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RESiJ\f~! .... M uaH ARY Federal Res~nH~ Ba nk of St; Louis . men 0 ~ 1997 Autumn 1997 News and Views on Eighth District Financial Services Later ACH Deadline Can Save You Money New $50 Bill to Fight Counterfeits https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Effective Oct. 1, the St. Louis Fed will improve its ACH service by extending its regular billing deadline (previously called the premium surcharge deadline) from 8 p.m. to 1 a.m. ET. The 0.5 cent peritem premium surcharge will stay the same; however, it will only be assessed for items received between 1 a.m. and 3 a.m. ET, the close-of-business deadline. This means you will be able to deposit items later than in the past and n'o t pay a fee. We expect this change to save all ACH customers across the country a total of $2.1 million a year in fees. This enhancement to our ACH service comes on the heels of several other price reductions and deadline T counterfeit notes at your financial institution by looking for these traits: his fall the Treasury will continue its efforts to curb counterfeiting by releasing a redesigned $50 bill. The Treasury expects the new bill to be as successful in discouraging counterfeits as the recently redesigned $100 bill. To date, no one has successfully duplicated the new security features of the redesigned $100 note; therefore, the U.S. Secret Service has found fewer new $100 bill counterfeits. In addition to reducing fraud, fewer counterfeit bills translate into cost savings for you and the Treasury. Emulating the successful results achieved with the redesigned $100 bill, the $50 bill will include many of the same security features that make counterfeits easier to detect. Guard against t Color-shifting ink on the lower right corner looks green when viewed straight on, but appears black when viewed at an angle. tA watermark is located in the space to the right of the portrait and is visible from both sides when held up to a light. t To the right of the portrait, a plastic security thread with the words "USA 50" and a depiction of the American flag glow yellow under ultraviolet light (the security thread in the $100 note glows red and is on the left of the portrait). t Concentric fine lines should be clear, not splotchy or extensions implemented in October 1996, January 1997 and May 1997. We have been able to offer these improvements now that all Reserve Banks have completed their conversion to Fed ACH, the new centralized ACH software. For more information, contact Andy Lueckenhoff in St. Louis at (314) 444-8647. wavy, on both sides of the bill. In addition to these features, the new $50 note contains several distinct security enhancements, such as: 1) an enlarged "50" on the back right corner of the note for those with poor vision and 2) the word "fifty" is microprinted along the right and left borders, and "United States of America" is on Grant's collar. Like the $100 note, the new $50 bill will gradually replace the older series notes as they are turned in to the Federal Reserve for processing. All older currency will retain its face value. If you have any questions about the new currency features, contact Joe Elstner in St. Louis at (314) 444-8902. Partnership's Direct Deposit Campaign to Kick Off Oct. 31 paign efforts under way ore than 500 financial Playing off this heightened include billboards and radio institutions in the consumer awareness, the M promotions in major marMidwest have joined the Partnership will promote Automated Payments Partnership (the Partnership) to promote the use of electronic payments among financial institutions, companies, nonprofit organizations and consumers. Kickoff for the direct deposit campaign Pay the easy way! is cleverly set for Oct. 31, a date known in the banking industry as "triple witching day." "On a triple witching day, three groups of people receive paychecks-those paid weekly, biweekly and monthly," explains Kathy Paese, chairperson of the campaign. "Usually these days create extra headaches for bankers and customers who have to wait in line to deposit their paychecks." Welcome Eighth District Partners J.ullmump, i::, .1 /i::,t of the 21 7 /)1::,tru t fmi111cial msfltutzrnz l'.1rt11ers <1s of Sept. I. The lzst is llljJlhz!Jeti::::.ed hy city u•1thi11 ellch state. