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Winter 1999


News and Views
on Eighth District
Financial Services

Look Before You Leap
Thus, 1900 was not a leap
year, but 2000 is.
The potential for the leap
year error is greatest in
embedded systems, such
as those found in card
readers or stoplights.
But the problem may also
exist in software applications. The good news is
that the public is generally
unaware of the potential
for problems, and therefore, the Fed does not
expect to experience
increases in cash demand.
Financial institutions
have had opportunities to
test with the Fed for the
2000 leap year date since
June 1998, and many
District institutions

ust when you thought
the century date change
.was behind you, it's time to
prepare for another critical
dat~ Feb.29,2000. Ju~
like the lack of foresight
that resulted in the "Y2K
Bug," it seems that computer programmers may
also not have considered
that th~ Year 2000 would
be a leap year, lasting 366
days, rather than 365.
There are two rules governing the determination
of leap years:
1. A year evenly divisible
by four is a leap year, except
for years ending in 00.
2. A year ending in 00
is a leap year only if it is
divisible by 400.


And the

Federal Reserve Bank of St. Louis



n 1999, the Federal
Reserve System conducted a nationwide customer satisfaction survey
to explore financial institutions' perceptions of the
Fed's products and services.
The results revealed which
components of our financial
services are most important
to you, including the quality of check processing and
check adjustments, ease
of use of monthly billing
statements, and all aspects
of customer service and
FedLine®software. This
feedback will help the Fed

Jan. 20/Feb. 15
Testing for Feb. 28, 2000
Jan. 21/Feb. 16
Testing for Feb. 29, 2000
Jan. 22/Feb. 17
Testing for March 1, 2000

have already tested with
us. If you have not tested,
however, or would like
to retest, a majority of
Fed applications will be
available for testing on
the following dates:

System and the Eighth
District identify strategic
initiatives that will improve
our products and services.
While responses varied
slightly by District, customer service remained a
principal factor in overall.
satisfaction. We plan to
compare the Eighth District
survey results to the consolidated nationwide results to
identify best practices and
-better meet customer needs.
This survey is unique
because it is the first time
we interviewed customers
throughout the nation

Other dates are available
for some applications.
Details on which
applications can be tested
on any of these dates are
in the test schedule sent to
you in mid-November. To
register, contact Electronic
Access Support at 1-800333-0861.

simultaneously. More
than 2,500 telephone interviews were completed to
ensure a statistically valid
response rate.
We appreciate your feedback and are taking steps
to address your concerns.
The St. Louis Fed will
collaborate with the other
Reserve Banks to address
the areas most important to
customers and will monitor
progress through internal
reporting mechanisms and
future surveys.

Three New Applications Improve
Customer Service
rhc r ighth District
rccogni;:,es the u.zluc of
iJitC,!!;l'Litin,~ techno logy
into customer scrz•ice.
/11 I 999, we mzplemcntcd three im101•afl1 1c

so/twc1rc applications
to im/mJ1 e the lci'l'l of




District Shifts
to Dallas
Perfect Time to Start


Federal Reserve Bank
of Dallas
Coupon Processing
P.O. Box 660656
Dallas, TX 75266-0656
Federal Reserve Bank of St. Louis

1) ACSIS-Last October,
the St. Louis Fed began
using the Automated
Customer Service Information System (ACSIS),
an application that enables
Fed staff to document
customer questions
and problems.
This software provides
online access to customer
data, giving Fed support
staff a comprehensive
picture of a financial institution's service requests
throughout the Bank.
ACSIS also helps our staff
monitor the status of any
outstanding issues and ana lyze the steps being taken
to ,resolve them.
ACSIS will be fully
implemented throughout the Eighth District
by mid-2000.
2) FACTS-Another electronic tool designed to
improve customer service
is the new Fed Access
Customer Tracking System
(FACTS). FACTS is a data
base containing informa-

tion on the FedLine®and
Computer Interface (CI)
connections for each
financial institution in
the Fed System.
This application enables
Fed staff to more efficiently
manage customers' electronic connections, set
up new connections and
update information online.
FACTS also automates
our internal communications, which translates
into more accurate and
timely responses to your
electronic service requests.
3) CSIS-In 1999, the
St. Louis Fed began using
the Check Services Information System (CSIS), a
PC-based application that
captures debit and credit
information pertaining
to our check services.
Our account executives
and customer service representatives use CSIS to analyze a customer's deposit
in detail and recommend
how that institution can
more efficiently and eco-

nomically deposit checks
with the Fed. Internally,
the system's ability to evaluate volume and deposit
patterns provides valuable
information used in developing new check collection
products for the District.
CSIS also enables us to
examine our sort patterns
and outgoing volumes to
ensure we are processing
deposited items efficiently.
Increasing our operating
efficiency reduces our
expenses, which, in the
long run, leads to competitively priced services for
our customers. All Eighth
District offices should be
using CSIS by the second
quarter of 2000.
All three applications are
internal management tools;
customers will not notice
any changes in their FedLine
software or CI connection.
The benefits of these applications will be reflected in
the improved quality of
our customer service.


