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W W W . F R O N T S T R E A M P A Y M E N T S . C O M

W W W . F R O N T S T R E A M P A Y M E N T S . C O M

• What is ACH?

• Common Types of ACH Transactions

• How does ACH work?

• How does e-check work?

• ACH Participants

• Funding flow of ACH via ArgoFire

• ACH Returns

• ACH Re-presentments (re-clears)

• What are the benefits of ACH?

• ACH Set-up via ArgoFire Integration

• ACH Set-up via ArgoFire Virtual Terminal

• ACH Set-up without FNBO Merchant Processing

• Pricing ACH

• FrontStream’s ACH Program vs. Our Competition

• Administrative Set-up of Merchant ACH Account

• Merchant Interface via the Virtual Terminal

• Argofire Reporting & Email Notification

• ACH Customer Service & User Guide Information

• ACH FAQs

SALES TRAINING FOR FNBO ACH PROCESSING

WHAT IS ACH?

Automated Clearing House (ACH) is an electronic payments network, governed by the National Automated Clearing House Association (NACHA) Operating Rules and used by individuals, businesses, financial institutions and government agencies to transfer funds.

The ACH Network is a batch processing, store and forward system. ACH processes large volumes of both credit and debit transactions which are originated in batches. This provides faster processing than paper checks, which must be physically handled. Instead of using paper to carry necessary transaction information, ACH transactions are transmitted electronically between financial institutions though data transmission. Rules and regulations governing the ACH network are established by NACHA.

Through First National Merchant Solutions' ACH product, automatic withdrawals or deposits can be processed, paper checks can be converted into electronic transactions, and corporate funds can be consolidated or unscheduled transactions can be accepted over the telephone or Internet. ACH transactions may be submitted with credit card transactions in the same batch, or in a separate batch. ACH transactions are processed and paid together at the merchant's payment level (the merchant identification number -- MID, chain or associate level). If ACH transactions are submitted together with credit transactions, they remain together throughout the payment process.

HOWS DOES E-CHECK WORK?

• Conversion of a paper check

• Recurring payments

• Corporate payments

• Mail order form

• Non-scheduled telephone transaction

• Web transactions

COMMON TYPES OF ACH TRANSACTIONS

Denotes a FSP supported transaction

HOW DOES ACH WORK?

STEP 1:. The merchant enters the transaction information into a check reader, virtual terminal or directly through their point-of-sale.

STEP 2: At the end of the day, the merchant processor (FSP) prepares the ACH payment information and delivers it for ACH submission to the First National Merchant Services (FNMS) on behalf of First National Bank of Omaha (FNBO-ODFI) by electronic transmission over a secure connection. The ACH Payments are submitted to FNBO on the consumer-specified payment date.

STEP 3: FNBO processes the ACH payment information and electronically delivers the information to the ACH network operator (Federal Reserve). The ACH network operator electronically distributes the ACH items to the consumer’s bank (RDFI).STEP 4: The Federal Reserve credits the ODFI bank account on settlement day for the value of all ACH debits deposited, and debit the consumer’s accounts (RDFI) account for the value of the ACH items received.STEP 5: The consumer’s bank (RDFI) will debit the consumer’s account for the stated funds.STEP 6: The merchant is notified of ACH payments on their bank statement. The merchant will see the funds in their account within 24hours and also via the transaction report in Argofire.

Additional Note: If a consumer debit results in a return for insufficient funds, closed bank account, or other error condition, FNMS will debit the merchant for the amount of returned item.

WHO ARE THE PARTICIPANTS USING ACH?

Originator

Any individual, corporation or other entity that initiates entries into the Automated Clearing House Network

Originating Depository Financial Institution (ODFI)

A participating financial institution that originates ACH entries at the request of and by (ODFI) agreement with its

customers. ODFI's must abide by the provisions of The NACHA Operating Rules. FNBO is our ODFI.

Receiving Depository Financial Institution (RDFI)

Any financial institution qualified to receive ACH entries that agrees to abide by the NACHA Operating Rules.

Receiver

An individual, corporation or other entity that has authorized an Originator to initiate a credit or debit entry to a

transaction account held at an RDFI.

ACH Operators

The Federal Reserve and Electronic Payments Network act as ACH Operators, central clearing facilities through which

financial institutions transmit or receive ACH entries.

Third-Party Service Providers (this is where FSP plays on behalf of the merchant or partner)

A Third-Party Service Provider is an entity other than the Originator, ODFI, or RDFI that performs any function on behalf

of the Originator, ODFI, or RDFI with respect to the processing of ACH entries.

FUNDING FLOW OF ACH VIA ARGOFIRE

ACH RETURNS

A Return is an ACH entry that has been returned to the ODFI from the RDFI or the ACH Operator because it cannot be processed. The

reason for each Return is included with the Return in the form of a ―return reason code‖. One such common example of a Return is an

entry that is sent back by the RDFI because the Receiver’s account has insufficient funds (Insufficient Funds R01).