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Arkansas Elk Horn Bank & Trust, Arkadelphia The Citizens Bank, Batesville Heartland Community Bank, Camden First National Bank of Conway, Conway Corning Bank, Corning First National Bank, Crossett DeWitt Bank & Trust Co., DeWitt Bank of England, England UARK Federal Credit Union, Fayetteville Forrest City Bank, NA, Forrest City Arkansas Best Federal Credit Union, Fort Smith City National Bank, Fort Smith Superior Federal Bank, Fort Smith Northeast Arkansas Federal Credit Union, Gosnell Helena National Bank, Helena Horatio State Bank, Horatio Alliance Bank of Hot Springs, Hot Springs ' The Arkansas Bank, Jonesboro Little River Bank, Lepanto Member Service Federal Credit Union, Little Rock Postal of Arkansas FCU, Little Rock United Arkansas FCU, Little Rock Bank of Lockesburg, Lockesburg Bank of McCrory, McCrory the conveniences of direct deposit on several consumer fronts. Financial institutions and corporations were invited earlier this summer to join the Partnership, a marketing alliance formed to promote the use of ACH for recurring payments. Partners include the Federal Reserve Banks of St. Louis, Kansas City and Chicago, and Mid-America Payment Exchange (MPX), as well as financial institutions and corporations across nine Midwestern states. Campaign materials are provided free or for a nominal fee to Partners. On Oct. 31, the Partnership will launch its consumer awareness campaign, themed "Direct Deposit. Pay the easy way!" Cam- kets, distribution of statement stuffers and table tents to participating financial institutions, and disbursement of informational posters and payroll stuffers to participating companies. Employee sign-up rallies will be encouraged throughout November and December to coincide with the consumer campaign. The Partnership is available to all Eighth District financial institutions. Joining the Partnership is free, and there is still time for you to become a Partner. For more information, visit the Partnership's website at www .mpx.org/partnership.htm or contact Carrie Andert of the Federal Reserve Bank of St. Louis at (314) 444-8946. Marked Tree Bank, Marked Tree Bank of Mulberry, Mulberry First National Bank of Nashville, . Nashville Merchants & Planters Bank, Newport Mercantile Bank of Arkansas, North Little Rock First National Bank, Paragould Simmons First National Bank, Pine Bluff Bank of Prescott, Prescott Federal Savings Bank, Rogers Logan County Bank, Scranton First Security Bank, Searcy Arkansas State Bank, Siloam Springs United Bank, Springdale Mil-Way Federal Credit Union, Texarkana Citizens Bank & Trust Company, Van Buren First National Bank of Lawrence County, Walnut Ridge First State Bank, Warren The Bank of Yellville, Yell ville Chapin State Bank, Chapin Buena Vista National Bank, Chester Du Quoin State Bank, Du Quoin Clover Leaf Bank, SB, Edwardsville The Bank of Edwardsville, Edwardsville Franklin Bank, Franklin Granite City Steel & Community FCU, Granite City The Peoples National Bank of Grayville, Grayville Herrin Security Bank, Herrin National Bank, Hillsboro Community Trust Bank, Irvington The Iuka State Bank, Iuka Elliott State Bank, Jacksonville Jacksonville Savings Bank, Jacksonville The State Bank of Jerseyville, Jerseyville Kinderhook State Bank, Kinderhook First National Bank of Litchfield, Litchfield South Pointe Bank, Marion First County Bank, New Baden Old Exchange National Bank, Okawville First National Bank in Olney, Olney Murphy Wall State Bank and Trust Company, Pinckneyville Illinois Citizens National Bank of Albion, Albion Laclede Credit Union, Alton First State Bank of Campbell Hill, Campbell Hill Carlinville National Bank, Carlinville Community Trust Bank, Centralia continued on back page ECP: Getting the Facts Straight I f you recently have read a banking journal or attended a payments conference, it is evident one of the hottest issues in the industry today is electronic payments. More and more organizations are using electronic payments to improve their operations and enhance their customer service. The federal government is taking the lead in this migration to electronics, as evidenced by the mandate requiring companies to pay their federal taxes electronically (EFTPS) and the recent law requiring the Treasury to disburse almost all of their payments electronically by January 1999 (EFT 99). Although the United States is increasing the use of electronic payments, we are still a long way from a paperless society. In fact, check volumes continue to grow. To help bridge this gap, financial institutions need to look for opportunities to eliminate paper from the payment process and take advantage of electronic payments. One way·you can do this at your organization is to use electronic check presentment (ECP) services. With ECP, a check processor-either the Federal Reserve Bank or a correspondent-captures data from the MICR line of each check, creates an electronic file that contains this information, and transmits the file to either the financial institution on which the checks