Spotlight on U.S. Bank s IBOS Alliance. E-Payment Service Meets Standard for Protecting Payment Card Data

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1 Spotlight on U.S. Bank s IBOS Alliance E-Payment Service Meets Standard for Protecting Payment Card Data International ACH Addresses Growing Need for Global Payment Initiation

2 Spotlight on U.S. Bank s IBOS Alliance U.S. Bank s membership in the European and North American bank club International Banking One Solution (IBOS) provides a powerful value proposition for customers conducting business in Europe. U.S. Bank and other IBOS members have joined together to focus on providing unequaled international treasury management solutions to corporate and commercial entities. U.S. Bank s Treasury Management customer base has needs that are increasingly global in nature. The IBOS bank alliance provides us with a strong group of partner banks and a common process to deliver international treasury management solutions in Europe, Canada, the Caribbean and Central America, says Jeff Jones, Executive Vice President and head of U.S. Bank s Global Treasury Management Group. Our IBOS membership and the partnerships it creates for our customers is one of a number of unique components that make up our Global Treasury Management product offerings. The IBOS advantage IBOS was founded on the premise that there is no such thing as a truly global bank one that has a service set full enough to meet all customer demands in all countries. Most global banks have a full service set in a few countries and a more superficial capability in several others. IBOS, however, joins the best of the treasury management banks in each of the countries covered by its scope. The capabilities each IBOS member possesses are meshed together by a specific group framework for account opening, information services, local and cross border payments, and liquidity management. Through its IBOS membership, U.S. Bank is able to provide banking customers with access to preeminent treasury management banks in each country that provide the type of services that make it feasible to do all their business in that country through those banks. Customers are provided the full range of existing domestic payment methods from a local bank, electronic banking where needed, local liquidity management services, efficient crossborder concentration of funds and/or funding of accounts, and a transparent price list.

3 How U.S. Bank customers benefit from IBOS IBOS provides customers of its member banks the ability to tap into an existing and well-run network of major banks. Functioning as host banks in referring customer relationships to each other, these banks including U.S. Bank can offer their international banking customers a much wider range of treasury management services than the world s so-called global banks. Doing business with an IBOS bank provides customers an array of benefits that include: Streamlined account opening The process and documentation is the same for each IBOS bank. Account-opening forms are completed by the receiving bank on behalf of the customers and a process is in place to deal with any blockages to account opening. Transparent and competitive pricing Explicit pricing is provided by IBOS banks for all services. Customers are not charged on inter-company credits. Local and cross-border banking all under one roof Customers can work with one bank in each country that delivers intimate knowledge of local markets and practices. IBOS banks work together without overlay to provide a complete regional treasury management solution. For more information about U.S. Bank Treasury Management services, and our international treasury management capabilities, please contact your U.S. Bank Treasury Management Sales Consultant. Hands-on adoption By requirement, a dedicated staff is in place at all IBOS banks to facilitate introductions between customers of IBOS-associated banks and the banks themselves. Additionally, the dedicated staff provides ongoing service to either the bank partner or the corporate customer. Consistent process and service across a large geographical area IBOS banks offer customers a familiar banking process, as well as a deep level of treasury management services in multiple countries. Straight-through processing (STP) payments are executed with short turnaround.

4 E-Payment Service Meets Standard for Protecting Payment Card Data With the rising number of credit card payments being made by telephone and the Internet, cardrelated fraud has become a growing challenge and not just for cardholders. Merchants and all sorts of organizations that accept and process card payments can suffer severe damage to their reputations and brands if cardholder data is stolen. Recognizing this escalating risk, the five major card associations American Express, Discover Financial Services, JCB, MasterCard Worldwide and Visa International together developed the Payment Card Industry Data Security Standard (PCI DSS). The standard includes requirements for security management, policies, procedures, network architecture, software design and other critical protective measures. Compliance with the PCI DSS is mandatory for any organization that touches credit card data. Regardless of whether you re a bank, a barbershop or McDonald s, if you touch card data, you must comply with the PCI standards, says Michael Volk, a Senior Treasury Management Product Manager at U.S. Bank. E-Payment Service provides businesses and government agencies an easy-to-deploy method of collecting payments via the Internet and by phone the latter either through integrated voice response (IVR) services or call centers. Because one of the payment methods it accommodates is credit card, E-Payment Service is subject to PCI DSS compliance. E-Payment Service receives certification U.S. Bank became one of the first financial institutions to have an application receive certification of PCI DSS compliance when U.S. Bank E-Payment Service achieved that distinction in December 2006 after a 20-month certification effort. The PCI Data Security Standard is managed by the PCI Data Security Standards Council, but the various card associations administer the certification process.

