Automated Clearing House (ACH) Direct Deposit

Transcription

1 User Guide Version /07 Automated Clearing House (ACH) Direct Deposit

2 Table of Contents 1. INTRODUCTION HISTORY OF THE AUTOMATED CLEARING HOUSE UNDERSTANDING DIRECT DEPOSIT...3 A. How Does Direct Deposit Work?...3 B. Company Benefits of Direct Deposit of Payroll...4 C. Company Questions and Answers UNDERSTANDING ROUTING AND TRANSIT NUMBERS EMPLOYEE QUESTIONS AND ANSWERS PROMOTIONAL INFORMATION...12 A. Employee Advantages...12 B. Sample of Employee Letter...13 C. Sample of Bulletin Board Announcement...14 D. Pay Check Stuffer LIST OF EXHIBITS...16 A. Authorization Agreement...17 B. ACH File Specifications...18 C. Sample ACH Reports...27 D. ACH Transmissions...32 E. ACH Codes...37 F. Processing Schedule: Pay Date & Holiday Schedule...38 G. Direct deposit Cost Benefit Analysis Worksheet...41 H. ACH Contact List...42 I. Directory of KeyBank Routing and Transit Numbers...43 Please Note: The information in this tool kit, while correct at the time of its publication, is subject to change without prior notification. ACH Direct Deposit User Guide i

3 1. INTRODUCTION This tool kit is designed to help you obtain greater cost savings and other benefits through employee participation in your direct deposit program. Inside you will find: a) Information about the Automated Clearing House (ACH) b) How direct deposit works c) Answers to commonly asked questions about direct deposit d) Promotional ideas for increasing participation We hope that this information will help in planning your employee communications, and in promoting increased use of direct deposit. We are pleased to have the opportunity to serve you. Please let us know if we can assist you further in developing your direct deposit program. - KeyBank Global Treasury Management & Corporate Product Management ACH Direct Deposit User Guide 1

4 HISTORY OF THE AUTOMATED CLEARING HOUSE The Automated Clearing House (ACH) began in the late 1960 s when a group of California bankers formed the Special Committee on Paperless Entries (SCOPE). This committee was formed in direct response to the rapidly growing volume of paper checks being processed through the national check clearing system. The committee was chartered to explore the technical, operational and legal framework necessary for an automated payment exchange system. SCOPE laid the groundwork for the first Automated Clearing House association which began in This led to the formation of similar groups in other parts of the country. In California, as in most other areas, agreements were made between the emerging local ACH associations and the Federal Reserve Banks serving those areas, to provide the facilities, equipment, and staff to operate the local ACH. In 1974, the National Automated Clearing House Association (NACHA) was formed to coordinate the activities of the local ACH associations and to establish a national system for exchanging entries among the different ACH regions. Through the joint efforts of NACHA and the Federal Reserve System, the local ACHs were linked electronically on a nationwide basis by Today there are ACH associations serving over 20,000 financial institutions across the United States. These financial institutions provide ACH-based services to 300,000 corporations/organizations and millions of their clients. KeyBank and its affiliates originate approximately 245,000,000 ACH items annually. Direct Deposit User Guide 2

5 UNDERSTANDING DIRECT DEPOSIT A. How Does Direct Deposit Work? At KeyBank, ACH processing is done through a state of the art software package, known as PEP+. This software helps us ensure that your transactions are delivered to the Automated Clearing House for distribution on time and that all files are accurate. Here s how the process works: 1. Your employees who participate in the program sign authorization forms, which allow you to deposit their earnings directly into their accounts at the financial institution of their choice. 2. Based on the authorization forms, your company prepares a transmission in the standard NACHA format. A record is created for each participant that includes the net deposit, bank account number and financial institution Routing and Transit number. If an employee changes banks or account numbers, the employee must notify you so that the appropriate records can be changed to ensure their direct deposit is sent to the correct account. 3. While prenotification is optional, the first transactions you create may be prenotes for all employees who have signed up for direct deposit. A prenote is a zero dollar entry that must be sent through the ACH system at least ten (10) calendar days prior to the first actual payroll entry. The prenote is used to let the employee s bank, savings & loan or credit union know that an actual credit to the employee s account is forthcoming. The receiving financial institution verifies the employee s account number and related information. If any information included in the direct deposit entry is incorrect, the receiving financial institution has ten (10) calendar days to notify KeyBank of the error. This is known as a Notification of Change. KeyBank delivers various hard copy reports, which notify your company of the necessary changes. Whenever you add a new employee to the direct deposit program, it is recommended that a prenote entry be generated. 4. You continue to furnish the statement of earnings to your employee on payday. 5. The transmission is normally delivered or sent to KeyBank by 10:00 A.M. two business days prior to the effective pay date. This time may be extended to 3:00 P.M., but in the event of a problem with the file, there may not be sufficient time to remake it for processing that day. (Transmission times may vary.) Our preferred method of receiving files is via transmission. 6. KeyBank will process the file, balance the entries, and retain those deposits which belong to KeyBank accounts. 7. The file is then forwarded to the Automated Clearing House facility at the Federal Reserve Bank. The Automated Clearing House balances and validates the remaining transactions. The items are then sorted and distributed to the designated financial institution. 8. The funds are normally available to your participating employees on the morning of payday. Deposits are reflected in the employee s next bank statement. KeyBank stands ready to provide operational, technical, educational, and marketing assistance to ensure your Direct Deposit Program is a success. Direct Deposit User Guide 3

