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Autumn 1998


of 6'-. L

News and Views
on Eighth District
Financial Setvices

Nationwide Direct Deposit Week
Debuts in October
The first nationwide direct
deposit promotion will take
place Oct. 12-16. During
this week, the Federal
Reserve, the U.S. Treasury,
the National Automated
Clearing House Association
and the regional ACH
associations will work with
financial institutions, companies and community organizations across the country
to increase consumer awareness of direct deposit.
This will be the first time
these organizations together
have carried out such an
extensive public education
campaign on direct deposit.
A variety of activities, includ-'
ing radio and television interviews, as well as advertising
on billboards, buses and

St. Louis
to New
Federal Reserve Bank of St. Louis

trains, will promote direct
deposit for payroll, pension
and Social Security benefits.
In addition, Oct. 14 will
be National Direct Deposit
Sign-Up Day, during which
regional media and community-based events will heavily promote direct deposit.
Nationwide Direct Deposit
Week is an opportunity for
financial institutions to reap
the benefits of shorter teller
lines and lower payment
processing costs by marketing direct deposit. '
Here are some ways to
become involved:
• Conduct lobby promotions Oct. 2, 5, 30 and
Nov. 2 for customers
depositing benefit and
payroll checks.

s part of our efforts
to meet century date
change (CDC) compatibility
requirements, this fall the
St. Louis office ·will offer
a CD-ROM viewing software replacement called
In addition to complying
with CDC standards, this
· new software will make our
Image-Enhanced Corporate
Cash Management service
easier for your business customers to use.


• Join local government
agencies and community organizations on
National Sign-Up
Day and set up tables
at places, such as local
community centers and
churches, to pass out
information on direct
deposit, answer questions and sign up people
for the service.

Free direct deposit educational materials are available for you to use, both
through the District's
Automated Payments
Partnership campaign or
the Treasury's Financial
Management Service
(FMS). Please contact
Carrie Andert in St. Louis
at (314) 444-8946 or
FMS at (202) 874-6540.

One of the most significant
improvements is that check
images will appear more
clearly on all Windows ®
operating systems. IDSPlus
also offers several new fea tures, including the ability to:
• Add notes, categories and
tags to checks.
• Store and recall frequently
used queries.
• Develop customized
• Transfer the index from the
current viewing software.

You must use IDSPlu s
to enjoy these capabilities,
because the current viewing software is not CDC compliant. For current
users, the cost to upgrade
to IDSPlus is $150. A new
copy costs $450, which is
comparable to the price of
the old software. To order
your copy, please contact
Bobbi Antoff in St. Louis
at (314) 444-4259.

Save Mon_ey, Time With Online Processing
o ensure you receive
cost-effective and
efficient services, the
Fed is encouraging customers who send and
receive funds transfer
and book-entry information on paper, or "offline,"
to begin using their
FedLine®software.,:Depending on the number of wires or book-entry
transfers your financial
institution processes, going
online can save you a substantial amount of_money.
Each wire and book-entry
transfer costs $12.40 and
$10, respectively. With
FedLine, the current online
fee is only $0.40 for wire
transfers and $2.25 for
book-entry processing
(these prices could be
l?wer in the future).

and Web
Sites Offer
Yea·r 2000 .
Federal Reserve Bank of St. Louis

hroughout the last
·year and a half, the
Federal Reserve has sent
out newsletters and bulletins with detailed information on the impact of the
century date change (CDC).
The newsletters feature
general CDC information and suggestions on
managing Year 2000
projects; the bulletins contain critical information
specifically for financial
institutions that electronically access Fed services
through FedLine®software,
Bulkdata or a Computer
Interface link.
You can find the entire
series of newsletters and
bulletins, as well as other
related information, on
the Fed's CDC web site at
www .fr bsf. org/ fiservices/
cdc. If you are not receiving these publications or
want additional copies,
please contact Jeff Dale in
St. Louis at (314) 444-8400.
Two other web sites contain Year 2000 supervisory
information for financial