Returns are entries that could not be processed and include: Insufficient Funds, Revocation of Authorization, Unauthorized/Improper

Consumer Debits or Death of Account Holder.

Some items may be returned for up to 60 days. The following are a few examples:

•The consumer claims the entry is unauthorized.

•A stop payment was placed on the transaction.

•An improper source document was used.

•(ARC only) The document was presented for payment as a check through the check system in addition to being

processed as an ACH transaction document.

Some of these circumstances require the consumer to sign a written statement under penalty of perjury prior to being re-credited for the

transaction.

Depending on the RDFI, FSP may receive the Return as soon as the same day the RDFI attempts to post the debit to the consumer's

account. Additionally, FNMS will debit the merchant the same day the return is received by FNMS.

MON -- Transaction Initiated before the cutoff (FNMS originates ACH transfer)

TUES -- Funds credit to Merchant's account / RDFI receives debit to consumer's account

WED -- RDFI initiates the return

THURS -- FNBO (ODFI) receives the R01 and sends to FNMS. FNMS debits the merchant the same day. File created and sent to TIC.

FRI -- R01 information sent to FrontStream

ACH RE-PRESENTMENTS (RE-CLEARS)

If a Return has a reason code that allows it to be sent back to the RDFI and the merchant has been set up to have Returns Re-cleared,

First National Merchant Solutions will re-clear it. Potentially, an entry can be sent to the RDFI a total of three times.

The first time an item is returned, First National Merchant Solutions will re-clear it the next business day. If the Re-Clear is returned

again, First National Merchant Solutions will re-clear it on the 3rd or the 16th day of the month, whichever is sooner, to coincide with

paydays and the issuance of government benefits (Civil Service Retirement/Annuity, Railroad Retirement/Annuity, VA Compensation

and Pension and Supplemental Security Income). Re-Clearing on these dates should improve the likelihood that the account will have

enough funds and the entry will post. If the entry is returned a final time, it will not be Re-Cleared again and First National Merchant

Solutions will debit the merchant.

A ReClear is a First National Merchant Solutions term for an entry in which an original entry that was returned by the consumer’s bank

(RDFI) is ―resubmitted‖, ―reattempted‖, ―reinitiated‖, or ―represented‖ to the consumer’s bank (RDFI)

The only Returns that qualify to be ReCleared are Insufficient Funds (R01) and Uncollected Funds (R09).

First National Merchant Solutions has two options for ReClears, which are detailed below:

•ReClear none of the Returns: Debit merchant account date return received.

•ReClear all entries that qualify: Third (3rd) or the Sixteenth (16th) day of the month or whichever is sooner

WHAT ARE THE BENEFITS OF ACH?

• 74% of all business-to-business payments are made by check

• Process checks with the same security as credit cards – Merchant’s deposit cannot be lost or stolen & the

Consumer does not have to worry about identity theft

• Paper checks account for 1/3 of non-cash payments

• Over 85% of adults in the US have checking accounts - Far more than have credit cards – don’t pass over a

huge pool of potential customers by only accepting credit cards

• Merchant is funded the next business day if batched by cutoff – just like credit cards – which means faster

access to cash flow

• FSP will automatically represent a declined check 2 additional times; allowing the merchant a greater

opportunity to collect funds.

• Expand your customer base by accepting payments online from customers that DO NOT have a credit or debit

card but DO have a checking account.

• Merchant reduces costs of invoicing and manual collections on recurring billing AND saves clerical time on NO

check endorsements, NO itemization on deposit slip, NO tracking of deposits/returns

• Merchant saves on bank fees (which may vary by bank): Deposit Fees, Per Item Fee (encoding of check amount

on MICR line), Return Check Fees

ACH SET-UP VIA ARGOFIRE INTEGRATION

If the merchant is utilizing the ArgoFire Gateway product, the merchant/VAR will use the ArgoFire gateway API for integration of check processing – the Getting Started with ArgoFire Integration documentation and the Processing Checks with ArgoFire documents will be supplied to merchant along with an ArgoFire test account for development testing.

• The merchant should be provided with the following documentation for ACH enrollment:

ACH Enrollment form and the ACH User Guide

ACH PPD Standards & ACH Web Standards

• Once the ACH Enrollment form has been completed and signed by the merchant, the form is submitted to Underwriting

• The MID and Bin number is attached to the merchant in SUNTARI so Deployment can enable ArgoFire gateway.

•Please note the above process is the same if the merchant is new or existing. An existing merchant will need to complete the ACH Enrollment form and it must be submitted to Underwriting for ACH entitlement.

