Ppt Online Payment

8/3/2019 Ppt Online Payment

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ONLINE PAYMENT

GROUP MEMBERS:

RUSHABH BHATT- 10-A04

RUSHABH CHHEDA- 10-A08

YOGESH SAKPAL- 10-A42

VINIT THAKER- 10-A53


2/19

Electronic ClearingMAKER (DRAWER) DATE CHECK

NUMBER

AMOUN

T

CURRENCY

AUTHORIZEDSIGNATURE OF

MAKERS AGENT

DRAWEE

BANK

PAYEE

DRAWER

ACCOUNT

NUMBER

DRAWEE BANKNUMBER

The paper check is just

a carrier of information.

Electronic transmission is

better.

We dematerialize the check(remove the paper).

0 6 1 3 0 0 1 8 1 8 4 3 1 0 1 4 3 7 0 0 0 0 0 0 0 0 0 1 0 0 0 0 U S D 0 6 5 2 0 0 3 5 6 4 2 5 0 2 0 0 1 0 1 3 0

DRAWER

ACCOUNT

NUMBER

DRAWEE

BANK

NUMBER

CHECK

NUMBERAMOUNT CURRENCY PAYEE

BANK

NUMBER

PAYEE

ACCOUNT

NUMBER

DATE

Only the information is sent to the clearing house


3/19

Automated Clearing House

(ACH) Nationwide wholesale electronic payments system

Transactions not processed individually

Banks send transactions to ACH operators

Batch processing store-and-forward

Sorted and retransmitted within hours

Banks Originating Depository Financial Institutions (ODFIs)

Receiving Depository Financial Institutions (RDFIs)

Daily settlement by RTGS

Posted to receivers account within 1-2 business days

Typical cost: $0.02 per transaction; fee higher


4/19

ACH Credit Transaction

BUYER SELLER

SELLERS

BANK

BUYERS

BANK

CLEARINGHOUSESETTLEMENT

BANK

1. BUYER SENDS

AN ORDER TO

BUYERS BANK TO

CREDIT $X TO

SELLERS ACCOUNT

IN SELLERS BANK6. SELLERS BANK

CREDITS SELLERS

ACCOUNT WITH $X

3. CLEARINGHOUSE DETERMINES THAT

BUYERS BANK OWES SELLERS BANK $Y

(ALL TRANSACTIONS ARE NETTED)

4. BUYERS BANK

PAYS $Y TO

SETTLEMENT BANK

5. SETTLEMENT BANK

PAYS $YTO

SELLERS BANK

2. BUYERS BANK

SENDS TRANSACTION

TO AUTOMATED

CLEARINGHOUSE


5/19

ATM and Debit Networks


6/19

Debit Card Authorization

A IS MERCHANTS BANK; B IS CUSTOMERS BANK

A AND B BELONG TO DIFFERENT REGIONAL ATM

NETWORKS ON THE SAME NATIONAL NETWORK

DEBIT IS IMMEDIATE WHEN BANK B AUTHORIZES


7/19

Debit Card Settlement1. NATIONAL NETWORK CLEARS FOR ITS REGIONAL NETWORKS,

SETTLES REGIONAL NETWORKS ACCOUNTS IN CENTRAL BANK

2-3. REGIONAL NETWORK CLEARS FOR ITS MEMBERS THROUGHNETWORKS CLEARING BANK

4-5. ACH OPERATOR FOR REGIONAL NETWORK INITIATES DEBITS

AND CREDITS TO REGIONAL BANKS THROUGH ACH


8/19

Regional ACH Networks in the US


9/19

ACHACH

Two types of ACH (Automated Clearing House)

ACH

ACH Credits ACH Debits

Direct Deposit.

Debit Card Account

Direct Deposits

Always initiated by sender

Senders account is debited and

receivers account is credited

Receivers Acct

Bank account

Debit card account

Electronic Drafts

Initiated by senderorreceiver If by sender Sender authorizes a third

party to initiate transaction

If by receiver Receiver initiates

transaction

Also referred to as Direct Payments

ACH Network A batch-process, store and forward forfuture settlement


10/19

ACH UtilizationACH Utilization

When appropriate to use

Large numberof payments in a single file (batch)

At least one day is available between initiation and settlement

Any size dollar amounts

Examples

Outbound Payroll direct deposit to bank account (ACH credits)

Outbound Payroll direct deposit to debit card account (ACH credits)

Outbound Vendor payments (ACH credits)

Inbound Taxpayer payments (ACH credits or debits)

ACH Transactions can have Addendum Records Remittance data attached

Can be interfaced with A/R system

DOR requires taxpayers to use TXP format


11/19

NATIONAL AUTOMATED CLEARING HOUSE

ASSOCIATION(NACHA)

Began in 1974.