6 B. Company Benefits of Direct Deposit of Payroll Advanced knowledge of cash flow. Electronic funds transfers are predictable and clear in less time than checks, which can improve the company s control of its cash flow. Direct Deposit can be offered as an employee benefit and may strengthen employee relations. KeyBank offers a comprehensive Group Banking Program, which provides individual benefits to those employees who bank at KeyBank and receive direct deposit. Most of the benefits are provided at no cost to your company. We would also encourage you to explore Group Banking plans with the other major financial institutions in your marketplace. A summary of KeyBank s Group Banking benefits has been enclosed. Improved employee productivity - reduces employee time spent cashing checks on payday. Improved company image - as a modern, innovative company. Cost savings. Based on nationwide surveys, each paycheck that is converted to an electronic deposit saves $.10 - $.23 on paycheck issuance and reconcilement costs. Administrative efficiencies: Reduced item to print and write checks (process payroll). Eliminated or reduced reconcilement costs. No lost or stolen checks, or resultant stop payments and reissues. No confusing or special handling of checks for absent employees. Lower per item costs for printing and handling payroll information notices. Direct Deposit User Guide 4

7 C. Company Questions and Answers Q. Not all my employees bank with the same financial institution. Can they receive direct deposit of their pay? Yes, the originating financial institution, KeyBank, is your connection with the ACH system, which automatically distributes your employees pay to any ACH member bank, savings and loan or credit union designated by your employees. Your employees are free to bank where it is most convenient for them. Q. I have employees all over the country. How do I know this system will work the same way everywhere? The ACH payment mechanism is a nationwide electronic payment system where all participating financial institutions follow the NACHA operating rules and regulations. Q. What has been the employee reaction to this program? Employees, clients, organizations and corporations report strong favorable reactions. Q. How will my employees get their money? Employees can obtain their money by cashing a personal check, using an automated teller machine, or drawing from their deposit accounts. The cash they need will be there waiting for them when they need it. They won t have to pick up their paycheck, stand in line, and deposit it themselves. They will still receive a pay stub which will verify deposit of their funds. Q. What if some of our company s employees want to send part of their pay to a checking account and the other part of their savings account? This is a split deposit. The ACH system can handle split deposits even if the accounts are at different financial institutions. Q. Do all my employees have to agree to use direct deposit? No. But the more who use it, the greater the savings to you. That s really a matter to be worked out between you and your employees. Many companies strongly encourage new employees to receive direct deposit by treating a check as an exception. Each state has different rules regarding whether direct deposit can be mandatory. Q. What if some of my employees don t have checking accounts? They will need to open a checking or savings account in order to receive their direct deposit transaction. It is to your advantage to encourage them to open one. The more your employees participate in the program, the greater savings to you. Direct Deposit User Guide 5

8 Q. What kind of employee participation can I expect? The participation depends on the type of services offered, the geographical area involved and how much you promote it, by word of mouth, pay envelope stuffer, etc. We can assist you in developing your promotional strategy. Q. How will ACH deposit be indicated on our employees bank statements? The NACHA rules require that, at a minimum, the date and the amount of the transaction, as well as the source and purpose must be made available to them. Q. Will errors be difficult to trace and correct? The opposite is actually the case. By automating the payments system, errors are minimized. KeyBank s Cash Management and ACH staff are available to help in any way necessary. Q. Won t I lose float? You will have to determine the amount of float that might be lost based on your own situation. Banking studies indicate that float has decreased substantially as a result of efforts to improve the efficiency of the nation s check collection system. Many companies have discovered that the loss of float is offset by savings on check processing charges, in-house reconcilement costs, check safekeeping, stop payment charges, and check re-issue charges. Q. Will it be expensive to convert our present program to supply the necessary input? By involving your data processing people, a precise cost and timetable can be established. Many payroll software packages already have a direct deposit option built in. Once an ACH system is in place, the savings start adding up because the ACH system is less expensive to operate. And the more the system is utilized, the greater the savings. Q. If I use direct deposit, I ll still have to run two systems. It s really one system. You ll find that the automated portion is derived from your present method and will be less expensive. The more you convert to the automated mechanism, the more you ll decrease your present costs. Q. I don t have an automated payroll system now. That s okay. We ll show you how to set up the automation needed. Q. It sounds complicated. It really isn t. The only complicated part is the operational portion within the ACH system and we do that for you. Once the system is in place, your company s job is actually simplified. Direct Deposit User Guide 6

9 Q. I can t meet your input schedules. What are my options? There are two options that are recommended. You could either advance your processing cycle by one day or adjust your payday. Many companies have found that these adjustments, when necessary, are readily accepted - and the benefits received more that compensate for the adjustment. Q. Does this make payroll information accessible to people who don t need to have it? Exactly the opposite. Direct deposit is much more secure. Under normal procedures, a check passes through as many as hand in the clearing process... including grocery store clerks, tellers, etc. With direct deposit, this is handled on magnetic tape, transmission or PC based software and no one sees the individual transactions. Direct Deposit User Guide 7

10 UNDERSTANDING ROUTING AND TRANSIT NUMBERS In order to effectively implement a direct deposit program, your payroll staff will need to be knowledgeable about how to read the Routing and Transit numbers on checks and drafts. KeyBank will be happy to provide whatever training is necessary. A Routing and Transit number is a unique number assigned to each financial institution, which appears on checks or drafts drawn on that institution. Routing and Transit numbers assigned to banks are nine digits in length. The first two digits identify the Federal Reserve District in which the bank resides (01-12). The following seven numbers will be unique and designate each bank. The Routing and Transit number appears on the left side of the MICR line. When receiving authorization forms from your employees, we strongly suggest that a voided check be attached. This ensures that you receive the correct information from the employee. KeyBank will make available a full ACH member listing sorted by state and Routing and Transit number, upon request so that your staff members may verify the information they receive. This can be provided either on a magnetic tape, a hard copy report or through PC based software. Direct Deposit User Guide 8

