.org/c/HealthcarePaymentsResources.cfm. ■

100%
100%

ACH service availability (uptime)
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

NEWS FROM FEDACH
VOL. 7. NO 3

6

2011 FedACH Services Fee Schedule1
FEDEDI PLUS SERVICE

ORIGINATION

Item in small file (<2,500 items)
Item in large file (>2,500 items)
Minimum fee–forward origination

$0.0030
$0.0025
$0.01-$25.00 /Month

RECEIPT

$0.0025

Volume Discounts (excluding SameDay items)
Items 1,000,001 – 25,000,000 per Month
Per Item When Volume Exceeds
25,000,000 per Month
Minimum fee–receipt
Addenda Record
Web-originated Return / NOC
Facsimile Exception Return / NOC
Voice Response Return / NOC
Automated NOC
Account Servicing
FedACH Settlement
FedACH Information File
IAT Output File Sort

$0.0007
$0.0009
$0.01 - $15.00 /Month
$0.0015
$0.30
$30.00
$3.00
$0.15
$37.00 /RTN /Month
$45.00 /RTN /Month
$75.00 /RTN /Month
$35.00 /RTN /Month

FEDACH SAMEDAY SERVICE

Origination
Forward item in a small file / large file
Addenda record
Return item in a small file / large file
Receipt
Forward or return item
Addenda record

$0.0030/$0.0035 (surcharge)
$0.0015 (surcharge)
$0.0030 / $0.0025 (discount)
$0.0025 (discount)
$0.0015 (discount)

FEDACH RISK ORIGINATION MONITORING SERVICE

Monitoring Criteria (per set of criteria)
For sets 2-20 per Month
For sets 21-150 per Month
For sets 151 and above per Month
Batch Monitoring

$8.00
$4.00
$1.00
$.0025 /Batch

FedACH Services Performance Measures

Standard Scheduled Report
Standard On Demand Report
Premier Report
Encrypted e-mail
Report delivery via FedLine File Channel

$0.20/report
$0.75/report
$10.00/monthly report
$0.50/daily report
$0.20/e-mail
$0.30/report

FEDGLOBAL ACH PAYMENTS

Canada Service
Item Originated to Canada
Return Received from Canada
Trace of Item at/not at Receiving Gateway

$0.62 (surcharge)
$0.99 (surcharge)
$5.50/$7.00

Latin America Service
A2R Item Originated to Latin America
Return Received from Latin America
Item Trace

$4.40 (surcharge)
$0.72 (surcharge)
$5.00

Mexico Service
Item Originated to Mexico (including F3X)
Item Originated to Mexico (including A2R)
Return Received from Mexico
Item Trace

$0.67 (surcharge)
$3.45 (surcharge)
$0.91 (surcharge)
$13.50

Panama Service
Item Originated to Panama
Return Received from Panama
Item Trace
NOC

$0.72 (surcharge)
$1.00 (surcharge)
$7.00
$0.72

Europe Service
Item Originated to Europe (including F3X)
Return Received from Europe
Item Trace

$1.25 (surcharge)
$1.35 (surcharge)
$7.00

1

Refer to www.frbservices.org for additional details

Tell Us What You Think

YEAR-TO-DATE THROUGH 3RD QUARTER 2010

FedACH VOLUME STATISTICS

VOLUME

DOLLAR VALUE

(000)

(000,000)

Commercial Forward
Value Items Originated

7,611,972

$12,461,397

Government Forward
Value Items Originated

930,358

$3,365,019

Commercial Return
Items Originated

79,985

$41,271

Government Return
Items Originated

3,670

$10,313

82,173

N/A

8,708,158

$15,878,000

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

TOTAL ITEMS ORIGINATED

Has your institution considered
using FedACH SameDay Service?
Are you one of the early subscribers for this innovative service?
Are you aware of the benefits of using FedACH SameDay Service?
Share your feedback with us by clicking on the following
link to take a short survey, and check out the next issue
for survey results.

?

http://www.frbservices.org/app/

?

capture/survey.do?id=2136

NEWS FROM FEDACH
VOL. 7. NO 3

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