In addition to cost savings, your financial institution saves valuable time
through online processing
by eliminating four-party
callback procedures, which
require two employees from
your organization to participate in each transaction.
Ed Furman, vice president at First Bank in Creve
Coeur, Mo., recently began
using FedLine for online
securities transfers and is
experiencing substantial
cost savings and improved
operating effis;iencies.
· "We have reduced our
transaction costs 80 percent
and streamlined collateral
pledging, which saves a
significant amount of time
and labor," says Furman.
He also credits the switch
to online securities transfers

as the factor that enabled
him to avoid hiring temporary help when an employee
was on maternity leave.
If you have questions
or want an analysis of
your potential annual cost
-savings from using online
transactions, please call
Flora Armon in St. Louis
at (314) 444-8612.

institutions. You can find ·
the Federal Reserve Board
of Governors at www.
bog.frb.fed. us/y2k.
The Federal Financial
Institutions Examination
Council also has information at
y2k/ guidance.htm.

If you have any questions about the Fed's CDC
project or Year 2000 supervisory activities, please ·
contact Jeff Dale or your
account executive.

,:- Later this year the
Boston Fed will service
customers making offline
funds and b·ook-entry
security transfers (see
related Reserve Note}.

Remember Fed Testing for Century Date Change
To make sure your electronic connection with the
Fed is ready for the Year 2000, we are offering testing with many applications, including ACH, check,
book-entry and funds transfer.
In June, we completed testing the internal systems
that customers use, and we now are prepared to
distribute and receive century date change test files.
Using your FedLine or Computer Interface connection, you can test on specified weekdays and weekends (Century Date Change Bulletin No. 3 published
a schedule for each Fed service, which bulletins 4
and 5 updated).
We strongly encourage your financial institution
to test applications with us. To set up a time, please
send in a Test Request form (distributed with Century
Date Change Bulletin No. 4). If you need assistance
filling out this form or have other testing questions,
contact the FedLine Help Desk at 1-800-333-0861
and press 1 to speak with an Electronic Access
Support representative.

Major FedLine Changes Coming

et ready, FedLine users!
In 1999, several major
changes will significantly
improve FedLine ®software
by taking advantage of
advances in computer
and Internet technology.

Get Ready for
Windows NT ®

next version of the FedLine
for the Windows NT®
Workstation newsletter,
which will discuss recent
developments on the conversion, as well as list hardware requirements.
If you are thinking about
purchasing hardw~re to
accommodate Windows
NT, please contact an
Electronic Access Support
representative. Requirements have been continually
changing, and we want you
to have the most current
information. We also recommend that you wait to
purchase any hardware until
you upgrade to the new
version of FedLine.

After extensive preparation
and testing, we will introduce FedLine for Windows
NT®in the first quarter of
next year. Y~u may have
heard about the Fed's initiative to convert FedLine
software from a DOS to a
Windows ®operating system. We plan to convert
FedLine applications gradually according to the folii,.,
lowing 1999 schedule:
~ , , .\ r='G l


Phase OneFirst Quarter




Oleck lmnge


• Accounting
• Funds Transfer
• Large Dollar
Return Items
• Savings Bonds
•Treasury Tax & Loan
• Generic File Transfer,
(the ability to import
and export files)

Only the Beginning •••

Phase TwoSecond Quarter
• Statistical Reporting
and Reserves

Phase ThreeThird Quarter
• Book- Entry Securities
•Taxpayer Deposit
• Automated Auction
• Check Services
Informational sessions will
be available for you to learn
more about FedLine for
Windows NT (see Calendar
for dates). Also, watch your
mail later this year for the
Federal Reserve Bank of St. Louis

through your FedLine software, you will use the
Internet. You need a computer with Internet accessFedLine software does not
have to be loaded on the
same computer. Using an
off-the-shelf web browser,
you will access the Fed's
web server where the application software resides (data
entry screens, field edjts,
help information, etc.).
Six applications under
development for FedLine for
the Web are: Cash Services,
Check Image, Check Adjustments, Statistical Reporting,
Noncompetitive Treasury
Auction Tenders and Savings
Bonds. We currently are
evaluating other FedLine
applications to see if
I · ,,I
they als? would be
appropnate for
the Internet.
Several ·financial
institutions across
the Fed System are
in various stages of
piloting the web applications. Each is on a
different production
schedule; cash services
will be the first online in