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12 EMPLOYEE QUESTION AND ANSWERS Q. I consider how much money I make a confidential matter. Will this new bank service infringe on this confidentiality? No. The payroll information, which goes from the company to its bank is highly secure. Your pay slip will contain the same information now contained on your check. Direct Deposit will also eliminate tellers, grocery store clerks, etc. from seeing your paycheck. Q. What if I have started ACH Direct Deposit and want to drop it? If you have signed an authorization for direct deposit of payroll, you will need to notify your employer to cancel the authorization. Q. Do I have to use a certain financial institution to participate in the system? No. The majority of financial institutions participate. Almost no one will need to change banking relationships to have his of her pay deposited automatically on payday. Q. Must I have a checking or savings account to use the payroll deposit plan? Yes. Q. Can I have a set amount of money each month automatically deposited into a savings account? Yes. You can specify with your employer s payroll department the dollar amount you wish to be deposited into a savings account each pay period. Q. How will I know how much money is being deposited into my checking account? You will receive an earnings statement from your employer giving complete information including the net amount you are paid. This is the amount that will be deposited into your checking account. Q. Is my financial institution required to send a deposit confirmation to me at the time a direct deposit of payroll entry is posted? No. Since the employer is still required to provide you on payday with an accounting record of earnings and deductions, that statement will be your notification. You will also see your direct deposit entry on your regular monthly bank statement. Q. What if an error is made? We don t expect any, but if one should occur it can be easily corrected. There are trained personnel at your company and at your financial institution who fully understand the direct deposit and automated payment systems. These individuals stand ready to investigate and resolve any problems. Direct Deposit User Guide 10

13 Q. I want my check in my hand first. With direct deposit you can have all your earnings information (pay stub) in your hand, and your money in the bank. Q. How do I know how much I made? Your company will continue to issue you a pay stub detailing gross earnings, net earnings, and other payroll related information. Q. I have to go to the bank anyway; can I just deposit my check then? Why go on the busiest days at the bank? You can avoid the lines and hassles by going to the bank when it is convenient for you, or by using automated teller machines. Q. What if my institution is not involved with direct deposit? Most financial institutions are involved with direct deposit. However, if yours is not, contact your employer to make the necessary arrangements. Q. I do not want my spouse to know how much I make. The employee should check with his or her employer to see if the pay can be deposited to two separate accounts so that the spouse may only see some portion of the pay. Q. Does the Federal Government use the ACH network? The Federal Government is the largest user of the ACH network, initiating over 500 million transactions annually. Direct Deposit User Guide 11

14 PROMOTIONAL INFORMATION A. Employee Advantages 1. Safe and Secure a. Eliminates possibility of lost or stolen checks. b. Tends to reduce the amount of cash carried, reducing hazards associated with carrying cash. c. Deposit is posted to account more quickly, reducing possibility of overdrafts. 2. Convenient a. The cash is in the employee s account at the beginning of the day on payday. b. Reduces requirement to go to the bank to wait in long lines on busy days or make it to the bank during banking hours. c. Receive pay, with access to fund, even when absent or away from home. No need to make special arrangements. d. For those working different shifts, eliminates the need for special trips to obtain and deposit paychecks. e. Provides faster access to funds, which are available on payday without waiting for checks to clear. 3. Confidential a. Payroll data is more confidential-tellers, grocery clerks don t see your paycheck. It is processed electronically rather than handled by people. b. Continue to receive complete earnings statement every payday, showing gross pay, deductions, net pay and other information. 4. Improved Money Management a. The money is already in the bank. Encourages savings and good money management. b. May reduce bank service charges, and will in some cases there may be no charge for electronic deposits. Employees will need to check with their financial institution for service charges and benefits. c. Provides a consistent statement and historical record of financial/pay transactions. Direct Deposit User Guide 12

15 B. Sample of Employee Letter Dear (Company Name) Employee: Did you know... More than one million paychecks are lost or stolen each year? The average person spends about 81/2 hours a year waiting in lines to cash payroll checks. As an added benefit to our employees, (Company Name) now offers you DIRECT DEPOSIT. We can automatically deposit your pay into a checking or savings account at your bank, savings & loan, or credit union and send your regular earnings statement reflecting payroll information for your records. To begin, simply fill out an authorization form, attach a voided check and send the form to the payroll department. If you do not have a checking or savings account, let your supervisor know or contact the Payroll Department and we will help you handle the necessary arrangements. With DIRECT DEPOSIT, you will benefit in many ways. No more wasting part of your lunch hour or evenings waiting in lines at the bank. No possibility of losing or having your check stolen. No special trips or special arrangements when you are away from work on payday or are working offhours. DIRECT DEPOSIT will mean added convenience and security to you. Sign up TODAY! Sincerely, Joe Smith Direct Deposit User Guide 13

16 C. Sample of Bulletin Board Announcement WHY BOTHER WITH THE HASSLES NORMALLY ASSOCIATED WITH PAYDAY? Now there s a way to eliminate the worries of lost or stolen paychecks, the special arrangements for handling your paycheck when you re gone on payday or working off hours, the payday hassle of filling out forms, depositing your check, and standing in line. With Direct Deposit, (Company Name) will automatically deposit your pay into your account at your bank, savings & loan, or credit union. Your money will be in your account and ready for your use at the beginning of payday-even if your account is in another city or state. Of course, you ll continue to receive from us your earnings statement with all your normal payroll information. What is required? Stop by the Payroll Department and fill out a simple authorization form. It s the SURE way to receive your PAY. Direct Deposit-a little bit different, a whole lot better. Direct Deposit User Guide 14

17 D. Sample of Pay Check Stuffer DIRECT DEPOSIT IS HERE! Now you can avoid the chore of rushing to your bank, savings & loan, or credit union each payday to deposit your paycheck-or to the grocery store to cash it. No more worries about lost, or stolen paychecks. No more hassles when your on vacation, sick or traveling on payday. How? Through the direct deposit payroll program offered by (Company Name). With your authorization, we will automatically deposit your pay in your account at your bank, savings & loan, or credit union. Each payday your money will be in your account ready for your use at the beginning of the day. On payday you ll continue to receive from us your earnings statement, the form that lists your gross pay, deductions, and the net amount deposited in your account. Just imagine, studies indicate that employees in the U.S. spend an average of 8 1/2 hours each year waiting in line to deposit paychecks. Now you can spend that time doing the things you enjoy. The authorization form is enclosed. Please fill it out right away and return it to Payroll. The payday after the form is processed, your money will be automatically deposited for you. With direct deposit, your payday can be worry-free! Direct Deposit User Guide 15