institution's reserve
account; individuals will
be paid with a fiscal
agency check.
This announcement
arrives on the heels of
another Treasury securities
change that took place last
August, when the Fed discontinued processing definitive securities and providing
walk-in services. Eventually
all TreasuryDirect services
will be consolidated at three
customer service centers
across the country instead
of the current 3 7 sites
throughout the Fed System.
If you have customers
who purchase government
securities through brokers,
now is an ideal time to
encourage them to try
TreasuryDirect, a program
through which investors

can electronically purchase
Treasury securities directly
from the government and
hold them in an account
with the U.S. Treasury.
Using TreasuryDirect is
simple. Investors can initiate transactions by phone,
mail or computer without
paying broker fees. Unlike
paper securities, there is
no chance they can be lost,
stolen or destroyed. And
instead of clipping coupons,
investors receive interest
payments electronically
through Direct Deposit.
For more information
on the consolidation or
TreasuryDirect, contact
Mary Sanders in St. Louis
at (314) 444-8509.

n Jan. 1, 2000,
the redemption of
all semi-annual interest
coupons for U.S. Treasury
securities was consolidated
at the Federal Reserve Bank
of Dallas. No other Reserve
Bank or Branch will process
Treasury coupons.
Please send all Treasury
coupons you receive to the
Dallas Fed at the address
in the box at left. If your
financial institution does
not offer redemption services, customers should
mail their coupons directly
to Dallas.
The Dallas Fed will pay
coupons within one business day of receipt, but
no earlier than the interest
due date. Payments to
financial institutions will
be made by crediting the

Weigh Your Options:
Piles of Paper or One CD?

hen the clock struck
midnight on Dec.
31, 1999, we entered the
new millennium still using
traditional payment methods. Contrary to many
analysts' predictions, check
and cash transactions did
not virtually disappear by
the Year 2000. Although
the nation is definitely
making progress toward
becoming a checkless
society, we are still years
away from eliminating
pa per transactions as
payment options.
Even though many
Americans are not ready
to give up the check, there
are several ways to cut
back on paper. For example, many businesses must
keep boxes of cleared
checks for audit purposes-some dating back
as many as seven years.
Your institution can
provide an alternative
to this tedious process by
offering the Fed's imageenhanced corporate cash
management service.

especially those who
receive large statements.
These organizations devote
substantial resources to
storing, filing and retrieving checks-processes that
can be cumbersome, timeconsuming and expensive.
The greatest advantage
of image-'enhanced cash
management is the storage
space it saves. One CD can
hold between 15,000
and 20,000 check

viewing software. Each
CD comes with a customized label that enables
the user to identify its
Finally, corporate customers will find that
image-enhanced cash management is helpful when it
comes time to reconcile
their bank statements.
Because the service stores
check information electronically, customers
can easily

It takes
between six to
nine standard check
boxes to retain this many
items. Furthermore, check
imaging can prove to be a
cost-saving alternative for
businesses that currently
contract with off-site storage facilities to transport
and store their checks.
Image-enhanced cash
management also makes
it easier for corporate customers to retrieve individual items. Instead of rummaging through boxes of
checks or reels of microfilm
to find a particular check,
they can simply look up the
item on a CD using image-

the data to meet
their needs. For example,
if your account statement
lists items in order by
check number, customers
can view items in this manner on screen, rather than
sorting the checks by hand.

Put the Fed to
Work for You
How does imageenhanced corporate cash
management work? At
the end of a corporate customer's statement cycle, an
institution sends the customer's checks to the Fed.
We capture an image of
each item and store these
images on a CD-ROM.
The corporate customer
then receives a CD containing digitized images of its
checks, which can be
viewed on any PC loaded
with an image-viewing
software program, at least
16 megabytes of RAM, a
Windows®operating system and a CD-ROM drive.
Image-enhanced cash
management can benefit
any of your customers,
Federal Reserve Bank of St. Louis

Tip the Scale in
Your Favor
Image-enhanced cash
management is more than
just a great service for
your customers-it can
also serve as an additional
source of revenue for your
institution. The product
can also be used to

strengthen customer
relationships. By offering
services that help customers conserve resources,
you earn their trust and
encourage them to try
other services. The more
services your customers
use, the less likely they
are to switch financial
institutions. Offering
image-enhanced cash management can also show customers that your financial
institution is progressive
and a technology leader.
Even if you do not choose
to offer image-enhanced
cash management to your
corporate customers, your
institution can use it to
save storage space and
improve the item retrieval
process for your own official checks.
To learn more about
image-enhanced corporate cash management,
contact your local
account executive.
Federal Reserve Bank of St. Louis

Retail Payments :
Fact or Fiction?

n the Spring 1999 issue
of Payments Quarterly,
we announced that the
Federal Reserve System is
in the midst of an extensive
market research project
exploring payment usage
rates and attitudes toward
a variety of traditional
and emerging retail payment methods.
The first phase of the
project-a comprehensive
search foir public and proprietary studies on retail
payments-has recently
been completed. While
work on the next phase
of research has already
begun, some of the conclusions reached in the
first phase provide useful
insight into the retail
payments industry.