ACH SET-UP WITHOUT FNBO MERCHANT PROCESSING

Merchants can utilize ACH processing without having an active FNBO merchant services processing account. The account is simply an ACH ONLY processing account

• Complete the FSP Merchant Agreement: Merchant agreement is complete minus the credit card processing fees. The account is boarded and assigned an ACH only MID. The merchant cannot use this MID to process credit card transactions as only the ACH is activated on the FNBO side.

• Complete the ACH Enrollment form• This account will incur an account on-file fee because there is an active MID with FNBO. Standard

wholesale fees apply as a standard merchant expect those associated with a credit card merchant account.

• If we have an FSP merchant that has active credit card merchant account at First Data or Chase Paymentech and they want to process checks, they will apply for the ACH ONLY MID with FNBO. In this scenario, they receive two monthly bills (statements) - one from their credit card processor (First Data or Chase Paymentech) for the credit card processing activity and one from FNBO for ACH processing. The merchant will receive only one Argofire Gateway monthly statement.

• Once notified of the approved merchant account or addition of ACH to an existing merchant account, FSP Deployment will add the ACH parameters to the already existing or newly created ArgoFire gateway.

• An email will then be sent to the merchant notifying of the setup of the ArgoFire gateway or addition to the existing ArgoFire gateway.

• The merchant can reach out to FSP Integration Support for assistance with the set-up to ArgoFire or attend the bi-weekly ArgoFire training conducted by FSP Integrated Support.

• If the merchant’s POS needs to be integrated to ACH processing through something other than the virtual terminal, this should have been completed during the integration process and been in place before the account’s approval. If not, the merchant will work with FSP Integration on the merchant’s certification requirements.

ACH DEPLOYMENT

Once it has been established the merchant is using the ArgoFire Virtual terminal, the following enrollment forms and steps need to be followed:

Have an ACTIVE FSP merchant services account?

• Provide the merchant with the ACH Enrollment form , ArgoFire Gateway form (if not currently set-up with ArgoFire) and ACH User Guide. Submit the signed Enrollment & Gateway forms to Underwriting. Once the merchant is enabled with ACH, the merchant is emailed a set-up sheet from Deployment with all the necessary set-up instructions.

New set-up for both FSP merchant services and ACH?

• Provide the merchant with the FNBO Merchant Application, ACH Enrollment form , ArgoFire Gateway form , ACH User Guide. Submit the signed FNBO Merchant Application and the Enrollment & Gateway forms to Underwriting via the Suntari Deal Sheet Entry. Once the merchant account is approved and enabled with ACH, the merchant is emailed a set-up sheet from Deployment with all the necessary set-up instructions.

Forms and User Guide are available on FSP SharePoint. Agents need to request forms from the ISO Support Manager

ACH SET-UP VIA ARGOFIRE VIRTUAL TERMINAL

• Total Debit Transaction

Volume should represent

the average number of

ACH transactions on any

given day.

• Total Dollar Volume per

file should represent total

amount of ACH

transactions on any given

day.

• This option should always

be selected. NSF and

"uncollectable" items will be

resubmitted automatically 3

times. If it can't be collected

upon the 3rd debit attempt

the Fatal Return fee is

assessed.

PRICING ACH

ACH Service Suggested Merchant Fee

Sale, Void & Return Transaction Fee $0.50

Fatal Return per Transaction $1.50

Re-clear per Transaction $0.50

Addenda Records $2.50

Notifications of Changes $1.25

ACH Set-up (one time fee) $50.00

Monthly Maintenance Fee $10.00

Additional Note: ArgoFire fees are not included in the ACH fees listed above. ArgoFire fees are billed separately on the merchant’s monthly statement.

FRONTSTREAM’S ACH PROGRAM VS. OUR COMPETITION

Service Volume FSP FeeTotal FSP

Merchant FeesPay Simple

Fee

Total Pay Simple

Merchant Fees

# of Cr/Dr per month 1,000 $ 0.50 $ 500.00 $ 0.75 $ 750.00

# of Fatal Returns per month 10 $ 1.00 $ 10.00 $ 1.00 $ 10.00

# of ACH Re-Clears per month 200 $ 0.50 $ 100.00 $ 0.75 $ 150.00

# of Addenda Records per month - $ 2.50 $ - $ 2.50 $ -

# of Notifications of Changes per month 100 $ 1.25 $ 125.00 $ 1.25 $ 125.00

Monthly Fee 1 $ - $ 10.00 $ 34.95 $ 34.95

Total: $ 745.00 Total: $ 1069.95

• To enable an ArgoFire account with ACH processing, the merchant will log into their ArgoFire account, go

to the tab ―Select Processor‖ and select FNMS ACH.