18 LIST OF EXHIBITS A. Sample of Authorization Agreement/Form B. ACH File Specifications C. Sample ACH Reports D. ACH Transmissions 1) KeyBank Secure File Transfer Protocol Request Form 2) KeyBank File Transfer Protocol Guidelines 3) Data Transmission Request Form E. ACH Tape Specifications F. ACH Codes G Federal Reserve Holiday Schedule H Direct Deposit Cost Benefit Analysis Worksheet I. Processing Schedule: Delivery Date/Pay Date Schedule J. ACH Contact List K. Directory of KeyCorp Routing and Transit Numbers Direct Deposit User Guide 16

19 A. Sample of Authorization Agreement/Form AUTHORIZATION AGREEMENT FOR AUTOMATIC DEPOSIT (ACH CREDITS) COMPANY NAME COMPANY ID NUMBER I (we) hereby authorize, hereinafter called COMPANY, to initiate credit entries and to initiate, if necessary, debit entries and adjustments for any credit entries in error to my (our) Checking Savings account (select one) indicated below and the depository named below, hereinafter called DEPOSITORY, to credit and/or debit the same to such account. Depository Name: Branch: City: State: Zip: TRANSIT ABA NO. ACCOUNT NO. This authority is to remain in full force and effect until COMPANY has received written notification from me (or either of us) of its termination in such time and in such manner as to afford COMPANY and DEPOSITORY a reasonable opportunity to act on it. Name: ID Number: (Please Print) Date: Signed: Signed: (On a joint account both parties must sign) Direct Deposit User Guide 17

20 B. ACH File Specifications 1.1 Sequence of Records in ACH Files Each file has a File Header record and ends with a File Control record. Within files are any number of batches. Batches begin with a Batch Header record and end with a Batch Control record. Within batches are Entry Detail records. The number of addenda records that follow each entry is dependent on the Standard Entry Class Code. The file sequence is shown in the diagram entitled Record Layout Sequence on page File Structure File Header Record The File Header Record identifies the immediate origin (Sending Point or ACH Operator) and destination (Receiving Point or ACH Operator) of the entries contained within the file. In addition, this record includes date, time, and file identification fields which, can be used to identify the file uniquely. Company/Batch Header Record The Company/Batch Header Record identifies the Originator and describes the prearranged paperless debit or credit. For example, GAS BILL or REG SALARY indicates the reason for the transaction. The Company/Batch Header Record contains the Routing and Transit Number of the Originating Depository Financial Institution (ODFI) for settlement, routing of returns, and other control purposes. In addition, the Company/Batch Header Record can indicate the intended effective entry date of all transactions within the batch. Entry Detail Record Entry Detail Records contain individual DFI account number, identification number, name, and the debit or credit amount as indicated by the Transaction Code. Transaction Codes for Entry Detail Records have been defined to accommodate prenotification records, zero dollar entries, and return entries. Prenotifications are identical to the basic entry format but contain appropriate Transaction Codes and Zeros in the Amount field. Prenotifications can be batched with other dollar entries or batched separately. Return entries are distinguished by special Transaction Codes and must be batched separately from other dollar entries. See page 24 for detailed record layout. Direct Deposit User Guide 18

21 Addenda Record, Primary Addenda Record, Secondary Addenda Record Addenda records will be used by the Originator to supply additional information about Entry Detail Records which will be passed from of ODFI through the ACH Operator to the Receiving Depository Financial Institution (RDFI). Each application and its corresponding number of addenda records is listed below: APPLICATION CONTENTS MAXIMUM NUMBER OF ADDENDA RECORDS OPT/MAN CCD, PPD ANSI ASC X12 data segments, NACHA endorsed banking convention 1 Optional POS, SHR, MTE See NACHA Operating Rules Appendix 2.1.9,2.1.10, Mandatory (unless prenote) CIE Name Extension 1 Optional DNE NACHA endorsed banking convention 1 Mandatory Returns, Dishonored Returns, Contested Dishonored Returns COR, Refused COR CTX TRX See NACHA Operating Rules Appendix Five (Return Entries) See NACHA Operating Rules Appendix Six ( Notification of Change) ANSI ASC X12.4 X12..5 X12.6, X12.85, payment related UN/EDIFACT syntax National Association for Check Safekeeping syntax 1 Mandatory 1 Mandatory 9,999 Optional 9,999 Mandatory Direct Deposit User Guide 19

22 Company/Batch Control Record The Company/Batch Control Record contains the counts, hash totals, and total dollar controls for the preceding detail entries within the indicated batch. All Entry Detail Records are hashed. Both Entry Detail Records and Addenda Records are included in the entry/addenda counts; Batch Header and Batch Control Records are not included. See page 25 for detailed record layout. File Control Record The File Control Record contains dollar, entry, and hash total accumulations from the Company/Batch Control Records in the file. This record also contains counts of the number of blocks and the number of batches within the file (or batched data transmitted to a single destination). See page 26 for detailed record layout. Direct Deposit User Guide 20