are drawn or its data processor. The physical checks are either truncated or sent to the paying bank the same day or one to three days later. ECP Reduces Fraud The biggest advantage of obtaining MICR information electronically is you https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis can post transactions to your customers' accounts earlier. This enables you to sooner identify fraudulent checks and items being drawn on accounts with nonsufficient funds. Earlier posting is also an important tool if you offer a PC banking product, because you can provide your customers information early in the mornmg. We use ECP because it's reliable. When we get here in the morning, we know the information is out there waiting for us. With ECP, you also won't feel rushed to process the physical checks. You have the freedom to process them at your conveniencewhen you have the time and staff available. "The number one reason we use ECP is because it's reliable," says Lindsey White, Bank of Hayti, Mo. "When we get here in the morning, we know the information is out there waiting for us. ECP allows us to process checks at our schedule, without any pressure." In addition, ECP stretches out the useful life of your check processing equipment, enabling you to spend less money and time on equipment maintenance. "We like ECP because we don't have to run items through our reader-sorter, which saves wear and tear on our machinery," says Reynie Rutledge, First Security Bank, Ark. Myth vs. Fact Through discussions with financial institutions throughout the District, we have heard various reasons why some bankers choose not to use ECP. To help you better understand the service, we want to address common points of confusion and dispel some myths that could be preventing you from using ECP. Myth: To take advantage of ECP, my financial institution must purchase expensive software. Fact: If you are using a current version of your inhouse software, you usually do not have to purchase anything. You simply need to activate the feature on your software that enables you to receive ECP files. In addition, the Eighth District has lowered the prices of our MICR Presentment service by more than 50 percent in the last three years to make ECP more affordable. Myth: I use a data processor to process checks, so I cannot take advantage of the benefits of ECP. Fact: Not true! Even if you outsource your check processing, you can still benefit from ECP. Contact your data processor and find out if they are using ECP services. If not, explain to them the efficiencies of ECP and encourage them to try it. If your data processor is able to do business at a lower cost, they could pass some of these savings along to you. Myth: I do not receive all of my checks from the Fed, so ECP is not a feasible payment option. Fact: You don't have to receive all of your checks from one processor to take advantage of ECP. The Fed offers an array of ECP products, and other organizations offer comparable products as well. If you receive files from several processors, you can even ask them to com bine your checks into one electronic file. Myth: In the event my financial institution does not receive a cash letter after transactions have been posted, I wi II not be able to deliver customers' checks. This will be breaking the law. Fact: There is no legal reg uirement to return checks to your customers unless you make a special agreement to do so. If necessary, you can always get a copy of a missing check from the bank of first deposit. If you are interested in expanding the use of electronics at your financial institution, you can sample any of the Fed's ECP services for free! Simply contact your account executive. Basic Fed ECP Services MICR Presentment - For each check, we capture MICR line information, electronically present the information to you or your data processor, and send you the checks later that same day. MICR Presentment Plus The same as MICR Presentment, except we retain the items for one or three business days so we can provide other valueadded services, such as account post sort, microfilming ,lnd return pulls. Truncation - We capture MICR line information and deliver the MICR file as presentment. Your checks are not returned. Instead, they are microfilmed, placed in safekeeping and then destroyed. (Microfilm is kept for a minimum of seven years.) FinancialPagejje --District Converts to Central Check Processing System the next couple Dofuringmonths, the Little Rock, Louisville and Memphis Branches will centralize their check processing systems and convert to software located · on the central mainframe computer in St. Louis. The conversion will provide the Eighth District with a