2013 ACH Update August 15, 2013 Association for Financial Professionals of Arizo na August 15, 20 13 Dial In: 1 (866) 664-1069, Passcode: 5429429 2013 ACH Update IMPORTANT—Please place your phone on mute as soon as you dial in to the session. If you do not have a mute button on your phone you may dial *6 to mute your line and #6 to unmute your line. PLEASE DO NOT USE YOUR “HOLD” BUTTON!!! Thank you very much. © 2013 Viewpointe Clearing, Settlement and Association Services. All Rights Reserved. Viewpointe, through its Direct Membership with NACHA, is a specially recognized and licensed provider of ACH education, publications and support. Regional Payments Associations are directly engaged in the NACHA rulemaking process and Accredited ACH Professional (AAP) program. NACHA owns the copyright for the NACHA Operating Rules & Guidelines. The Accredited ACH Professional (AAP) is a service mark of NACHA. Disclaimer This course is intended to provide a basic overview of the ACH Operating Rules (Rules) revisions enacted or proposed by NACHA. Responsibility for compliance with all legal and regulatory requirements remains at all times with individual users. This presentation and the information contained in it are not intended to be used as legal advice and Viewpointe provides this material “as is” without warranty of any kind, either express or implied, including, but not limited to, the implied warranties of merchantability or fitness for a particular purpose. This document could include technical inaccuracies or typographical errors and individual users are responsible for verifying any information contained herein. The information in this document and discussed in this presentation is the exclusive property of Viewpointe Clearing, Settlement & Association Services, LLC. It may not be copied, disclosed, or distributed, in whole or in part, without the express written permission of Viewpointe. Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 2 1 2013 ACH Update August 15, 2013 Objectives  Identify and discuss specific rule changes that are effective in 2013 and beyond that have impact or potential impact for Originating Depository Financial Institutions (ODFIs) and their corporate Originators  Review potential rule changes that are being considered for the future Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 3 Agenda 2013 ACH Update IAT Modification/Refinements ACH Security Framework Data Passing Notifications of Change ODFI Return Rate Reporting Stop Payments Incomplete Transactions 2014 and 2015 Changes Health Care Payments Potential Changes Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 4 2 2013 ACH Update August 15, 2013 IAT Changes Effective March 15, 2013  Return reason code and change code for Gateway use with incorrectly-coded international payments  Amendment established two new codes for use by Gateways to advise ODFIs and Originators that funds related to a domestically-coded entry are being moved out of the U.S. and should be formatted as IAT • R85—Incorrectly Coded Outbound International Payment • C14—Incorrect SEC Code for Outbound International Payment  Impact?—all return and notification of change software had to be updated to include new codes Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 5 IAT Changes Effective March 15, 2013  ODFI Warranties—Compliance with Foreign Payment System Rules  Removed warranty that ODFI is in compliance with all foreign payment system rules  ODFI now only warrants compliance with foreign payment system rules relating to the authorization of outbound IAT entries  Impact?—makes outbound IAT for ODFIs more attractive by removing some of the risk that was present before Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 6 3 2013 ACH Update August 15, 2013 Agenda 2013 ACH Update IAT Modification/Refinements ACH Security Framework Data Passing Notifications of Change ODFI Return Rate Reporting Stop Payments Incomplete Transactions 2014 and 2015 Changes Health Care Payments Potential Changes Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 7 Data Passing  Effective March 15, 2013  Prohibits the sharing of certain customer information by Originators, Third-Party Service Providers and ODFIs for the purpose of initiating debit entries that are not covered by the original authorization  Relates to Restore Online Shoppers’ Confidence Act  Similar to major card brand rules currently in effect Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 8 4 2013 ACH Update August 15, 2013 Data Passing  Added a new subsection to Section 2.3 (Authorization and Notice of Entries)  Subsection 2.3.4 (Restrictions on Data Passing)  Impacts?  