23 Record Layout Sequence (NACHA Format) FILE HEADER RECORD BATCH HEADER RECORD - ONE PER FILE - FIRST LOGICAL RECORD - ONE PER BATCH 1ST ENTRY DETAIL RECORD 2ND ENTRY DETAIL RECORD ETC... LAST ENTRY DETAIL RECORD BATCH CONTROL RECORD - ONE PER BATCH BATCH HEADER RECORD 1ST ENTRY DETAIL RECORD ETC... LAST ENTRY DETAIL RECORD BATCH CONTROL RECORD ETC... FILE CONTROL RECORD ONE PER FILE - LAST LOGICAL RECORD - FILE USED TO COMPLETE LAST PHYSICAL BLOCK Direct Deposit User Guide 21

24 File Header Record (NACHA Format) FIELD # FIELD POSITION INFORMATION 1 01 NNNNNNNNNN NNNNNNNNNN YYMMDD HHMM A KEYBANK XYZ CORPORATION xxxxxxx FIELD FIELD FIELD # POSITION LENGTH FIELD DESCRIPTION DEFINITION RECORD TYPE CODE File Header Identifier - Must Be <1> PRIORITY CODE FIXED INFORMATION-MUST BE <01> IMMED. DESTINATION # *(1)* PROCESSING BANK R/T # NOTE: FIELD RIGHT JUSTIFIED, BLANK FOLLOWED BY # IMMEDIATE ORIGIN # *(1)* ORIGINATOR #-SHOULD BE TAXPAYER ID# OF COMPANY. NOTE: FIELD RIGHT JUSTIFIED, BLANK FOLLOWED BY # TRANSMISSION DATE DATE OF FILE CREATION-FORMAT <YYMMDD> TRANSMISSION TIME TIME OF FILE CREATION-FORMAT <HHMM> FILE ID MODIFIER ALPHANUMERIC CHARACTER TO UNIQUELY IDENTIFY MULTIPLE FILES THAT WERE CREATED ON THE SAME DAY RECORD SIZE RECORD SIZE-MUST BE <094> BLOCKING FACTOR BLOCKING FACTOR-MUST BE <10> FORMAT CODE FORMAT CODE-MUST BE <1> DESTINATION NAME *(1)* PROCESSING BANK NAME ORIGIN NAME *(1)* ORIGINATORS NAME-MUST BE NAME OF COMPANY REFERENCE CODE OPTIONAL FIELD-AVAILABLE FOR COMPANY S INTERNAL USE *(1)* BANK MUST BE NOTIFIED PRIOR TO MAKING ANY CHANGES TO THIS FIELD (NOTE: Routing and Transit Number is abbreviated as R/T # in this and subsequent record layouts.) Direct Deposit User Guide 22

25 Company Batch Header Record (NACHA Format) FIELD # FIELD POSITION INFORMATION 5 2NN XYZ CORPORATION XXXXXXXXX NNNNNNNNNN PPD Entry Type xxxxxx YYMMDD 1 NNNNNNNN FIELD # FIELD POSITION FIELD LENGTH FIELD DESCRIPTION DEFINITION RECORD TYPE CODE Batch Header Identifier - Must Be <5> SERVICE CLASS CODE TYPE OF ACH ENTRIES-200 = MIXED DEBITS AND CREDITS 220= CREDITS ONLY 225 = DEBITS ONLY COMPANY NAME *(1)* COMPANY NAME - WILL APPEAR IN THIS FORM ON RECIPIENTS CHECKING/SAVINGS ACCOUNT STATEMENT CO. DISCRETIONARY DATA FIELD AVAILABLE FOR COMPANY USE CO. IDENTIFICATION *(1)* COMPANY NUMBER 1 FOLLOWED BY 9 DIGIT EIN # 3 FOLLOWED BY 9 DIGIT DUNS # 9 FOLLOWED BY 9 DIGIT CO. ASSIGNED # STD. ENTRY CLASS CODE *(1)* ENTRY CLASS (SEE EXHIBIT F) CO. ENTRY DESCRIPTION *(1)* TRANSACTION TYPE - WILL APPEAR IN THIS FORM ON RECIPIENTS CHECKING/SAVINGS ACCOUNT STATEMENT (i.e., <PAYROLL><PENSION><PAYMENTS> CO. DESCRIPTIVE DATA OPTIONAL DATE INFORMATION - COMPANY USE EFFECTIVE ENTRY DATE DATE OF SETTLEMENT OF TRANSACTIONS - FORMAT <YYMMDD> SETTLEMENT DATE MUST BE BLANK (FOR BANK USE ONLY) ORIGINATOR STATUS CODE BANK STATUS MUST BE <1> ORIGINATION ID *(1)* PROCESSING BANK R/T # = SHOULD BE KEYBANK S R/T # BATCH NUMBER SEQUENTIAL NUMERIC BATCH # - STARTING WITH < > *(1)* BANK MUST BE NOTIFIED PRIOR TO MAKING ANY CHANGES TO THIS FIELD Direct Deposit User Guide 23

26 Entry Detail Record (NACHA Format) FIELD # FIELD POSITION INFORMATION 6 NN RRRRTTTT C $$$$$$cc AAAAAAAAAAAAAAAAAA 0 NNNNNNNNNNNNNNN FIELD # FIELD POSITION FIELD LENGTH FIELD DESCRIPTION DEFINITION RECORD TYPE CODE ENTRY DETAIL IDENTIFIER - MUST BE <6> TRANSACTION CODE TYPE OF TRANSACTION - SEE TABLE BELOW ROUTING/TRANSIT NUMBER R/T # OF RECIPIENTS FINANCIAL INSTITUTION R/T # CHECK DIGIT R/T # CHECK DIGIT OF RECIPIENTS FINANCIAL INSTITUTION INDIV. ACCOUNT NUMBER RECIPIENTS ACCOUNT NUMBER - LEFT JUSTIFIED NUMBERS <0-9> AND HYPHENS <-> ONLY, OMIT SPACES AMOUNT AMOUNT OF TRANSACTION - MUST BE NUMERIC INDIVIDUAL ID # NUMBER BY WHICH RECIPIENT IS KNOWN TO THE COMPANY INDIVIDUAL NAME RECIPIENTS NAME DISCRETIONARY DATA OPTIONAL FIELD - AVAILABLE FOR COMPANY S INTERNAL USE ADDENDA INDICATOR ADDENDA RECORD INDICATOR - MUST BE <0> IF NO ADDENDA TRACE # FIRST 8 CHARACTERS SHOULD BE THE FIRST 8 DIGITS OF KEYBANK S R/T #, REMAINING 7 MUST BE SEQUENTIAL NUMBERS ASSIGNED BY COMPANY COMMON TRANSACTION CODE TABLE 22 - CHECKING ACCOUNT CREDIT ENTRY 23 - CHECKING ACCOUNT CREDIT PRENOTIFICATION 27 - CHECKING ACCOUNT DEBIT ENTRY 28 - CHECKING ACCOUNT DEBIT PRENOTIFICATION 32 - SAVINGS ACCOUNT CREDIT ENTRY 33 - SAVINGS ACCOUNT CREDIT PRENOTIFICATION 37 - SAVINGS ACCOUNT DEBIT ENTRY 38 - SAVINGS ACCOUNT DEBIT PRENOTIFICATION Direct Deposit User Guide 24