common hardware and software platform for all check processing services. This new platform, called the Check Processing Control System (CPCS), was developed by IBM and is a state-of-the-art check processing operating system, one of the most widely used in the banking industry. Because we will have only one processing system to support, the delivery of new products and enhancements will be quicker and more consistent. Specific conversion dates at each office begin as follows: t Memphis-Oct. 6 t Little Rock-Nov. 3 t Louisville-Nov. 24. Once all offices convert to CPCS, we will be able to expand our electronic check presentment and electronic cash letter services District-wide. Items such as cash letters, kill lists and advices will be modified and look .:::::::::::- .:::::::::::-~ slightly different in the centralized format; however, no changes are required of our customers. If you have any questions, contact your account executive. How Are We Doing? An update of the Eighth District's quality measure goals Measure: ACH Edit Errors Notified Timely Report Helps You Track ACH Volume https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis s the effort to reduce the amount of paper in the payment system accelerates, the number of ACH payments is predicted to increase. With this expanded focus on ACH, it is more important now than ever to track ACH volume. To help, the St. Louis Fed can provide you with a report that shows the total number of commercial ACH items your financial institution originated or received in a given month. Yot..i can have this report designed to contain data for any group of months, starting from June 1994 to the present. Although this information can be pulled from your billing reports, this onepage summary gives you a condensed snapshot of your experience for a select period of time. This is helpful because it reveals A fluctuations and trends in your ACH volume. The summary also saves you the time and effort of having to find your old billing reports and look up past data. In addition, this report is a good way to measure the results of ACH marketing and educational efforts implemented by your financial institution. This is particularly timely in light of the upcoming kickoff of the Automated Payments Partnership, an alliance between the Federal Reserve and Mid-America Payment Exchange to promote ' electronic payments to companies and consumers across the Midwest. If you are planning to participate in the Partnership and execute a marketing campaign at your financial institution, this report would be an excellent way to see if your ACH volume increases Our Goal: Customers will be notified of all edit errors within 30 minutes 100 percent of the time. Year-to -Date Performance: 99.96 percent during your promotion. (See article on page 2 for a mbre detailed description of the Partnership.) To request a copy of this ACH report, call Carrie Andert in St. Louis at (314) 444-8946. ReserveNotes Shorter Delivery Schedule for Social Security Payments Effective Sept. 3, the Treasury reduced the amount of time between the delivery and settlement of Social Security payments that are deposited electronically into your customers' accounts. Instead of being delivered four days before settlement, payments now . will be delivered to you three days prior. This will give the.Social Security Administration more time to determine which recipients are deceased, resulting in fewer return transactions to the Treasury. Over the next couple of years, the Treasury plans to eventually convert all federal benefit payments to this shorter processing window. If you have any questions, call Julie Dalton in St. Louis at (314) 444-8714. Revised Fedline Screen Simplifies EFTPS Sending customer tax payments to the IRS using the Electronic Federal Tax Payment System (EITPS) just got a little easier. If you use the ACH credit option, Fedline now creates the addenda record for you. Previously, financial institutions had to manually create these addenda records on Fedline. If data were entered incorrectly, the wrong information would be transmitted. Now a new Fedline screen contains predefined subcategory fields under the "Addenda Information" section. You simply enter the appropriate information into the subcategories and the addenda is automatically created. A Fedline patch containing this enhancement, along https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis with a new pre-formatted Fedline screen that enables you to send customer state taxes, will be issued in September. If you have any questions or would like a step-by-step Fedline helpsheet that walks you through an EFTPS credit payment, contact Karen Harper in St. Louis at (314) 