Fedline Functions
Go Online
Not all existing FedLine
applications will convert
to Windows NT. We are
developing a product so
financial institutions can
use the Internet to access
some of the current
FedLine services.
FedLine for the Web will
be a new way for customers
to communicate with us
other than by using traditional FedLine software, fax,
mail or telephone.
The way it works is simple. Instead of exchanging
information with the Fed

We continually look for
, new ways of using technology to help make FedLine a
more flexible product and
to improve your communication with the Fed. These
two enhancements are just
the start. If you have any
questions on these upcoming changes, please contact
Gary Auer in St. Louis at
(314) 444-8948.

Taxpayer Deposit:
EFTPS Option for
Offline Customers
We recently released
a more user-friendly
Taxpayer Deposit (TD)
FedLine application.
FedLine customers who
do not use the online
funds transfer service can
use TD as-an alternative
way to submit same-day
Electronic Federal Tax
Payment System (EFTPS)
transactions. TD is a
backup to the ACH
credit method and should
not be used regularly.
The new TD application .includes several
• Multiple choice lists
that reflect current
EFTPS tax type codes.
• Modified tax type/
field definitions that
include tax forms and
descriptions with corresponding prefixes
and suffixes.
• Renamed tax deposit
screens that reflect the
tax classification
instead of the tax form.
• Ability to reverse a
federal tax deposit
message transmitted
on a previous day.
• Removal of the enrollment screen, which
is coordinated
between the taxpayer and Treasury
Financial Agents.

If you are a FedLine
customer who wants this
upgrade and has not yet
received it, please call
the FedLine Help Desk ·
at 1-800-333-0861 and
press 1 to speak with
an Electronic Access
Support representative.
Federal Reserve Bank of St. Louis

Study Shows Education
Needed on Direct Payment
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national market
research study conducted earlier this year
on Automated Clearing
House (ACH) payments
revealed some I}ew facts
about direct deposit.
Consisting primarily of
focus groups and surveys to
explore some of the existing
attitudes toward electronic
payments, the study also
looked at current direct
deposit and direct payment
use among consumers and
businesses, as well as their
satisfaction with the services.
Following are highlights
from the direct payment
portion of the study.

• Only 84 percent of
direct payment users
are extremely or very satisfied with the service, significantly lower than 97
percent of direct deposit
users who are extremely
or very satisfied.
• Ease and convenience
are the best attributes of
direct payment, according
to 7 5 percent of users.
Saving time by not having
to write checks was
another recognized benefit, as well as not having
to worry about paying
bills on time or by their
due date.

Consumer Findings

• Only 13 percent of businesses offer direct payment to consumers.
Businesses offer direct
payment mainly because
customers request it and
to improve customer service. Satisfaction with
current methods of receiving payments, as well as
lack of demand, are the
primary reasons for not
offering it.
• Businesses that offer
direct payment rely
on s1gnmg up new customers when they open
new accounts, instead
of targeting existing
• Surveyed businesses said
direct payment he! ps
improve cash flqw and
saves time and money
because of decreased
check processing. They
also cited improved reliability as a benefit because


Business Findings
• Confusion exists with
the term direct payment.
Many think the terms

automatic withdrawal
or authorized automatic
payment more accurately
describe electronic debit
• Many consumers do
not really know how
direct payment works22 percent of users and
45 percent of nonusers
indicated they do not
understand direct payment well enough to
describe it to a friend
or colleague.
• More than one-third
of U.S. households
claim they use direct
payment for at least
one recurring payment.
On average, direct payment users make 2.4
electronic payments
a month.


JnU'H,lh ,,

ue <•/


payments arrive at the
same time each month,
reducing late and delinquent payments.
• Only 4 7 percent of
businesses use direct
payment for their own
bills. Greater potential
exists if a discount from
the bill is offered.
One of the most significant findings was th~t
businesses and consumers
depend primarily on their
financial institutions for
information about direct
payment and direct deposit.
They consider you the
most credible and reliable
source, which means your
financial institution can
play a key role in educating your customers and
helping them understand
electronic payments.
The St. Louis Fed's
web site at www.stls.
provides more information on this study.
Later this year, we will
send all financial institutions a report summarizing the key findings from
this research. If you have
any questions about the
research, please contact
Cheryl McCarthy in St.
Louis at (314) 444-8459.