27 Company Batch Control Record (NACHA Format) FIELD # FIELD POSITION INFORMATION 8 2NN $$$$$$$$$$$$$c c $$$$$$$$$$cc NNNNNNNNNN NNNNNNNN FIELD # FIELD POSITION FIELD LENGTH FIELD DESCRIPTION DEFINITION RECORD TYPE CODE BATCH CONTROL IDENTIFIER - MUST BE <8> SERVICE CLASS CODE *(2)* TYPE OF ACH ENTRIES = MIXED DEBITS AND CREDITS 220 = CREDITS ONLY 225 = DEBITS ONLY ENTRY/ADDENDA COUNT # OF RECORDS IN BATCH - MUST BE UNSIGNED NUMERIC ENTRY HASH ACCUMULATION OF ROUTING/TRANSIT # S FROM ENTRY DETAIL RECORDS (FIELD 3) NOTE: TRUNCATE HIGH ORDER DIGITS BEYOND 10 CHARACTERS TOTAL DEBITS $ AMOUNT AMOUNT OF DEBITS IN BATCH - MUST BE UNSIGNED NUMERIC NOTE: IF NO DEBIT $ MUST BE < > TOTAL CREDITS $ AMOUNT AMOUNT OF CREDITS IN BATCH - MUST BE UNSIGNED NUMERIC NOTE: IF NO CREDIT $ MUST BE < > CO. IDENTIFICATION *(2)* COMPANY NUMBER - 1 FOLLOWED BY 9 DIGIT EIN # 3 FOLLOWED BY 9 DIGIT DUNS # 9 FOLLOWED BY DIGIT CO. ASSIGNED # RESERVED MUST BE LEFT BLANK RESERVED MUST BE LEFT BLANK ORIGINATION ID *(2)* PROCESSING R/T # - SHOULD BE KEYBANK S R/T # BATCH NUMBER *(2)* SEQUENTIAL NUMERIC BATCH # - STARTING WITH < > *(2)* MUST BE SAME AS BATCH HEADER OF SAME BATCH Direct Deposit User Guide 25

28 File Control Record (NACHA Format) FIELD # FIELD POSITION INFORMATION $$$$$$$$$cc $$$$$$$$$$cc FIELD # FIELD POSITION FIELD LENGTH FIELD DESCRIPTION DEFINITION RECORD TYPE CODE FILE CONTROL IDENTIFIER - MUST BE <9> BATCH COUNT # OF BATCHES IN FILE - MUST BE UNSIGNED NUMERIC BLOCK COUNT # OF BLOCKS IN FILE - MUST BE UNSIGNED NUMERIC ENTRY/ADDENDA COUNT # OF ENTRY DETAIL RECORDS IN FILE - UNSIGNED NUMERIC ENTRY HASH ACCUMULATION OF ROUTING/TRANSIT # S FROM ENTRY DETAIL RECORDS (FIELD 3) NOTE: TRUNCATE HIGH ORDER DIGITS BEYOND 10 CHARACTERS TOTAL DEBIT AMOUNT AMOUNT OF DEBITS IN FILE - MUST BE UNSIGNED NUMERIC NOTE: IF NO $ MUST BE < > TOTAL CREDIT AMOUNT AMOUNT OF CREDITS IN FILE - MUST BE UNSIGNED NUMERIC NOTE: IF NO $ MUST BE < > RESERVED MUST BE BLANK Direct Deposit User Guide 26

29 C. Sample ACH Reports I. Adjustment Activity Completed Today: This section details the on-line changes that have been made to your file on your behalf. For example, detail deletes, file deletes, and batch effective date changes are all included in this section if they were entered today. This section details activity, which occurred today regardless of settlement date. Direct Deposit User Guide 27

30 II. Notifications of Change: This section details any notifications of change on items originated by your company. They are treated as if they settle and will appear on this section on the day they settle. While this information does not affect settlement, it is information you should receive on a regular basis to update your records. Direct Deposit User Guide 28

31 III. Items Returned: This section details any returns of originated items. Only those returns which have settled today are included. Direct Deposit User Guide 29

32 IV. Adjustment Activity Affecting Settlement Today: This section details on-line changes, which affect settlement today. This section differs from Adjustment Activity Completed Today in that this activity could have taken place on an earlier date, but did not settle until today. This section details any adjustment activity which settles today, regardless of when the adjustment occurred. Direct Deposit User Guide 30

33 V. Settlement Reconciliation for Today: This section is a summary. It shows the net settlement to the account today by indicating the original amount of settlement to the file and the total adjustment activity. Return Item settlement is listed separately, as are reversals. Direct Deposit User Guide 31

