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Electronic Payments – Safe and Easy for Government Entities of all SizesThe Final Frontier

Opportunities, Challenges and Solutions UPIC & STP 820

Sharon JablonBusiness Development ManagerAugust 18, 2009

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TCH offers a full line of payment services that facilitate the migration of paper to electronic payments

EPN ACH Processing &

Association services

CHIPS Wire: Large value, real time,

final payments

SVPCO - Check Services• Regional paper check

exchanges, transportation, settlement and adjustments

TCH provides private-sector, global payment systems and infrastructure to clear and settle 50 million payments for $2.2 trillion each day

SVPCO - Electronic Clearing Services

• Image Exchange Gateway & Settlement

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Market Needs & Trends Today’s Solutions

– UPIC– STP 820

Q&A

Agenda

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Market Needs & Trends

• Government Entities and Larger Corporations have been requesting electronic payments and would like to pay electronically

• Their smaller trading partners had no tools to comply

5 Large Receiver/Vendor

Remittance Processing Associated With Check Processing

SMEs

Has to be keyed into receivables by receiver or Converted at the lockbox

…..More accurate when keyed by sender from source

….......Much more accurate when comes directly from AP

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Customer Service calls to discuss payments take time and cost both payors and receivers money

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Why $ and Data Together?

Receivers do not want to:Be directed to web sites to find the payment related infoReceive and review emails to find explanation about paymentsReceive Faxes with info pertaining to a payment

All of these cause inconsistencies in reconcilement!

This wastes time and $

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What Stands in the way of Migrating To Electronic Payments?

Reluctance to divulge sensitive banking information Preference for the Credit “push” versus Debit “pull” model

Many AP/AR packages cannot create/receive electronic payments

No integration with cash management and accounting systems

Conflicting, multiple message formats A minimum amount of standard information is needed

Float

STP 820

UPIC

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Why Haven’t Electronic Payments between Trading Partners Grown More?

We have had….– Software tools

– Trading partner incentives

But we had challenges that impeded mass adoption…– Limited software products

– Windows installations

– One-on-one training

– Lag in development of browser based tools

And we haven’t had….– Easy to use formats and tools that were readily available

Previous attempts were not elegant and did not gain adoption

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Business-to-Business PaymentsA Solution Exists!

EPN Research

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Universal Payment Identification Code (UPIC®)

Masks routing and account numbers Credit payments only, blocks debits Use with any cash management or

accounts payable system Universal routing number Issued and maintained by banks

Portable

UPICs help prevent fraud

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How UPICs Work

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Corporate Sales Sold to: Hudson Computers Supply

ATTN: G. Nederman 45 E Main St. Suite 1B Warren, NY 32132-6754

Ship to: Hudson Computer Supply ATTN: G. Nederman 45 E Main St. Suite 1B Warren, NY 32132-6754

Qty Size Color Item # Description Unit

Price Disc Total

4 34’ N/A 7523411 T1 Cable $105.00 $420.00 2 N/A N/A 7565433 Network Router $540.00 $1080.00 1 Sm Blue 6543733 19’ LCD Display $426.00 $426.00 1 Md Red 6242444 Mousepad $15.00 $15.00 Questions? Call customer service @ 243-555-3232

If you are paying by check please return this portion with your payment Remit checks to: Sold to: ACME Products Inc. Hudson Computers Supply 1209 Cedar Ln. ATTN: G. Nederman Holyoke, MD 34212-4565 45 E Main St. Suite 1B

Warren, NY 32132-6754

We encourage you to send payments electronically via ACH credit or EDI Payments to: ACME Products Inc. ABA # - 021052053 UPIC/Acct # - 3783000152 Reference # - RJ8049 Invoice # - 0147586342

Invoice #

Order # Page #

Date 0147586

3458003 1 of 1

12/06/01

Customer # Amount 804978-75 $2096.28

Tax

Sub Total

$155.28

$1941.00

Shipping $0.00

TOTAL $2096.28

Invoice # 0147586

Customer #

Amount

804978-75

$2096.28

Due Date 01/06/02 * To ensure proper credit of electronic payments both the reference # and invoice #(s) are required.

George, Thank you for your order!!

