Continuing Impacts of Same Day ACH Digital Banking & Digital Payments May 23, 2017 Business Digital Product Management
Continuing Impacts of Same Day ACHDigital Banking & Digital Payments
May 23, 2017
Business Digital Product Management
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
– Online Banking plans
– Business eBanking plans
• Client considerations
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Days Until
Phase 2!
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The new Same Day ACH Rule
provides a ubiquitous same-
day clearing and settlement
capability for virtually all
ACH Payments
NACHA.org Same Day ACH Resource Center
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
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So Far … NACHA Survey Summary
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• 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
December 2016/January 2017 NACHA Survey (23 financial institutions comprising nearly 2/3 of Same Day ACH Origination)
Reported success stories
involving support for
PAYROLL %
So Far … NACHA Survey Summary
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Business customer usage
Same Day ACH being used by businesses of all sizes
Payment types
• Payroll: 95%
• One-time: 68%
• Regular: 58%
December 2016/January 2017 NACHA Survey
(23 financial institutions comprising nearly 2/3 of Same Day ACH Origination)
Middle Market
Large Business
Small Business
So Far … Business eBanking Adoption
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Utilization of Same Day ACH Origination in Business eBankingAs of February 2017
Enabled
Not Enabled
Banks with Credit Origination Enabled
PPD PAYMENT
CCD PAYMENT
CTX PAYMENT
STP 820 PAYMENT
CHILD SUPPORT PAYMENT
OTHER
Services Enabled
So Far … Business eBanking Adoption
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Utilization of Same Day ACH Origination in Business eBankingYTD as of February 2017
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
CCD
Actual Origination Transaction Activity
So Far … Online Banking Adoption
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Utilization of Same Day ACH Origination in Online BankingYTD as of April 2017
Actual transactions originated
• 55% of banks enabling Same Day origination are
seeing actual customer usage
Concentration
• One FI initiates 70% of all OLB volume
• Next most active accounts for 23%
• Remaining are very small numbers
Enabled
Not Enabled
Banks with Credit Origination Enabled
Overview of the Rule Change
Same Day ACH
Same Day Rule Change Highlights
1. Same Day Rule is being implemented in three phases.
• 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
Introduced in 3 phases:
• Phase 1 – effective 9/23/16 – COMPLETE
• Phase 2 – effective 9/15/17
• Phase 3 – effective 3/16/18
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Same Day Rule Change Highlights
2. Same Day ACH implementation phasing:
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;
now there is another level of interrogation.
Activity Phase
Same Day Transaction Posting Deadlines Phase 1-2: By bank’s EODPhase 3: By 5:00 pm “local time”
Same Day Operator Settlement All Phases: Settlement to FI at 1:00 ET and 5:00 ET
Same Day Transaction Eligibility All Phases: IAT batches and transactions over $25K are ineligible
Phase 1: Only credits transactions are eligiblePhase 2-3: Debits are eligible
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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 – 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.
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4. New processing deadlines effective September 23, 2016.
Impacts:
• 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.
Same Day Rule Change Highlights
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 First File Containing Same Day entriesA posting file is required from this file
Fed commingles Same Day and forward entries in 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
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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.
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.
Same Day Rule Change Highlights
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)
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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
Same Day Rule Change Highlights
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Same Day ACH Benefits
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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
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
Plans for Same Day ACH
FIS Digital Banking and Digital Payments
General Approach
FIS Digital Banking Plans
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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
COMPLETE
General Approach
FIS Digital Banking Plans
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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
Online Banking
FIS Digital Banking Plans
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Phase 1 – 9/23/16
• Online Banking changes to enable financial institutions to support Same
Day ACH origination
– FIS OLB supports same day ACH origination through file upload and batch templates in
2016 (this includes both Debits and Credits)
– OLB allows the use of a current day effective date by company.
COMPLETE
Online Banking
FIS Digital Banking Plans
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Phase 1 – 3/26/17
• Extended support options added in 2017 in advance of Phase 2
– Cut off timing
– Batches
– limits
• Online Banking support for a same day indicator in a batch in 2017
COMPLETE
Business eBanking (BeB)
FIS Digital Banking Plans
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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.
COMPLETE
Business eBanking (BeB)
FIS Digital Banking Plans
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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
COMPLETE
Business eBanking (BeB)
FIS Digital Banking Plans
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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
Client Considerations
Same Day ACH
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
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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
https://www.nacha.org/content/same-day-ach-resource-center
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Business Digital Product Management
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