5 A 20-month effort Pursuing PCI DSS certification represents a tremendous investment of time and human resources. Certification must address the following six compliance directives referred to as categories : Build and maintain a secure network Protect cardholder data Maintain a vulnerability management program Implement strong access control measures Monitor and test networks Maintain an information security policy At U.S. Bank, more than 50 individuals had significant direct involvement in the initial certification process for E-Payment Service, which had to meet all the requirements at four separate U.S. Bank locations: the service s development office in Chicago, core processing and customer service centers in the Minneapolis/St. Paul area, and a back-up data center in Portland, OR. U.S. Bank is currently completing its recertification effort for 2007, since the process must be repeated annually. Within these categories are 12 categorical requirements. For instance, to maintain a vulnerability management program (the third category above), an organization must use and regularly update anti-virus software and develop and maintain secure systems and applications. In all, an organization must demonstrate fulfillment of 140 specific requirements to achieve certification. The process includes separate self-assessment, pre-assessment and final assessment phases. What it means to customers Why should this extensive certification process interest E-Payment Service customers? With all of the problems being experienced in the industry with breaches of data security, PCI Data Security Standard certification should reassure E-Payment Service customers that it is trustworthy and secure, explains Volk, who is product manager for the service. For more information on the PCI Data Security Standard, visit

6 International ACH Addresses Growing Need for Global Payment Initiation For decades now, the supply chains of U.S. companies have been becoming more global. Indeed, the portion of gross domestic product (GDP) involving a cross-border flow of goods and services has been on the rise, with some estimates suggesting up to 50% of U.S. GDP has some international component. As a consequence, U.S. companies have experienced a growing need to pay international suppliers. At the same time, the relationship between global trading partners has evolved, impacting the form that these payments are taking. Buyers and sellers have come to be much more comfortable with risk that in earlier times was often mitigated through trade letters of credit and more recently structured trade finance techniques, explains Mark Reid, Vice President, International Banking and Strategy, U.S. Bank Treasury Management. As a result, international transactions today are often conducted using open account arrangements, increasing the demand for cash management payment products. One such product that offers a number of benefits is international ACH. Low-value electronic payment option For years, the Automated Clearing House (ACH) network has been a cost-effective electronic payment alternative for certain types of low-value, domestic payments. As companies have needed to make more global payments to suppliers, as well as overseas employees and retirees many have turned to ACH to achieve the same benefits they ve come to enjoy with domestic ACH payments. ACH is cost-effective and secure, says Roxanne Luick, Assistant Vice President at U.S. Bank. With ACH, you know exactly when your international disbursements clear. You can track your company s cash position accurately and base treasury management decisions on exact information. Alternatives at U.S. Bank U.S. Bank offers business customers the ability to initiate international ACH payments to beneficiaries in Canada, Mexico and five European countries:

7 Austria, Germany, the Netherlands, Switzerland and the United Kingdom. The Federal Reserve, which processes domestic ACH payments, also processes international ACH payments initiated through U.S. Bank. Customers can send ACH payments to Canada today using U.S. Bank SinglePoint, a Web portal to the bank s suite of treasury management services. Since the ACH payment instructions are already formatted in SinglePoint, customers need only fill in fields of information such as amount, account number and type of payment (fixed-to-fixed or fixed-to-variable). SinglePoint ACH initiation is expected to be available for payments to Mexico and the five European countries in second quarter Until then, customers can initiate international ACH payments to beneficiaries in these locations through a direct transmission to U.S. Bank. U.S. Bank s international ACH service does not offer U.S. companies the ability to receive international ACH payments only initiate them. The other primary electronic option for sending international cash management payments, of course, is an international wire transfer. Finality and settlement risks for cross-border wires are completely different than for cross-border ACH transactions. Best option for your global payments? For more information about sending electronic payments to Canada, Mexico or Europe, talk to your U.S. Bank Treasury Management Sales Consultant about the most appropriate solution for your situation. Customers can send international ACH payments as late as 10:00 p.m. Central Time to pay receivers the following business day. What s more, rather than initiating individual payments, you can send one ACH file that contains both domestic and international payments, streamlining your payment processing.