Continuing Impacts of Same Day ACH

Transcription

1 Continuing Impacts of Same Day ACH Digital Banking & Digital Payments Business Digital Product Management April 13, 2017

2 Session Agenda Goals for today s session Overview of the rule change: what do we all need to know? Where are we at so far? Impact of Phase 1 Completed changes Continuing FIS Digital Banking plans Digital Banking general approach Business ebanking plans Days Until Phase 2! Client considerations 2

3 The new Same Day ACH Rule provides a ubiquitous sameday clearing and settlement capability for virtually all ACH Payments NACHA.org Same Day ACH Resource Center 3

4 Same Day Rule Change Highlights Change timing: NACHA Rule changes approved May 2015 Federal Reserve Board approved 9/23/15 Phased rollout Stepping stone to payment modernization Movement to accelerate payment and settlement Available to: Consumers Businesses Governments 4

5 So Far NACHA Survey Summary 100% of survey respondents NO INCREASE in fraud due to Same Day ACH Volumes from ORIGINATORS Volumes were as anticipated: 55% Volumes were HIGHER than expected: 35% Volumes for RECEIVERS Volumes were as anticipated: 61% Volumes were HIGHER than expected: 22% 80% of respondents expect steady growth over next 6-9 months % Reported success stories involving support for PAYROLL December 2016/January 2017 NACHA Survey (23 financial institutions comprising nearly 2/3 of Same Day ACH Origination) 5

6 So Far NACHA Survey Summary Business customer usage Same Day ACH being used by businesses of all sizes Small Business Payment types Payroll: 95% One-time: 68% Middle Market Regular: 58% Large Business December 2016/January 2017 NACHA Survey (23 financial institutions comprising nearly 2/3 of Same Day ACH Origination) 6

7 So Far Business ebanking Adoption Utilization of Same Day ACH Origination in Business ebanking As of February 2017 Banks with Credit Origination Enabled Services Enabled Enabled CHILD SUPPORT PAYMENT STP 820 PAYMENT CTX PAYMENT OTHER PPD PAYMENT Not Enabled CCD PAYMENT 7

8 So Far Business ebanking Adoption Utilization of Same Day ACH Origination in Business ebanking YTD as of February 2017 Actual Origination Transaction Activity CCD Actual transactions originated Only PPD and CCD Concentration One FI initiates 50% of all BeB volume Next five account for 27% Remaining are small numbers PPD 8

9 Overview of the Rule Change Same Day ACH

10 Same Day Rule Change Highlights 1. Same Day Rule is being implemented in three phases. Introduced in 3 phases: Phase 1 effective 9/23/16 COMPLETE Phase 2 effective 9/15/17 Phase 3 effective 3/16/18 RDFI All banks are required to accept and post Same Day payments ODFI Originating Same Day transactions are not mandatory ACH Operator Fed and EPN will accept, route, and settle Same Day payments 10

11 Same Day Rule Change Highlights 2. Same Day ACH implementation phasing: Activity Same Day Transaction Posting Deadlines Same Day Operator Settlement Same Day Transaction Eligibility Phase Phase 1-2: By bank s EOD Phase 3: By 5:00 pm local time All Phases: Settlement to FI at 1:00 ET and 5:00 ET All Phases: IAT batches and transactions over $25K are ineligible Phase 1: Only credits transactions are eligible Phase 2-3: Debits are eligible Impacts: Market adapting to transaction posting deadlines vs settlement to the FI. Transaction eligibility is a new concept for ACH Previously everything from a batch carries the same settlement date; however, now there is another level of interrogation. 11

12 Same Day Rule Change Highlights 3. ODFI s pay RDFI s 5.2 per Same Day network transaction. How it works: ACH Operator (Fed) serves as the billing agent for the Same Day transaction fees. These fees are independent of processing Operator (Fed) fees. The Operator does not take any portion of that 5.2 fee. ACH Operator bills on a MONTHLY basis to the DFI Operator account. Posting two entries monthly. (a) Net fees charge as the ODFI (b) Net fees paid for same-day receiving transactions. FIS is not involved in this process at all it is managed by the ACH Operators. Impacts: Provides revenue to RDFIs for having to support initiative. ODFIs have to be mindful of their Same Day activity since it will be charged this fee. On-us transactions that stay in-house will not be part of the charge as they are not network transactions. 12

13 Same Day Rule Change Highlights 4. New processing deadlines effective September 23, Send to Fed Description Comment 10:30 am ET First Same Day Origination deadline Operator settles to FI account at 1:00 pm EST 2:45 pm ET Final Same Day Origination deadline Operator settles to FI account at 5:00 pm EST Send from Fed Description Comment Noon ET Impacts: First File Containing Same Day entries A posting file is required from this file 4:00 pm ET Last file with Same Day entries A posting file is required from this file Fed commingles Same Day and forward entries in file Fed commingles Same Day and forward entries in file Banks should review their origination deadlines if they want to participate in Same Day for debits. There is no unique method to identify same day transactions from forward transactions except for by the assigned settlement date (Julian Date) when received for external items. 13