New $20 Bill
Released in

encourage these customers
to have an alternative online
contingency plan.
You will receive more
specific details about the
consolidation as information becomes available. If
you have questions in the
meantime, please contact
Flora Armon in St. Louis
at (314) 444-8612.

The Federal Reserve is
circulating the redesigned
$20 bill this month. The
new bill has the same security and anti-counterfeiting
features you now see on the
new $50 and $100 notes.
The practice of gradually
replacing the old series notes
with new ones will continue,
with all old currency retaining its face value.
To help introduce the
new $20 bill to the public,
the Fed will fill all orders
for $20 bills with the new
series for approximately
two weeks, and then revert
to distributing fit currency
before issuing new notes
(guidelines are in Operating
Circular #2 for Cash
Services). If you have any
questions, please contact
Joe Elstner ·in St. Louis at
(314) 444-8902.

Th~ St. Louis Fed's web
site has a fresh new look.
To help you quickly find
information on our financiat services, economic
data and other topics,
we have redesigned our
Internet page.
We think you will discover a new site that is
easy and enjoyable to use.
Visit us at
and see for yourself!

Boston Fed Will
Service Offline

Fixed Availability
Option Eases
Reconciling Returns

Beginning Nov. 30, the
Federal Reserve Bank of
Boston will service Eighth
District offline customers
and five other Fed districts.
As more financial institutions discover the benefits of online processing
through Fe_dLine ®software
(see article on second
page), the volume of offline
transactions continues
to decline. To provide
these customers with
proficient service, we are
consolidating offline funds
and book-entry security
transfer services.
The consolidation will
not change procedures for
offline transaction processing. Although the Boston
Fed will support online
customers in contingency
situations, we strongly

Are you looking for
an easy way to reconcile
your low-dollar return
cash letters? Take advantage of the fixed availability option, which enables
you to receive one-day
deferred credit on your
entire return cash letter
amount. This,is less complicated than the calculated alternative, which
giyes you credit during the
course of several days.
The fixed availability
option simplifies reconciling your return ·
cash letters and elimi- ·
nates the need to track
multiple availability
dates. To sign up, please
contact your local customer service representative (listed on back page).
Federal Reserve Bank of St. Louis

Check Out
Our New and
Improved Web Site

Composite Receiver
File Reduces
ACH Returns
To keep track of all financial institutions across the
country eligible to receive
commercial ACH entries,
the Federal·Reserve maintains a national ACH
Composite Receiver File
(CRF) and distributes
copies to requesting financial institutions.
' With this information,
originating financial institutions can avoid sending
ACH items to nonparticipating institutions and
reduce the number qf
returned entries.
You can receive a copy
of the complete CRF at
no charge and obtain
monthly updates through
your electronic connection
or on tape, microfiche or
paper. To sign up to
receive the CRF or to
change how you currently
receive the file, contact
Julie Dalton in St. Louis
at (314) 444 -8973.

Reminder: Request
Form Speeds Check
As we work continually
to improve check operations, we ar,e placing special emphasis on check
adjustments. To help us
more efficiently resolve the
adjustments you file, please
use the Check Adjustment
Request form instead of a
handwritten note. .
Because this form contains all the information
we need to start working
on your adjustments, you
can be assured that we will
start the process immediately. Including all pertinent attachments with the
form (e.g., ,opies of checks
with encoding errors, both
sources for paid items, etc. )
also helps us provide quick

and accurate resolution of
your adjustments.
Another way to speed
the adjustment process is to
submit cases electronically
usiµg FedLine ®software.
For details on this option
·or to obtain a supply of the
adjustment request forms,
please contact your local
customer service representative (liste? on bac~ page).

