Helping You Streamline Online Bill Payment Processing 2014 CACTTC BANKRUPTCY & EDUCATION CONFERENCE

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1 2014 CACTTC BANKRUPTCY & EDUCATION CONFERENCE Presenters MUFG Union Bank, N.A. Hector Sandoval, CTP OCTOBER 7-10, 2014 EMBASSY SUITES SAN FRANCISCO AIRPORT - WATERFRONT BURLINGAME, CA J.P. Morgan Chase Bank Doug Airulla Well Fargo Bank Paul Martin

2 Consumer Bill Pay Facts Consumers paid about 16mm bills with a value of more than $4.2 T 7.5 mm bills are paid online 3.4 mm are paid by mail 2.8 mm are paid via direct debit 1.5 mm are paid in person 0.7 mm are paid via phone 0.5 mm are paid via mobile channel Volumes grew almost 2% from 2010 to 2013 Dollars grew more than 6% from 2010 to Percentage of Bill Volume by Channel 2010 vs Source: Aite 2013 Report. How Americans Pay Their Bills: Sizing and Forecasting Bill Pay Channels and Methods,

3 More Than One Way to Pay Online Biller Direct The biller sets up their own site to present billing information, and accept payments. In some cases, credit and debit card is optional Bill Direct Bank Sites Online bill pay services offered by banks, typically supported by a third party technology, that allows consumers to pay bills directly from their bank s online channel. It May or may not include bill presentment services. Payments to billers are made via ACH, or sometimes via check Options Third Party Sites Companies that act as bill consolidators and payment facilitators. FiServ CheckFree and PayTrust are two examples 1 3

4 Online Bill Pay 1 Stats Online payments made on biller sites still account for more than half of the volume. Percentage of Online Bill Volume by Type of Site 2010 vs Source: Aite 2013 Report. How Americans Pay Their Bills: Sizing and Forecasting Bill Pay Channels and Methods,

5 Bill Payment Forecast Industry reports show that consumers will continue to favor biller sites over bank sites, but third-party sites will make a bigger dent in the bill pay picture, as the percentage of bills paid through these sites will more than double, from 1.7% in 2013 to 3.5% in Biller site Bill Payment Forecast Percentages 2010 e Source: Aite 2013 Report. How Americans Pay Their Bills: Sizing and Forecasting Bill Pay Channels and Methods,

6 Bill Concentration 6

7 How Bill Concentration Works Consumers initiate bill payments electronically through their preferred home banking web site. Multiple financial providers (bill pay originators) send remittance information to your bank The aggregated ACH payments from the various bill pay originators are consolidated and reconciled. Receive a single credit in your depository account and post remittances to your accounts receivable system Did you know? The business rules for defining and communicating the Customer Account Number field to the bill pay originators is essential to receiving quality remittance data. Consolidate your electronic payments received from multiple sources into a single deposit. 7

8 Bill Concentration Benefits Support & promote Establish Provide Partners to consider end-to-end electronic fulfillment of consumer and small business payments an electronic link between you - the biller - and the payment originator operational efficiencies and support cash collection strategies Your bank Biller Service Providers

9 Implementing a Bill Concentration Service BSP examples Fiserv RemitStream Electronic Lockbox FIS Pay Electronic Implementation depends on volume 4-6 weeks for large billers (> 5,000 monthly bills) Smaller billers may have lighter and quicker integration options Who should be involved AR and billing staff, IT, information reporting Billing Service Providers 9

10 Implementing a Bill Concentration Service Bank selection considerations Your AR automation strategy Working with partners Bank s paper to electronic (P2E) conversion success Implementation depends on scope P2E conversion project for bill payments can take 45 days from completion of business requirements Full AR consolidation project can take 2 months Who should be involved Banks AR and billing staff, IT, information reporting 10

11 Pain Points Frustration regarding the checks received from taxpayers home banking websites. Checks are often difficult to associate with the related taxpayer receivable, Reconciliation demands the expenditure of significant labor and man-hours. This issue is particularly challenging during peak tax season. 11

12 Bill Concentration Exception Repair Overview Exception repair streamlines the exception process, allowing you to review and repair exception items online for faster posting to your back-office system. Receive transactions that do not meet the edit/validation instructions and correct these transactions using a match file and/or via online editor. Online databases minimize future exceptions, as any updates you make can be "remembered and applied to incoming subsequent transactions, automatically corrected and sent to you. How it works! Customers initiate bill payments electronically Match incoming transactions against your posting rules, and provide a list of exceptions to review and repair Return transactions that are unidentified and/or send notifications NOCs for correction to the originator. Did you know? The business rules for defining and communicating the Customer Account Number field to the bill pay originators is essential to receiving quality remittance data. 12

13 Bill Concentration Best Practices Capability Description Value Proposition Extensive Network Positive File Processing Stop File Processing Direct connection to multiple Maximize electronic volume, improved funds \ endpoints \ flow/reduced DSO \ Biller provides partner with complete listing of valid billing account numbers Minimizes drafts and check-and-list payments Only accept payments from accounts in the master file; invalid accounts returned or suspended for client decisioning Reduced DSO from delayed posting Lower exception rate and costs from manual processing \ \ \ Compares payers to a stop file of unacceptable accounts Any stopped payments are automatically returned to the originator by processor Lower manual returns processing costs for closed accounts \ \ \ 13

14 Bill Concentration Best Practices Capability Description Value Proposition Cross Reference File Processing Account Masking Online Decisioning Translates consumer bill account numbers received to the correct account number before passing to biller in posting file Reduced DSO from delayed posting Clean posting file - biller can provide known old account/new account cross references (billing system consolidation, acquisition, etc.) Create cross-references from individual NOC transactions as necessary \ \ \ Validates that account numbers match masks Maximizes electronic volume Reduce manual exception processing \ \ \ View suspended payments and make, accept, or reject decisions on pending transactions \ Perform transaction \ maintenance \ - initiate returns, research and repair processed transactions Powerful search engine based on multiple criteria (amount, account number, post date, etc.) Items failing validation are presented to biller for action (post, post with correction, or return) Biller can create cross-references for individual transactions that passed edits but rejected during posting allowing straight-through processing of future transactions 14

15 Thank you MUFG Union Bank, N.A. Hector Sandoval, CTP J.P. Morgan Chase Bank Doug Airulla Well Fargo Bank Paul Martin 15