34 D. ACH TRANSMISSIONS 1) KeyBank Secure File Transfer Protocol Request Form Fill out this page if requesting Encrypted File Transfer FTP Incoming/Outgoing File Transfer Using Key s FTP Server (trading partner pushes or pulls data) Source IP Address: Alias: Can your FTP client support Passive Mode? Yes No (If no what port(s) does your client listen on for data connections Key FTP server: sft.keybank.com IP address ( for DR/test) Allows our FTP proxy to authenticate the client. Username and Password will be sent via separate communication Please review the Data/Hardware Specifications Summary to ensure transmission compatibility. Indicate technical review if the transmission request will require setup customization or if other is checked above. Return completed form to Sales Officer. Any questions about completing this form should be directed to the Transmission Coordinator at NOTE: This form is used for all transmission types; shaded areas are to be completed by KeyBank Transmission Support for bank use only. Transparent Data yes /no Compressed Data yes/no Date Received Application test date Test data Modem # Prod. Modem # Remote ID: Batch ID: Extract Jobname: Technician Comments: Batch Jobname Direct Deposit User Guide 32

35 Direct Deposit User Guide 33

36 Remote Site Information 1) Company Name Self-explanatory 2) Company Address Self-explanatory 3) Client Operations Contact Person at company responsible for file to be transmitted and/or creates and sends file 4) Telephone and Fax Self-explanatory 5) Staffing Hours Days of week and hours per day this person is available 6) Client Technical Contact Person at company knowledgeable about data communications setups 7) Telephone and Fax Self-explanatory 8) Staffing Hours Days of week and hours per day this person is available 9) Protocol Select one 10) Application Check ACH, ARP or Lockbox (LBS) Only 11) Transmission Frequency Check One Daily plus = more than one per day 12) Data Transfer Direction Check One Inbound to Key = Client sends file to Bank Outbound from Key = Client retrieves file from Bank 13) Type of Request Addition = New Transmission Change = Change, e.g. protocol Deletion = Cancel Service Technical Review = Requires review by data center personnel to determine feasibility 14) Site Check One Transmission goes to or originates from specified data center 15) Requester/Sales Officer CMSO 16) Telephone CMSO Phone Number 17) Logon ID CMSO Mainframe ID., e.g., HYLANMI 18) Dates Enter Request Date Only Direct Deposit User Guide 34

37 2) KeyBank File Transfer Protocol Guidelines ENCRYPTION Encryption is required for all FTP s with KeyBank. Key provides 2 encryption options: 1. FTP with PGP encryption (signing optional) 2. FTP/TLS FIREWALL Key requires trading partners to have a static public source IP address, or limited range of addresses. The source address must be added to our firewall policy prior to your connecting. Key should be notified in advance of any changes to your IP address(es). Firewall updates may take up to 10 business days to complete FTP/TLS TLS (Transport Layer Security) is generally compatible with FTP/SSL. Key s FTP server supports explicit (AUTH SSL) TLS using the control port Key s firewall does not allow FTP/TLS connections on port 21, either inbound or outbound. Client certificates are not required. PASSIVE MODE Key requires you to connect to our FTP server using passive mode. In passive mode, Key s FTP server listens for data connections on ports in the range If necessary, configure your firewall to allow outgoing connections to Key on these ports. ACTIVE MODE Generally, Key does not support active mode. If your ftp client binds to a LIMITED range of data ports in active mode, Key may be able to accommodate those ports. Note that most command line ftp clients (Solaris, Microsoft) use random high ports for data connections and cannot open data connections with Key in active mode. SFTP Key does not currently support S/FTP or Secure Copy using SSH. TEST SERVER Key s test FTP server uses port 2021 for control connections for all ftp traffic. Direct Deposit User Guide 35

38 Port Summary Below are the destination IP addresses and ports to which your firewall should allow outbound connections: Server Control Data Ports Port Test/ DR Production FTP sft.keybank.com ( ) FTP/TLS sft.keybank.com KeyBank offers AS2 and browser-based option for client who cannot meet our FTP requirements. Direct Deposit User Guide 36

39 3) Data Transmission Request Form Company Name: Company Address: Client Technical Contact: Client Operations Contact: Address: Address: Telephone: Fax: Telephone: Fax: Staffing Hours: Transmission Method: Key Total Treasury WBT(Web-based File Transfer Module) Other Staffing Hours: Encrypted File Transfer FTP w/pgp FTP w/tls AS-2 Transmission Frequency: Daily Weekly Semi-Monthly Annually Daily Plus Bi-Weekly Monthly Other Data Transfer Direction: Inbound to Bank Outbound from Bank Both Internal Use: Applications: ACH ARP Batch Wire BAI2 Information Reporting EDI Lockbox Wire Transfer Key Capture Plus Consolidated Payables Returned Items Request Date: Implementation Date: Comments Section: Direct Deposit User Guide 37

