Remittance Coalition Slides May 2014

1. Remittance Coalition Slides May 2014

2. Table of Contents Slides 4-7 Basic Information about the Remittance Coalition 9-10 Remittance Coalition Survey of Corporate Practitioners 12-14 Deduction Code Project (Core Adjustment Reason Codes) 16 Remittance Standards Inventory 18 Remittance Glossary 20-23 Education & Outreach Activities of the RC 25 Standards of Focus in 2014 28 B2B Directory

3. Basic Information about the Remittance Coalition

4. Remittance Coalition 4 • ParticipationNational group of associations, small & large businesses, financial institutions, technology & software vendors, standards development organizations & others • Formed in 2011 • 336 members & growing • No dues or criteria for joining, other than a willingness to work together • MissionWork together to solve problems related to processing remittance information associated with B2B payments in order to promote use of electronic payments & straight through processing (STP)

5. How the RC Operates 5 • Remittance Coalition meets 4 times a year • 2 conference calls & 2 in-person meetings (at NACHA Payments & AFP annual conferences) • Members volunteer for work groups based on interests & expertise • Members stay informed via meetings, calls, email & website

6. RC Successes & Priorities 2013 Successes: Simplified Deduction Code Project Remittance Standards Inventory Remittance Glossary Educational Publications Outreach 2014 Priorities: Continue targeted education & outreach B2B Directory Project Promote adoption of selected standards & technical reports (ISO Stand-Alone Remittance Message, XML Remittance Format, & others)

7. Remittance Coalition Information • Visit the website to: • Join the Remittance Coalition • Volunteer on a project • Learn about activities 7 The Federal Reserve Bank of Minneapolis posts information about the Remittance Coalition on its public website: http://www.minneapolisfed.org/about/whatwedo/paymentsinformation.cfm

8. Remittance Coalition Survey of Corporate Practitioners

9. Remittance Coalition Survey: What Corporate Practitioners Said Source: 2012 Remittance Coalition Survey 9

10. Survey Results: Solutions Practitioners Want Source: 2012 Remittance Coalition Survey 10

11. Deduction Code Project – aka Core Adjustment Reason Codes

12. RC Success Example: Addressing Deduction Code Problems 12 • Over 600 codes defined in X12 standard “426 adjustment reason code” • Used in various EDI transactions (e.g., 820 Payment & Remittance Advice, 812 Credit/Debit Adjustment) • Used in other remittance exchanges (e.g., email remittance) • Unclear definitions & descriptions lead to: • Inconsistent usage across business entities • Manually processing of remittance data or customizing software to ensure compatibility with trading partners

13. Simplified Deduction Code Project Goal: Develop Common Standards 13 • Identified about 70 codes as essential for deduction processing • Developed a short list of “core” codes along with higher level categories for roll up • Includes the 12 codes allowed in X12 STP 820 • Mapped to “best fit” codes from 426 code list to minimize need to convert (426 codes can still be used) • Codes may be carried in X12 messages or other electronic formats OR may be included in other remittance information exchanges (e.g., spreadsheet, e-mail)

14. Core Deduction Reason Codes TR 14 Core Deduction Reason Codes Technical Report available for free download at X9.org Encourage software & technology vendors to support simplified “core” code list Educate business practitioners about the core code list & encourage adoption

15. Remittance Standards Inventory Technical Report

16. Remittance Standards Inventory 16 • Reference guide describing 16 remittance standards • Defines each standard, types of payments that it supports, how remittance may be sent, &information about the issuing organization • Published as TR-44-2013 by ASC X9; available for free download at X9.org

17. Remittance Glossary Technical Report

18. Remittance Glossary 18 • Reference guide offering a vocabulary & terminology • Defines 169 terms related to payables & receivables processing, B2B payments, & remittances • Published as a Technical Report by ASC X9 & can be downloaded at X9.org

19. Education & Outreach Activities of the Remittance Coalition

20. Education & Outreach Speak at regional & national conferences Create publications & publish articles that help promote greater usage of electronic payments & remittance exchanges, as well promote standards adoption 20

21. Education 21 • Remittance Coalition publications • Payment Types Explained • Extended Remittance Information Wire Transfer Format • Business Educational Tool on ACH Reconciliation Services • Case study: Small Business Experience with ACH Payments • Review Panel vets copy & suggeststopics