We encourage you to send payments electronically via ACH credit or EDI Payments to:

ABC Treasurer’s Office ABA # - 021052053 UPIC/Acct # - 3783000152 Reference # - RJ8049 Invoice # - 0147586342

Requesting Electronic Payments

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Online Cash Manager

UPIC / Account Number

UPIC / Account Number

Universal Routing Number

Universal Routing Number

UPIC / AccountNumber

UPIC / AccountNumber

Universal Routing Number

Universal Routing Number

A/P Vendor Setup Screen

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Receiving industry wide adoption around the United States

Telecommunications

Agriculture

Real Estate Financial ServicesPaper Supplier

Fund Raising

Employment

Banking Association

BenefitsAdministration

Hotel Industry

Education

Medical Technologies

Computer Manufacturing

Government Agencies Wholesale Distributors

Universal Payment Identification Code

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What are UPIC Adopters Saying?

Oregon State Treasurer

State Treasurer of Nebraska

Verizon

NACHA

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Financial Institutions offering UPIC:

•23 Financial Institutions have issued 825 UPICs •Total UPIC payments through August 1, 2009 1.45M valued at over $52Billion

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The Past - Electronic Payment with Remittance Information

Remittance informationNot deliveredFaxEmailDatafile820BAIProprietary (custom) larger customers)

Financial Institutione-payment with Limited remittance information

Accounting Software Limited electronic payment capabilities

Financial Institutione-payment with limitedremittance information

Accounting Software& Cash ManagementMostly manual entry and single invoice

Cash ManagementMostly manual entry and single invoice

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Business-to-Business Payments

A Solution Exists!

STP820

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What is the Straight-through Processing - STP 820?

Streamlined standard for making electronic payments

with remittance information.

Easy to implement & easy to use.

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STP 820 – Sleek…easy to implement in cash management and accounting software

Fields Mandatory

Customer Account Number XCustomer Name X Invoice NumberInvoice DateInvoice Gross AmountAmount PaidPO NumberDiscount AmountAdjustment AmountAdjustment Reason Code

12 adjustment reason codes01 Pricing Error 03 Extension Error 04 Item Not Accepted - damaged05 Item Not Accepted - Quality

06 Quantity Contested 07 Incorrect Product 11 Returns - Damage 12 Returns - Quality 59 Item not received 75 Total order not received 81 Credit as Agreed CM Covered by Credit Memo

10 Data ElementsIn the remittance area there are 10 data elements with places for explanation if desired.

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Making a PaymentSTP 820 Implementation at Union Bank of California

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Approved/Certified by

Promoted by

Supported by

Adopted by

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Today: The Beauty of the STP 820

Accounting Software

Accounting Software

CTX w

ith S

TP 8

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STP

820

CTX with STP 820

CTX with STP 820

Payables ReceivablesCustomer Account NumberCustomer NameInvoice Gross AmountAmount PaidInvoice NumberInvoice DatePO NumberDiscountAdjustment AmountAdjustment Code

Bank’s Web Cash Manager

ACH Operator

Customer Account NumberCustomer NameInvoice Gross AmountAmount PaidInvoice NumberInvoice DatePO NumberDiscountAdjustment AmountAdjustment Code

EDI820/STP820 STP820

EDI820STP820

A Standard that can be delivered by any bank

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Energy Company Posts to Receivables

“Any” Government Entity or Company

UBOC Web Cash Manager Payment to Energy Vendor

Customer Experience with Bank Cash Management Package

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Verizon

Posts toAccounts Receivables

- STP 820 module

The Clearing House (Great Plains DynamicsAccounts Payable – STP 820 module)

Citibank Verizon’s Bank

Customer Experience with STP 820 & Accounting Software

ACH Operator

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QuickBooks Accounts Payable from Coastal Software

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How can Government & Trading Partners use the STP 820?

Banking Cash Management Software

Accounting software from resellers

Middle-ware from software providers

CALL TO ACTION!!!

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But it will save money

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Enabling CHIPS and Fedwire to Carry Remittance Information

Research undertaken in October 2006

STP 820 data elements will simplify invoice payment and reconcilement

ISO has amended the ISO 20022 standard to include all STP 820 data elements

Fedwire & CHIPS working together on an implementation – Scheduled for 10/2010

What the Future Holds

www.chips.org

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Adoption is Growing

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The Clearing House research, “The Remaining Barriers to e-Payments and Straight-through Processing” at:

www.epaynetwork.com/cms/resources/research/corporate/001780.pdf

EPN STP 820 materials http://www.epaynetwork.com/cms/services/001457.php

UPIC materials

http://www.epaynetwork.com/cms/services/processing/value/risk/001480.php

Sign-up for webinars

– Next webinar will be August 26, 2009 2:00 P.M.

http://www.epaynetwork.com/webregister/

Resources

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Thank you

Sharon Jablon, AAPEPN, Business Development Manager212-613-0178sharon.jablon@epaynetwork.comwww.epaynetwork.com