40 E. ACH CODES This is a listing of the most commonly used transaction and other codes required in the NACHA file layouts described in Exhibit B. SERVICE CLASS CODES 200 ACH Entries Mixed Debits and Credits 220 ACH Credits Only 225 ACH Debits Only 280 ACH Automated Accounting Advices STANDARD ENTRY CLASS CODES ARC Accounts Receivable Conversion CBR Corporate Cross Border Payment CCD Cash Concentration or Disbursement CIE Customer Initiated Entries CTX Corporate Trade Exchanges MTE Machine Transfer Entries PBR Consumer Cross Border Payment POP Point of Purchase Entry POS Point of Sale PPD Prearranged Payments and Deposits RET Automated Returns RCK Re-presented Check Entry SHR Shared Network Transaction TEL Telephone Initiated Entries TRC Truncated Entries TRX Truncated Entries (w/addenda) WEB Internet Initiated ACH Entries XCK Destroyed Check Entry ORIGINATOR STATUS CODES 1 This code identifies the Originator as a depository financial institution which has agreed to be bound by the NACHA rules 2 This code identifies the Originator as a federal government entity or agency not subject to the NACHA rules. ADDENDA TYPE CODES 02 Point of Sale Entry (POS), Shared Network Transaction (SHR), or Machine Transfer Entry (MTE) terminal location description. 05 Special Addenda Information (Addenda Record(s) apply to CCD, CIE, PPD and CTX entries 98 Automated Notification of Change 99 Automated Return Entry ADDENDA RECORD INDICATOR 0 No Addenda Record(s) follow 1 Addenda Record(s) follow LOAN ACCOUNT CREDIT RECORDS 51 Automated Return or Notification of Change for original transaction code 52,53, or Automated Loan Account Deposit (Credit) 53 Pre-notification of Loan Account Credits Authorization (non-dollar) 54 Zero dollar with remittance data (for CCD & CTX only) 55 Automated Loan Account Debit (Reversals Only) 56 Automated Return or Notification of Change for original transaction code 55 TRANSACTION CODES Demand Credit Records (for checking, NOW, and share draft accounts) 20 Reserved 21 Automated Return or Notification of Change for original transaction code 22 or Automated Deposit 23 Pre-notification of Demand Credit Authorization (non-dollar) 24 Zero dollar with remittance data (CCD,CTX) Demand Debit Records (for checking, NOW, and share draft accounts) 25 Reserved 26 Automated Return or Notification of Change for original transaction code 27 or Automated Payment 28 Pre-notification of Demand Debit Authorization (non-dollar) 29 Zero dollar with remittance data (CCD, CTX) Savings Account Credit Records 30 Reserved 31 Automated Return or Notification of Change for original transaction code 32 or Pre-notification of Savings Credit Authorization (non-dollar) 34 Zero dollar with remittance data (CCD, CTX) Savings Account Debit Records 35 Reserved 36 Automated Return or Notification of Change for original transaction code 37 or Automated Payment 38 Pre-notification of Savings Debit Authorization (non-dollar) 39 Zero dollar with remittance data (CCD, CTX) Direct Deposit User Guide 38

41 F. PROCESSING SCHEDULE Pay Date Schedule Please reference the table below to help you select appropriate pay dates schedule for ACH Direct Deposit origination 2008 ACH Origination Schedule Monthly Weekly Company Name: Semi-Monthly Bi-Weekly Point Name: Other Daily Contact Name: Phone Number: After 5 p.m. Number: January February March S M T W T F S S M T W T F S S M T W T F S April May June S M T W T F S S M T W T F S S M T W T F S July August September S M T W T F S S M T W T F S S M T W T F S Direct Deposit User Guide 39

42 October November December S M T W T F S S M T W T F S S M T W T F S Legend: Non-Business Day or Holiday X = Transmission/ Delivery Date Direct Deposit User Guide 40

43 ACH Origination Schedule Procedures Instruction To insure timely processing, Direct Deposit (credit) files must be delivered at least two (2) banking business days prior to the effective date, one (1) banking business day for Prearranged Payments (debits). When a bank holiday (see below) occurs during a processing cycle, one (1) additional banking business day is required to process transactions through the ACH network Observed Bank Holidays New Year s Day Tuesday, January 1, 2008 M. L. King s Birthday Monday, January 21, 2008 Presidents Day Monday, February 18, 2008 Memorial Day Monday, May 26, 2008 Independence Day Friday, July 4, 2008 Labor Day Monday, September 1, 2008 Columbus Day Monday, October 13, 2008 Veterans Day Tuesday, November 11, 2008 Thanksgiving Day Thursday, November 27, 2008 Christmas Day Thursday, December 25, 2008 Direct Deposit User Guide 41

44 G. Direct Deposit Cost Benefit Analysis Worksheet I. Initial Investment 1. 20% of cost modifications to payroll system or cost of PC payroll software (amortized over 5 years) $ II. Annual Costs 2. Collection of authorization forms and file maintenance $ 3. Bank service charges for direct deposit $ 3a. Third party payroll vendor fees if applicable $ 4. Lost float on payroll dollars $ III. TOTAL ANNUAL COSTS Annual Savings 5. Bank service charges per (per item x number of checks issued) $ $ 6. Bank service charges for reconcilement $ 7. In-house reconcilement costs $ 8. Bank service charges for stop payments $ 9. Check reissue costs (cost per reissue x number of reissues) $ 10. Check printing costs $ 11. Check storage costs $ 12. Check cashing service charges $ 13. Employee lost time to cash checks $ 14. Reduction in cost of mailing checks (US mail and/or express mail). A stub may still have to be sent but the overall cost should go down. TOTAL ANNUAL SAVINGS $ $ IV. Net Addition to Profits Annual Savings - (minus) Annual Costs $ Direct Deposit User Guide 42

45 H. ACH CONTACT LIST Contact Support Number Function ACH Customer Service Manager Contact for general ACH enquiries and ACH Set-ups. KeyBank s Commercial and Business Banking Center Corporate Client Services General transmission questions and assistance and all application issues for KTT transmissions, including incorrect file, wrong file format, etc. All application issues for SFT transmissions, including incorrect file, wrong file format, etc. Transmission Hotline All communication issues, including questions regarding sending and/or retrieving files. Direct Deposit User Guide 43

46 I. Directory of KeyBank Routing and Transit Numbers Bank Name Routing and Transit Number Northwest Group KeyBank of Alaska KeyBank of Oregon KeyBank of Washington Rocky Mountain Group KeyBank of Colorado KeyBank of Idaho KeyBank of Utah Midwest Group KeyBank National Association (Ohio) KeyBank National Association (Indiana) KeyBank National Association (Michigan) KeyBank National Association (Florida) Northeast Group KeyBank of Maine KeyBank of New York KeyBank of Vermont KeyBank of New Hampshire Direct Deposit User Guide 44