What Did We Learn?
One of the most notable
conclusions derived from
the literature search is that
the total number of retail
payments is growing.
Each payment mechanism
explored in the literature-including checks,
ACH transactions, credit
cards, debit cards, stored
value cards and electronic
cash-has grown over the
last five years.
Another finding confirmed what many already
suspected: the use of electronic payment options is
growing rapidly. Even
though the base, or total,
number of electronic payments made in a year
remains significantly
less than the total number
of checks written, electronic payment growth
rates are impressive.

For example, credit card
payments grew 48 percent
between 1992 and 1997;
offline debit card transac. tions grew almost 30 percent between 1994 and
1998; and electronic data
interchange (EDI) and
financial EDI transactions
have grown 40 percent
since 1997.
Furthermore, studies
seem to show that while
the number of electronic
payments is growing, most
checks are moving out
of the payment stream at
the point of sale. Strong
growth in both credit and
debit card transactions
appears to be responsible
for the decline of pointof-sale check use; however,
no studies h;ive been
conducted to prove this
The conversion to electronic payments may be
a slow progression. One
study showed that although
many consumers are usmg
electronic payment options
more often, individuals
who prefer to write checks
are not likely to change
their payment behavior.
Another study rev~aled
that consumers have concerns about the safety of
making payments on the
Internet. And despite projections for strong growth
in electronic bill presentment and payment, some
data indicate that widespread consumer acceptance does not yet exist.

More Work to Do
The literature search produced volumes of useful
information; however,

researchers also found
several gaps in the data.
For example, there is little
information available on
the cost of various retail
payment transactions or
consumer attitudes toward
these payment options.
And because few retailers
monitor or track cash
transactions, it was difficult to determine the number of these transactions
conducted at the point of
sale or elsewhere.
According to Hank
Bourgaux, senior vice
president of the St. Louis
Fed's Operations Division
and coordinator of the
research project, these
gaps will be addressed
in the second phase of
the project.
"We're going to try to
break down the composition of retail payments at
the point of sale, and cash
represents a large portion
of these transactions,"
said Bourgaux. "It's very
difficult to have a clear
vision of the aggregate
retail payments market
unless you have an understanding of how cash fits
into the picture."
The next phase of the
project, which will involve
written surveys of businesses and financial institutions, is expected to
begin in the first quarter
of 2000. Results of that
project will be made available to the industry, so
stay tuned for more

Reseiv eNotes
Phone line Delivers
Check Information to
little Rock Ba.-kers
N°o w Arkansas customers
have a direct comm unication link to the Little Rock
Check Department. We
have added a special phone
line to give you immediate
access to the check information you need. To connect, call (501) 324-8300
or 1-800-482-9463. Dial
1 for the check menu and
then press the number that
corresponds with the service you want to request:
1 for dispatch time
2 for adjustments
3 for return items
4 for check manager
5 for account executive
0 for customer service

Pick Up latest
ACH Rule Book
NACHA's 2000 ACH
Rules publication is now
available. We strongly
encourage all ACH participants to keep a copy ,
on hand to reference the
most current rules and
regulations governing
the ACH network.
MPX and SFE members
· will receive a complimentary copy in early January.
Other institutions can
order the publication from
their regional ACH association, or through NACHA
by calling 1-800-487-9180.

New Currency for
the New Year
On Nov. 16, the U.S.
Treasury unveiled new
designs for the $10 and
$5 bills. Like the changes
made to the $20, $50 and
$100 bills, the new designs
incorporate security features intended to deter
The Fed will begin circulating the redesigned notes
Federal Reserve Bank of St. Louis

in mid-200O. In the meantime, the Treasury, the Fed
and other agencies will distribute materials to educate
tellers and other cash handlers. They will also work
with vending machine manufacturers and distributors
to ensure their equipment
accepts the new bills.
The older currency will
retain its full face value as
the new bills are gradually
introduced. No decision
has been made whether to
redesign the $1 bill.
Sharing the spotlight in
2000 is the new one dollar
coin, called the Golden
Dollar. Its gold color,
wide border and smooth
edge distinguish this coin
from the Susan B. Anthony
dollar coin, which will be
discontinued once the
Golden Dollar is circulated. The U.S. Mint will
begin shipping these coins
to Reserve Banks during
the first quarter.