22. Small Biz Toolkits Coming in 2014 Coalition volunteers will develop & promote use of easy, plain-language “toolkits” that provide step-by-step information to help small business adopt more electronic payments & remittance information; including sample “form” letters, & illustrative terms & conditions • Current plans are for two toolkits: 1) Geared to bankers to help them see the value of promoting ACH or other electronic alternatives to their small business clients, including what banks should consider in terms of pricing, packaging, customer support, etc. to be successful in moving small businesses away from checks 2) Designed to serve small businesses directly, as well as their financial advisors

23. Outreach 23 • RC representatives presented at 8 conferences & 4 webinars in 2013 • Slide decks are posted on RC website: http://www.minneapolisfed.org/about/whatwedo/paymentsinformation.cfm • Vendor Forum held at Credit Research Foundation Conference • Encouraged standards adoption among software & technology vendors • Retail Value Chain Federation Focus Group on common biz processes & practices needed in retail sector • Potential new X9 work item to create standard on debit balances best practices • Small biz outreach: America’s Small Business Development Centers conference (workshop & focus group) & Small Business Administration webinars

24. Standards of Focus in 2014

25. Standards of Focus in 2014 25

26. Tactics to Encourage Standards Adoption 26 • Work with software & technology vendors to promote standards adoption • Make business case for implementing standards in upcoming releases • Define “win-win” for both billers & payers • Identify ways to improve interoperability among existing services & systems • Continue dialogue started at Vendors Forum by holding meetings/calls in 2014

27. B2B Directory

28. B2B Directory: Scope 28 • Work group determined requirements of a B2B directory that meets needs of small to medium sized biz • Defined pain points • Developed use cases • Creating white paper that outlines specifications & proposes a framework for one or more secure directory models

29. B2B Directory: Status • Remittance Coalition B2B Directory work team is closing out the first phase of its work • White paper capturing requirements & recommending an approach to be published this summer • Next steps: Planning next phase of pilot & implementation • Addressing: 1) governance (e.g., Directory Association) &2) what the business model will be to drive initial adoption • Recruiting volunteers who will adopt the directory &be early adopters; want people who will take action in proof of concept stage • B2B Directory registers & facilitates payee electronic identity; is not a payment system • Also promotes a simple, standard format to handle remittance data • Data security protection is paramount

30. Payment Identity Components A payment identity contains (at least) the following information for an organization listed in the directory

31. Payment Identity: Example These are free-form strings that can be used to positively identify payees. The search string is essentially “keywords”. For example, a Verizon Wireless DID could put their Verizon Landline DID in the search string. Privacy is determined by the payee. For a UPIC, would probably be public. If private, payer would contact payee for detail. Remittance string could be a link to a web site, contact information, or any other (unlimited) free form text

32. Use Case 1 Payee sends invoice without electronic payment information… …but payer wishes to pay electronically, is aware of directory… 32

33. The B2B Directory www.B2Bdirectory.com B2BDirectory: find something What are you looking for? Boston Globe 12 matches found (displaying by relevance) The Boston Globe PO Box 55819Boston MA 02205 The Boston GlobeDID: GHT56663 Daily newspaper based in Boston, MA. The Boston Globe Store 135 Morrissey BoulevardBoston MA 02205 The Boston Globe Advertising Company 1 Main StreetCambridge MA 02140 The Boston Globe and Map Company 39 Freedom LaneSomerville, MA 02332 33

34. Use Case 2 Payee sends invoice with payment directory ID… We accept other forms of payment. Please ook us up at b2bdirectory.com …and a place to look up and retrieve payment information 34

35. The B2B Directory www.B2Bdirectory.com B2BDirectory: find something What are you looking for? GHT56663 1 match found The Boston Globe PO Box 55819Boston MA 02205 The Boston GlobeDID: GHT56663 Daily newspaper based in Boston, MA. 35

36. B2B Directory Centralized access, distributed management Wells Fargo VISA BottomLine Sub Directory Node managed by Directory Host Sub Directory Node managed by Directory Host Sub Directory Node managed by Directory Host The central node is populated by crawling distributed nodes periodically, and on demand Sub-directory Sub-directory Central Nodeb2bdirectory.com When the Payer does adirectory information lookup… …information is returned from a “directory of directories” Central Cache 36