14 Same Day Rule Change Highlights 5. There are no unique triggers for ACH originators using Same Day. There are three things that ACH Operator interrogates to determine if a Same Day settlement date is assigned to a transaction. 1 Batch received prior to Same Day deadline To Operator by 2:45 pm EST 2 Batch was eligible for Same Day - Effective date is today or prior. - Batch is not an IAT 3 Transaction is eligible for Same Day - Entry is below $25,000 - Entry is a credit (Phase 1) Impacts: Banks may incur the $.052 fee for unintended Same Day origination. It will be difficult as a RDFI to identify the Same Day entries when looking historically. 14

15 Same Day Rule Change Highlights 6. Fed opened a later returns window to enable Same Day returns. How it works: There is an additional return window later in the day Settled transactions may be returned by the receiving institution and get it into this later window to receive settlement today for that return and deliver back to the bank The transaction does not have to be a Same Day transaction to use this window There are no eligibility restrictions such as IAT or over $25,000 Impacts: Market initially assumed this window was only for Same Day entries, but it is open for all returns Places pressure on core systems to provide pre-post capabilities or early non-post decisions Banks are concerned with their ability to properly fund their Fed accounts given the later settlement times. It is difficult to know if the transaction truly settled yet unless you are the ACH Operator 15

16 Same Day ACH Benefits Consumer Billing Due date/late payments Payments to prevent loss of service Any bill payment in which credit is given immediately Any bill payment in which non-payment risk is elevated Check Conversion Merchants Lockboxes Collections Individual Account Transfers Business to Business Just-in-time payments for release/ shipment of goods Invoice due date / late payments Key Benefits Consumers: more control over cost and timing of payments Businesses: lower cost, ubiquitous payment and collection capabilities Leverage existing infrastructure to faster payment model 16

17 Plans for Same Day ACH FIS Digital Banking and Digital Payments

18 FIS Digital Banking Plans General Approach COMPLETE Phase 1 effective 9/23/16 Enable financial institutions to selectively offer Same Day ACH Origination in 2016 Credit origin only for eligible payments under $25,000 Leverage existing capabilities Enable restriction of same-day effective dated transactions Targeted enhancements to customer-facing digital solutions Support core banking system changes Restrict Same Day activity to entitled customers Reporting and inquiries on Same Day ACH credits received Support FIS ACH processing solutions 18

19 FIS Digital Banking Plans General Approach Phase 2 effective 9/15/17 Enable financial institutions to selectively offer Same Day ACH Origination Support credit and debit origination For eligible payments under $25,000 Expand on existing Same Day capabilities Enable restriction of same-day effective dated transactions Enhance ACH Positive Pay to support Same Day ACH activity 19

20 FIS Digital Banking Plans Business ebanking (BeB) COMPLETE Phase 1 9/23/16 Business ebanking changes to enable financial institutions to support Same Day ACH origination ACH File Upload feature Financial institutions can control same day effective dating in the BeB ACH File Upload feature Bank Level Company Level Existing feature will enable the financial institution to enable or prevent the upload of Same Day ACH files Changes will not be made to Billing, BIC, Entitlement, etc. 20

21 FIS Digital Banking Plans Business ebanking (BeB) COMPLETE Phase 1 10/23/16 Business ebanking Q4 Release - Expanded ACH Credit Origination Continue to leverage existing configuration settings for File Upload Add ability to enable Same Day ACH credit origination for ACH Templates Change min max day to zero Add control for Same Day cut-off time Add transaction level billing for ACH credit Enhance Prenotes for next day effective date 21

22 FIS Digital Banking Plans Business ebanking (BeB) Phase 2 plans 10/22/17 Prevent accidental Same Day for External Transfers (June 2017) Enable debit origination ACH File Upload ACH Templates Enhance ACH Positive Pay Real-Time Debit Block (Transaction Authorizer) Enable banks to manage same day debit activity arriving in later settlement windows Generate alerts for additional exceptions Enable FI to offer extended exception window 22

23 Client Considerations Same Day ACH

24 Client Considerations Understand the rule changes and how they impact you Operational considerations Expectations for receiving financial institutions Availability and settlement consideration Competitive impacts and go-to-market strategy Competitive value of participation in credit and debit origination for Phase 2 Risk v. competitive advantage Complexity of service support Educating and communication with customers 24

25 Client Considerations Helpful resources FIS Communications throughout 2017 White Papers Client Bulletins Your FIS Account Team NACHA Same Day ACH Resource Center Fact Sheets, FAQs, Q&A Documents Recorded webinars Videos and other resources 25

26 Thank You