Get a Hold of the
latest National
Average Report
The results of the Federal
Reserve's Functional Cost
and Profit Analysis (FCA)
program for 1998 are now
available in the National
Average Report (NAY).
The NAY provides nationally averaged income and
expense information based
upon aggregate data from
institutions that participated
in the FCA program.
If you would like to
know the average cost
to make a loan, process
a withdrawal, accept a
of non-interest income to
interest income, the NAY
can help. Many financial
institutions have used
information contained
in the NAY to measure
performance and pri~e

FCA participants receive
a free copy of the NAY.
Banks and credit unions
can purchase a NAY for
$150 per report. To order
the NAY or find out more
about the FCA program,
visit the FCA web site at, or call
our FCA coordinator,
Dan Horton, at (314)

Quicker Response
Time for EDRH Users
The Eighth District
Interactive Telephone
Helpline (EDITH), our
voice response system for
financial services, recently
received a major hardware
and software upgrade.
Although EDITH customers will not notice arty
changes in the system's
functionality, they will
enjoy a faster rate of
response when retrieving
check totals and processing
ACH returns and NOCs,
TT &L advices of credit
and cash orders.
This upgrade will provide
better customer service as
we cross the threshold
into the new millennium.
If you have any questions
or would like to request
access to ED ITH services,
call the EDITH Help Desk
at (314) 444-8999 or

Reminder for
Canadian Item
As a reminder, Canadian
checks and Postal Money
Orders should not be
deposited in a mixed cash
letter. Instead, items should
be presented as non-cash
collection items through a
correspondent bank that has
an international department.
If you regularly have a
high volume of these items,
you may want to consider
depositing them via con-

solidated shipment to
the Helena Branch of the
Minneapolis Fed. This
method is less cumbersome
than other alternatives
because it does not require
you to make your own
transportation arrangements.
For more information 6n
the consolidated shipment
deposit option, contact your
local account executive or
customer service representative, or see Page 8 of the
Check Deposit Guide.


TIP and PATAX Seminars
This one-day training
seminar explains the
features and functions
. of TIP and PATAX,
two new applications
that will enhance the
TI &L program in
late 2000.
St. Louis-Feb. 15 & 16
Memphis-F€b. 23
Little Rock and
Louisville customers are
encouraged to attend
one of these sessions.

Memphis Check
~diustments Workshops
Each half-day workshop covers all aspects
of check adjustments,
from completing request
forms to understanding
how cases are researched
and resolved. Further
information will be sent
to Memphis customers
as the date approaches.
March 9
Morning session8:30 a.m. to 11:30 a.m.
Afternoon session1 p.m. to 4 p.m.

Get Up to Speed on TT&L Enhancements
his winter, the St. Louis
Fed will conduct educaT
tional seminars on the
Treasury Investment
Program (TIP) and Paper
Tax System (PATAX),
two new systems that
will enhance the current
Treasury Tax and Loan
(TT&L) application in the
third quarter of 2000.
Like the current TT &L
program, these systems
are designed to enable
qualified financial institutions to collect and retain
a portion of the nearly
$1. 4 trillion in federal tax


deposits that the Treasury
In February, TT&L Note
Option institutions will be
invited to attend a one-day
session on TIP and PAT AX
at the St. Louis or Memphis
office (see Calendar section
for dates). Cash managers
and operations staff members will be invited to learn
· more about the applications'
features and enhancements,
which include a new investment option, enhanced
reporting and the ability
to initiate account changes
online. The seminar also
will cover improvements
in collateral monitoring,
customer support and
electronic access.
TT&L Remittance Option
institutions will receive educational materials describing the new systems, which

will have a minimal effect
on their operations. In
addition, both Note and
Remittance Option institutions will receive a desktop
reference guide, a FedLine®
tutorial and a brochure
containing information on
reducing IRS adjustments.
Watch for more information about TIP and PATAX
in the upcoming months.
If you have any questions
about the new enhancements, call John Hussey in
St. Louis at (314) 444-4672,
or check our web site at under
the Treasury/Government

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)

1-800-482-9463 .
(outside Arkansas)


Louisville Office
(in Kentucky)

· 1.-800-292-3596
(outside Kentucky)

Butch Whit~

(502) 568-9224

Memphis Office
(in Tennessee)

(outside Tennessee)

Chandra Hester

(901) 579-2435
Volume 4, Number 4
Payments Quarterly is published
quarterly by the Financial Services
Office of the Federal Reserve Bank
of St. Louis. If you would like to
obtain additional copies or want
others at your organization to receive
Payments Quarterly, contact Cheryl
McCarthy at (314) 444-8459.















Federal Reserve Bank of St. Louis