ADMINISTRATIVE SET-UP OF MERCHANT ACH ACCOUNT

Step 1: Complete the fields as

indicated on ArgoFire –

• Name,

• Check Number

• Bank Routing/Transit

• Account Number

• Amount

You may also choose to enter

in additional information. If so,

select the check box next to

―Show Additional Information?‖

These section is shown in

detail on the next page

When all fields are complete,

click on ―Process.‖

MERCHANT INTERFACE VIA THE VIRTUAL TERMINAL

Step 2 Optional:

• By selecting the check box next to

―Show Additional Information,‖ you

may also complete the field shown

at right.

• Upon completion of these fields,

you will then click on ―Process.‖

MERCHANT INTERFACE VIA THE VIRTUAL TERMINAL

MERCHANT INTERFACE VIA THE VIRTUAL TERMINAL

This is the final step showing the

check sale is now complete.

• Argofire provides the merchant with the necessary check reporting-below is the transaction log.

ARGOFIRE REPORTING

ARGOFIRE REPORTING

• Report Criteria – Date Range, Status, Check/Credit, Reference number, Account number

• Transaction status is displayed above

•Clicking on the Reference number of the transaction that you wish to view will provide a drill down

of the transaction information – see next page.

ARGOFIRE REPORTINGARGOFIRE REPORTING

• Drill down contains the transaction information as well as the result code and reason text.

ARGOFIRE EMAIL NOTIFICATIONHere is an example of the FNBO ACH Batch Report a merchant will receive daily if they are enabled with ACH processing.

ACH CUSTOMER SERVICE & USERS GUIDE INFORMATION

The complete FNMS ACH User Guide is available for download on the FSP SharePoint site. FSP Agents should contact their ISO Support Manager for a copy of the User Guide.

Basic merchant ACH training or set-up is available by contacting FrontStream Payments Customer Service.

1-800-687-8505

Contact your Sales Manager for more sales assistance on ACH processing.

For more ACH information, visit these websites:

http://www.electronicpayments.org/c/ind_checkconversion.cfm?hp=ind

http://www.electronicpayments.org/c/ind_directpayment.cfm?hp=ind

http://nacha.org/c/Intro2ACH.cfm?

Q: Do we process ccd? (Corporate checking account vs. Personal Account)

A: Yes – both the API and VT support this transaction type – please refer to the FNBO ACH User Guide for additional

information on the requirements for this transaction type.

Q: Can check payment be triggered from POS?

A: With direct integration and with middleware solutions – this can be accomplished – see the integration

documentation posted on SharePoint

Q: Can check payment be triggered from eCommerce?

A: Yes – documentation provided in API and requirements for the transaction type are included in the FNBO ACH User

Guide.

Q: Do we offer reclears and if so what is configurable?

A: Yes, reclears are provided as a service from FNBO – If selected, NSF and "uncollectable" items will be resubmitted

automatically 3 times. If it can't be collected upon the 3rd debit attempt - this transaction would then be deemed a Fatal

Return. The merchant also has the ability to represent, through VT an ACH transaction that has been uncollected.

Q: What ACH transaction types are supported initially?

PPD — Written Authorization for Prearranged Payments and Deposit Entry

CCD — Written Authorization for a Corporate Credit or Debit

POP — Written Authorization for Point–of–Purchase

RCK — Written Authorization for Re-Presented Check

TEL — Telephone–Initiated Authorizations

Q: What is the transaction limit for an ACH/echeck payment?

A: $25,000

ACH FAQS

ACH FAQSQ: Can we updated stored accounts when NOC is received?

A: This was not included in this integration – this item is open and will be reviewed for further development requirements

and prioritized

Q: Do we send NOC notifications to Payer?

A: The information from the NOC is stored in our database but at this time, we are not sending notification to Payer

Q: Do we send NOC notifications to merchant?

A: Notification of NOC is available in the transaction report and an email is sent to the merchant.

Q: What is the timeline for deposit to merchant for ACH transaction batch?

A: Merchant will see funding as early as next day.

Q: What is the timeline for withdrawal posting to the consumer account?

A: Depending on bank – this could be as early as next day or as far out as 9 days.

Q: Does Argofire send separate batches for ACH and credit cards?

A: Yes, Argofire will batch these files separately.

Q: Where can I find the enrollment paperwork or integration information?

A: The following items can be found on SharePoint under the Project Management Tab-click on the FNBO ACH library:

ACH Enrollment form, ACH Enrollment form instructions, ACH User guide for merchants, ACH PPD

standards documentation, ACH WEB standards documentation

Q: Who is notified of the exception notification file?

A: The email that is stored in the merchant configuration at the merchant level will receive the email notifying

them of any Returned transactions.

Q: Is there a single ―NSF‖ record or will there be an a document attached with all the exceptions received that

day?

A: The NSF will generate an email to the merchant. Each NSF will be in the email for that merchant and no

document will be attached.

Q: Are NOC’s considered an ―exception‖ and included in exception notification-either via email or via the

FNBO ACH reporting?

A: NOC is not checked for-Only Return (Declined) transactions.

ACH FAQS