ODFIs are not allowed to disclose and must ensure their Originators or Third-Party Senders do not disclose Receiver’s account number or routing number to any third party for the purposes of originating a debit that is not covered under the original authorization  ODFIs must make risk-based judgments about how best to require compliance Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 9 Agenda 2013 ACH Update IAT Modification/Refinements ACH Security Framework Data Passing Notifications of Change ODFI Return Rate Reporting Stop Payments Incomplete Transactions 2014 and 2015 Changes Health Care Payments Potential Changes Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 10 5 2013 ACH Update August 15, 2013 ODFI Return Rate Reporting  Effective March 15, 2013  Reduced the reporting period from 60 days to 30 days during which the ODFI has to reduce a return rate below the threshold before the initiation of a rules enforcement proceeding  The one percent threshold still applies  Changed title of Subsection 2.17.2.1 to add reference to “ODFI Action”  Changed all references in Article 2 and Appendix 10 from 60 days to 30 days Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 11 ODFI Return Rate Reporting  Impacts?  ODFIs have a shortened timeframe to ensure that the return rate for unauthorized entries is reduced to below the one percent threshold  Forces ODFIs to terminate sooner an Originator or Third-Party sender with excessive return rate or  Forces ODFIs to work more closely in a quicker manner with Originators or Third-Party senders that have excessive return rate Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 12 6 2013 ACH Update August 15, 2013 Agenda 2013 ACH Update IAT Modification/Refinements ACH Security Framework Data Passing Notifications of Change ODFI Return Rate Reporting Stop Payments Incomplete Transactions 2014 and 2015 Changes Health Care Payments Potential Changes Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 13 Incomplete Transactions/Return of Funding Debits  Effective March 15, 2013  Allows the return of a debit entry to a consumer account within 60 days of the settlement date for an “Incomplete Transaction”  Incomplete Transaction defined as a transaction for which a Third-Party Sender debits a consumer’s account to collect funds but does not complete the corresponding payment to the party to which payment is owed  Written Statement of Unauthorized Debit required Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 14 7 2013 ACH Update August 15, 2013 Incomplete Transactions/Return of Funding Debits  Added new definition of “Incomplete Transaction” to Article Eight and modified definition of “Written Statement of Unauthorized Debit  Modified the R10 return reason code to include Incomplete Transactions  Includes modifications to description and cross references in Appendix Four Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 15 Incomplete Transactions/Return of Funding Debits  Impacts?  ODFIs needed to educate Third-Party Senders about new rules  ODFIs must determine if they need to perform additional due diligence to ensure Third-Party Sender has capability to complete transactions  Third-Party Sender may be subject to tighter obligations imposed by ODFIs Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 16 8 2013 ACH Update August 15, 2013 Agenda 2013 ACH Update IAT Modification/Refinements ACH Security Framework Data Passing Notifications of Change ODFI Return Rate Reporting Stop Payments Incomplete Transactions 2014 and 2015 Changes Health Care Payments Potential Changes Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 17 Health Care Payment Rule Changes  Effective September 20, 2013  Five major components to new rule  Unique identification of health care EFTs  Additional formatting requirements for health care EFT transactions  Delivery of payment related information (reassociation number)  Addition of new EDI data segment terminator  Health care terminology within the NACHA Operating Rules Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 18 9 2013 ACH Update August 15, 2013 Impact of Rule Changes to ODFIs  Ensure Health Plan Originators comply with Rules  Use of HCCLAIMPMT in Company Entry Description field  Company Name field containing readily recognized information by Health Care Provider (Receiver)  Correct formatting in Addenda Record Indicator field  Correct formatting in Payment Related Information field Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 19 Impact of Rule Changes to RDFIs  Do you already have a product or service available for providing payment related information if it is requested?  Does it include a secure, electronic delivery option?  Will your software accept the “~” as a data segment terminator?  Are you looking at the potential opportunities to promote your financial institution’s services to your health care provider customers? Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe. 20 10