Oversees the ACH Movement Nationwide.

Regional Payment Associations Oversee the

ACH Movement in Their Area.

SWACHA

1. Based in Dallas

2. Texas, Northern Louisiana & Southern

New Mexico

3. Provide ACH Rule Interpretation,

Assistance, Education


12/19


ASSOCIATION(NACHA)

NACHA manages the development, administration, andgovernance of the ACH Network.

NACHA-The Electronic Payments Association is a not-for-

profit trade association that develops operating rules and

business practices. NACHA has created the Council for Electronic Billing and

Payment of the NACHA Interopera BILL Initiative of the

Banking Industry Technology Secretariat (BITS).

NACHA activities and initiatives facilitate the adoption of

electronic payments in the areas:-

1. Electronic bill payment.

2. financial electronic data interchange.


13/19


ASSOCIATION(continue)

3. Internet commerce.

4. presentment.

5. International payments.

6. Electronic checks.

7. Electronic benefits transfer (EBT)

NACHA is not directly involved in the ACH

transactions that flow to and from organizations and

financial institutions


14/19

ACH PlayersACH Players

ACH Operator(FRB)OriginatingDepository

Financial

Institution

(ODFI)

ReceivingDepository

Financial

Institution

(RDFI)

Originator

(Company /

Employer)

Receiver

(Company /

Employee)

Authorization / Enrollment

1

2 3

4


15/19

Primary DifferencesPrimary Differences

Wire Transfers

Item Cost - $6.75

Same day funds

Transfer almost

instantaneous

Use for criticalpayment (e.g. debtservice)

ACH

Item Cost < 1 penny

Next day funds

One day delay in

settlement

Used for large batchfiles (e.g., payroll)

State Checks

Average Cost - Range $.74


16/19

Electronic ChecksElectronic Checks

Loosely used term Refers to two different methodsElectronic Checks

Online Paper Check ACH Conversions

Online Paper Check Developed by Financial Services Technology Consortium (FSTC) Not-for-

profit group of CA banks Initiated using a PIN and digital signature Receiver prints out paper check for deposit

ACHConversions (most common method referred to)

Transactions converted to ACH debits (e.g., ARC, POP, WEB, TEL) Services can be provided by third party processors Account verification determined upfront. Guarantees available. Examples of services provided through third-party CyberSource (POP)

Telecheck: CheckFree: AmeriNet:

Paymentech:

Applies to consumerchecks

only, not business checks.


17/19

Regulator GovernanceRegulator Governance

Regulation E, per Electronic Funds Transfer Act (EFTA)

Issued by Federal Reserve Bank

Covers ACH and debit cards (but not wires or credit cards)

Consumer protection oriented

Some protection afforded the consumer does not apply to corporate orgovernment customers

NACHAOperating Rules

National Automatic Clearing House Association Applies to ACH transactions only Applicable to both consumer and corporate (including government)

UniformCommercial Code (UCC) Article 4A

Applies to Wire Transfers Only

UniformCommercial Code (UCC)Articles 3 and 4 and Reg CC

Applies to negotiable instruments (checks)

Reg CC issued by Federal Reserve - Applies to checks not EFT

Check 21 (Check image conversion) governed by Reg CC, not Reg E


18/19

ACH TerminologyACH Terminology

Typical ACH Standard Entry Class Codes PPD Prearranged Payments and Deposits (Consumer payments)

CCD - Cash Concentration or Disbursements (Corporate payments)

CCD+ - Corporate payments with 180 character addenda record

TXP Addendum format for Tax Payments (Used by DOR)

Check Conversion Standard Entry Class Codes POP Point-of-Purchase / Face-to-face (e.g., Wal-Mart)

ARC Accounts Receivable Conversion Non-face-to-face (e.g., Lockbox)

BOC Back Office Conversion Face-to-face, but later converted (Mar 07)Check Conversions not eligible for use with corporate or government checks

and have an amount limit of $25,000

Other Standard Entry Class Codes (Debit entries)

WEB Internet-initiated entries against a consumer account

TEL Telephone-initiated entries against a consumer account

RCK Represented check (representment of a non-sufficient funds check)


19/19

Documents

Ppt Online Payment