Check Adiustments
This half-day seminar
provides an in-depth
overview of the adjustment process. Attendees
will receive a workbook
containing adjustment
samples, a glossary and
an updated contact list.
Watch for a seminar
agenda and registration
form in the mail this fall.
Memphis-Nov. 18

Training for fEDEDI and
Fed Line for,Windows NT ®
FedLine customers can
learn about the new ·
FEDEDI so_ftware and
FedLine for Windows
NT in an informative
one -day session. ,:T o register for one of
the seminars in your
area, contact Carrie
Andert in St. Louis at
(314) 444-8946.
St. Louis-Nov. 16, 18, 20
Little Rock-Nov. 2, 3, 4
Louisville-Oct. 20, 21, 22
Memphis-Oct. 27, 28, 29
* Dates are tentative.

District Roundup on EBT
tates across the Eighth
District have been workS
ing hard to implement
Electronic Benefits Transfer
(EBT) programs. All states
must use EBT to issue food
stamp benefits by Oct. 1,
2002, as specified by the
Welfare Reform Act of 1996.
As you are probably
a ware, EBT is the electronic
disbursement of state benefits to those who receive
food stamps or~cash assistance. Most states use
magnetic swipe cards,
similar to debit cards,
that are accepted at ATMs
and stores displaying the
Quest ®symbol. Illinois
residents look for the
Illinois Link symbol to
redeem their benefits.
Your financial institution can increase revenue
opportunities by becoming
involved in your state's EBT
program. To participate,
arrange with ATM networks
to accept EBT cards, as well
as offer low-cost or starter
accounts to those without
accounts who want to
receive cash benefits by
direct deposit.
Volume 3, Number 3
Paym ents Quarterly is published
qu a rterly by the Financial Services
Office of th e Federal Reserve Ba nk
of St. Louis. If you wish to obtain
addition a l copies or wo1,1ld like others
at your organization to receive
Payments Quarterly, contact C heryl
McCa rthy at (314 ) 444 - 8459.








Federal Reserve Bank of St. Louis

States in the Eighth District
have made the following
progress on EBT programs:
• Arkansas launched its
EBT program statewide
in April. Early feedback
shows customers are
pleased with receiving
welfare, food stamp and
Transitional Employment
Assistance (TEA) benefits
on a magnetic swipe card.
• Illinois successfully began
issuing EBT cash and food
stamp benefits statewide in
November 1997.
• Indiana plans to start
placing food stamp and
Temporary Assistance for
Needy Families (TANF) benefits on its EBT card in the
future, after handling an
implementation delay.
• Kentucky will begin disbursing food stamp benefits
electronically in May 1999.
Five counties in central
Kentucky wiH be the first
to offer EBT-Anderson,
Fayette, Franklin, Shelby
and Woodford. Kentucky
also is focusing on moving
cash consumers into the
banking system by partnering with financial institu-

tions to develop and promote starter accounts.
• Mississippi has rejoined the
Southern Alliance of States;
contract negotiations will
begin soon to pilot its EBT
program in Rankin County.
• Missouri's program
has been active statewide
since May. The state's EBT
card provides temporary
assistance and food stamp
benefits, as well as federal
benefits, such as Social
Security, Railroad Retirement and Supplemental
Security Income (SSI).
• Tennessee will pilot its program in November in four
counties-Meigs, McMinn,
Polk and Bradley. The state
plans to place food stamp,
Temporary Assistance for
Needy Families (TANF) and
federal benefits (optional)
on its EBT card.
As states begin their
EBT programs, you
will receive more information on how you can
participate. In the meantime, if you have any questions about EBT, contact
Cauie Andert in St. Louis
at (314) 444-8946.

A Phone Call Away


If you have questions or
comments, let us pay for the
call. Our toll-free phone
numbers and· customer
service representatives are:

St. Louis Office
Bobbi Antoff
(314) 444-4259

Little Rock Office
(in Arkansas)
(outside Arkansas)
Gerry Gray
(501) 324-82,65

Louisville Office

(in Kentucky)
(outside Kentucky)
Lisa Locke
(502) 568-9224

Memphis Office
(in Tennessee)
(outside Tennessee)
Nikita Little
(901) 579-2435