444-8947. IRS Now Accepts EFTPS Reversals This summer, the IRS announced that you can now reverse erroneous EFTPS entries sent using the ACH credit option. In the past, if you accidentally transmitted a tax payment twice, sent an ACH debit instead of a credit, or forwarded a payment with the wrong effective entry date, you had to work with the IRS to correct the mistake. Now you can simply send an ACH reversal. EFTPS reversals must be sent in accordance with the ACH rules (pages OR 4 and OR 5 in the 1997 NACHA Rule Book). Please contact Karen Harper in St. Louis at (314) 444-8947 if you have any questions. Updated Guidelines Available for Same-Day Electronic Tax Payments If you use the Fedwire same-day mechanism to initiate electronic tax payments for your customers and originate wires in the expanded funds format, you should have on hand the latest copy of Depository Institution Guidelines for Use of the Fedwire Same-Day Tax Deposit in EFTPS. This document, initially issued by the Federal Reserve in September 1996, has been revised, and a new June 1997 version is now available. The new issue reflects changes brought about from the expanded funds format. It also contains samples of several new Fedline screens and includes information specific to third-party payroll processors. If you have questions on Fedwire or would like to obtain a copy of the new guidelines, contact Dwana Davis in St. Louis at (314) 444-8973. For general questions on EFTPS, call Nancy Klages at (314) 4448707. Quality Report to Be Published Quarterly This summer, the St. Louis Fed distributed its first quality report, which listed the Eighth District's 1996 quality measure goals for each financial services department and summarized our performance on each. In the future, we plan to publish this report quarterly. We want to keep you up to date on our performance and provide current information on any occurrence that could have affected our service. If you would like a copy of the 1996 quality report, contact Cheryl McCarthy in St. Louis at (314) 444-8459. More NACHA Rule Changes Coming Down the Pike Late this past summer, two amendments to the NACHA rules were announced. The first one, effective Sept. 19, requires that Originator/ODFI agreements include an acknowledgment by the Originator that their ACH entries comply with U.S. laws, including economic Calendar Expanded Funds Format Fedline Training Oct. Oct. Oct. Oct. 1 and 2-Memphis 6 and 7-St. Louis 16-Little Rock 23 and 24-Louisville These classes will discuss Fedline software changes associated with the new expanded format. Two sessions are scheduled on each date: 8:30 a.m. to noon and 1 p.m. to 4:30 p.m. For more information or to sign up, call Gary Auer in St: Louis at · (314) 444-8948. sanctions administered by the Treasury's Office of Foreign Assets Control (OFAC). The second amendment, effective Dec. 19, requires an ACH Originator to notify the Receiver when a reversing entry is being sent to the Receiver's account. This notification, which must be sent no later than the settlement date of the reversing entry, must contain the reason for the reversal. For more information on either of these changes, contact Julie Dalton in St. Louis at (314) 444-8714. Illinois (continued from page 2) Corn Belt Bank & Trust, Pittsfield Mercantile Trust and Savings Bank, Quincy First National Bank of Steeleville, Steeleville . Union Bank of Illinois, Swansea Commercial State Bank, Waterloo First National Bank of Waterloo, Waterloo Indiana The Bank of Alamo, Alamo Hoosier Hills Credit Union, Bedford Stone City Bank, Bedford Boonville Federal Savings Bank, Boonville First Federal Bank, Corydon Dupont State Bank, Dupont English State Bank, English Evansville Post Office Federal Credit Union, Evansville Evansville Teachers Federal Credit Union, Evansville Permanent Federal Savings Bank, Evansville The Holland National Bank, Holland Dubois County Bank, Jasper Dubois-Pike Federal Credit Union, Jasper Springs Valley Bank & Trust, . Jasper Martin County CO-OP Credit Union, Loogootee First National Bank, Mitchell Security Bank & Trust Company, Paris First Bank & Trust, Sullivan TCB Bank, Tell City United Southwest Bank, Washington Kentucky Farmers Bank & Trust Company, Bardstown Beaver Dam Deposit Bank, Beaver Dam Bank of Benton, Benton Bank of Buffalo, Buffalo Taylor County Bank, Campbellsville Farmers National Bank, Danville Bank of Ohio County, D.undee South Central Bank FSB, Edmonton Elkton Bank & Trust, Elkton Fort Knox Federal Credit Union, Fort Knox Commonwealth Credit Union, Frankfort State National Bank, Frankfort Kentucky Employees Credit Union, Frankfort City National Bank, Fulton Commonwealth Community Bank, Hartford Ohio Valley National Bank, Henderson Kentucky Banking Centers, Inc., Horse Cave First Security Bank & Trust, McLean, Island Citizens National Bank, Lebanon Casey County Bank, Liberty Classroom Teachers Federal Credit Union, Louisville Commonwealth Bank & Trust Company, Louisville Jefferson County Federal Credit Union, Louisville https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Kentucky Telco Federal Credit Union, Louisville KIT Federal Credit Union, Louisville Louisville Naval Ordinance Credit Union, Louisville Republic Bank, Louisville Farmers Bank & Trust Co., Madisonville Farmers Bank & Trust Company, Marion Bank of Marrowbone, Marrowbone Morgantown Bank & Trust, Morgantown Peoples Bank Mt. Washington, Mount Washington P~~ples Bank of Murray, Murray Citizens Bank, New Liberty Daviess County Teachers FCU, Owensboro Modern Employee Federal Credit Union, Owensboro Owensboro Federal Credit Union, Owensboro Citizens Bank & Trust, Paducah Citizens National Bank, Russellville Mississippi First Security Bank, Batesville First American National Bank, Iuka First National Bank of Holmes County, Lexington Merchants & Farmers Bank, Macon The Peoples Bank & Trust Co., Tupelo Missouri 'First Independent Bank, Aurora Bank of Birch Tree, Birch Tree Bank of Bolivar, Bolivar Town and Country Bank, Bourbon First Community Bank of Taney Councy, Branson Ozark Mountain Bank, Branson First National Bank, Camdenton First State Bancorp, Inc., Caruthersville Boone County Teachers Credit Union, Columbia First National Bank & Trust Company, Columbia Missouri Student Federal Credit Union, Columbia Peoples Bank, Cuba State Bank of DeSoto, DeSoto Alliance Credit Union, Fenton Bank of Hillsboro, Hillsboro Eagle Bank, Hillsboro · Central Trust Bank, Jefferson City District 5 Highway Credit Union, Jefferson City Exchange National Bank, Jefferson City UMB Bank, Jefferson City, Jefferson City Bank of Kirksville, Kirksville Central Bank, Lebanon Peoples Security Bank, Licking Linn State Bank, Linn Bank of Louisiana, Louisiana Macon-Atlanta State Bank, Macon Madison-Hunnewell Bank, Madison Citizens State Bank, Marshfield Martinsburg Bank and Trust, Martinsburg United Credit Union, Mexico Bank of Cairo and Moberly, Moberly City Bank & Trust Co., Moberly First State Bank of Purdy, Monett Bank of Mountain View, Mountain View Southwest Community Bank, Ozark Security Pacific Bank, Pacific First Midwest Bank of Poplar Bluff, Poplar Bluff Central Federal Savings and Loan, Rolla Phelps County Bank, Rolla Aerospace Community Credit Union, St. Charles The Bank of St. Charles County, St. Charles Bank of Saint Genevieve, St. Genevieve Cass Bank & Trust Company, St. Louis Commerce Ban~, St. Louis DeKalb Credit Union, St. Louis First Banks, Inc., St. Louis Health Care Family Credit Union, St. Louis Heartland Bank, St. Louis Laclede Family Savings Credit Union, St. Louis Mercantile Bank NA, St. Louis Missouri State Bank, St. Louis Public Service Bank, FSB, St. Louis Southwest Bank of St. Louis, St. Louis Teamsters Credit Union, St. Louis UMB Bank St. Louis, St. Louis , Union Planters Bank of Missouri, St. Louis The First National Bank of the Mid-South, Sikeston Empire Bank, Springfield Mercantile Bank of South Central Missouri, Springfield Metro Credit Union, Springfield Springfield Telephone Employees Credit Union, Springfield State Bank of Southwest Missouri, Springfield UMB Bank Southwest, Springfield Community Bank of the Ozarks, Sunrise Beach Maries County Bank, Vienna Commerce-Warren County Bank, Warrenton Bank of Washington, Washington V It's On Us If you have questions or comments about any of the Federal Reserve's products or services, let us pay for the call. Our toll-free phone' numbers are listed below. St. Louis Office 1-800-333-0810 Little Rock Office (in Arkansas) 1-800-482-9463 (outside Arkansas) 1-800-332-0813 Louisville Office (in Kentucky) 1-800-292-3596 (outside ~ entucky) 1-800-626-4507 Memphis Office (in Tennessee) 1-800-552-5132 (outside Tennessee) 1-800-238-5293 Volume 2, Number 3 Payments Quarterly is published quarterly by the Financial Services Office of the Federal Reserve Bank of St. Louis. If you wish to obtain additional copies or would like others at your organization to receive Payments Quarterly, contact Cheryl McCarthy at (314) 444-8459. Tennessee Bank of Gleason, Gleason Greenfield Banking Company, Greenfield Bank of Huntingdon, Huntingdon Carroll Bank & Trust, Huntingdon City State Bank, Martin American Savings Credit Union, Memphis Munford Union Bank, Munford The Peoples Bank, Sardis Central Bank, Savannah Bank of Sharon, Sharon FEDERAL R E S E R V E FINANCIAL SERVICES
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