The Payments Authority

My P2P Facebook Odyssey

Thu, 22 Mar 2012 16:56:17 -0400

I hold my breath and click "Allow" on Facebook. I get that sinking feeling whenever that "Allow or Don't Allow Access" dialogue box comes up. That's the Gen X in me rearing its' ugly head (Gen Yers don't think twice). I have cause to pause because I'm allowing American Express access to ALL my Facebook data. AND more importantly, now Facebook has my banking information.

Recently American Express and Facebook teamed up to offer Serve, a person to person payment mechanism within Facebook. It's a preloadable account which also comes with a plastic card that you can use to make purchases in stores or online as well.

I wanted to know how easy it would be to pay one of my Facebook friends so I talked my brother into signing up as well. Signing up entails, as I said earlier, allowing AmEx access to all your Facebook data and submitting your banking information from which to fund your Serve account. To my surprise, the account appeared with $10 on it - have I sold my soul to the devil for ten bucks?

Once the accounts were set up, which took a few minutes, I was able to pay my brother very easily, free of charge. A plastic card came in the mail and I can use it to shop online or in stores. Adoption will be the barrier to Serve success because I suspect that most Gen Xers and Boomers won't make that deal with the devil - but hey, I took one for the payments team. I could be pleasantly surprised if my FB friends start sending me money! As always, I'll keep you posted.

Experiment: The Psyche of the Garage Saler and Credit Card Payments

Thu, 19 Jan 2012 15:39:16 -0400

You know it's time to hold another garage sale when your basement looks more like a furniture grave yard. It's been years since I had a sale and the old stuff is starting to pile up (the 80s want their shiny, brass picture frames back; and who knew TV armoires would be fleeting furniture feng shui?)

This spring I'm going to accept credit and debit card payments via Square. Square is the little device, also known as a "dongle" that you attach to your Smartphone and swipe!

The experiment part is this: will I have droves of garage salers clambering to shop because I accept plastic? OR, are serious shoppers armed with cash and prefer to keep it that way?

I just ordered my Square device which was free and I downloaded the app on my iPhone (also free). Square keeps 2.75% of the transaction amount, however that may be a small price to pay for more business. Of course, I'll advertise that I will be accepting credit card payments and we'll see if that will have an impact on sales. I'll keep you posted.

In the meantime, next time we go out to lunch, I'll pick up the tab and you can pay me back via square! To get your free dongle, click here.

I have become my teenage son’s ATM, but NOT to withdraw cash…

Thu, 17 Nov 2011 10:56:55 -0400

Holding my "bank book" in one hand, as a child, and my Dad's hand in the other, together we walked into the bank to withdraw $60 in cash that I had saved for a new bike. The year was 1976. I think I'd saved for about a year. Off we went to buy my new bike from Sears.

Fast forward to today and my 15 year old son wants to buy the new Modern Warfare 3 Xbox sensation. He has some cash he had earned for lawn mowing and was heading to GameStop with his debit card to buy the game. He quickly handed me the cash and said, "Mom, can you take this and transfer into my account so I can buy the game?" Our accounts are linked so I took his cash and transferred the sixty bucks into his account. The exact opposite of how this transpired in 1976 (not to mention the difference in what $60 will buy).

Financial institutions should be aware of the shift in mind-set. Kids don't want the paper - they want electronic. Plastic is prevalent but mobile payments like Google Wallet and PayPal's mobile shopping app are here.

Here are some links to digital wallet articles and videos:

PayPal Unveils mobile payments for in-store shopping

Google Wallet VIDEO: George Castanza, our first Google Wallet Customer

Visa Digital Wallet VIDEO

Mobile Commerce: Three Trends to Watch

Ah-ha moment after Concepts – attendees want exhibit booths back!

Wed, 19 Oct 2011 16:46:39 -0400

Concepts 2011 is a wrap! We relaxed for a couple days and now begin the planning process for next year's event. One of the tools we use to plan is the conference evaluations. We pour over these evals so we can get in the heads of the attendees. What can we do better, different, improved? We consider every comment, every suggestion from topics to room temperature (although there isn't much we can do about room temperature - one year I swear I saw snowflakes in the room).

Many of you may have noticed the absence of solution provider (vendor) exhibit booths last week. The reason we decided to go without booths was because we were seeing a trend away from exhibiting and toward sponsoring. However, the attendees spoke loudly and clearly that they really MISSED the exhibit booths. The evals said that for many of our attendees, this is a wonderful shopping and networking opportunity, and the booths make it easy for solution providers to be found.

This ah-ha moment was a surprise and a welcome one, because bringing the booths back is something we can do to improve the attendee experience.

It should also be a huge wake-up call to all the Solution Providers out there - our attendees really want to talk to you and listen to what you have to offer. Our attendees are proactive! That is great news for you, Solution Providers!

Stop Pay Sends Wrong Message for Unauthorized Debits

Wed, 07 Sep 2011 16:15:48 -0400

I took a call today from a member who had the following scenario:

An account holder discovered that his account had received unauthorized debits every month for almost a year. The financial institution (RDFI) asked me if they could place a STOP PAY on these WEB transactions in order to prevent any further loss to the account holder.

The problem with taking this action is that it sends the wrong message to the ODFI. An ACH return for Stop Pay says, "I now want to stop the transaction I authorized ,"which is not the case in this situation - the account holder didn't authorize these transactions. This is a case of unauthorized transactions, not a stop payment situation.

What can the RDFI do?
There are two considerations: 1. Reg E Error Resolution and 2. Remedy through the ACH payment system.

Reg E Resolution:
Financial institutions should have written procedures for responding to a consumer's notice of unauthorized transactions. Reg E dictates that upon notice of any unauthorized debits the financial institution should investigate the transactions. The account holder must report the unauthorized transactions within 60 days from receipt of the statement that contained the first unauthorized transaction, in order to limit their liability.

ACH Remedy
The ACH Rules allow for consumer debits that the account holder claims are unauthorized to be returned up to 60 days from settlement date as R10 - Unauthorized.

In this case, since the unauthorized transactions are ACH, part of the investigation could include requesting a copy of the authorization from the financial institution that originated the transactions (ODFI). The ODFI has 10 days to fulfill this request.

If the RDFI discovers upon investigation that all the debits were truly unauthorized, they can call the ODFI and ask them to accept the transactions back as a warranty claim. If they do not willingly agree, it is within the rights of the RDFI to file a Rules Violation against the ODFI with NACHA. The threat of a fine may encourage the ODFI to cooperate. For more information on Fines and Enforcement see page OR 197 in the ACH Rules.

How can we prevent future unauthorized debits if we can't use the Stop Pay?
The ACH rules require that transactions returned as unauthorized not be reinitiated. If a company initiates another transaction a second Rules Violation could be filed.

Paperless Federal Benefit Payments - a Moral Imperative

Tue, 30 Aug 2011 18:47:00 -0400

Earlier this year, the U.S. Department of the Treasury announced that it would be retiring the paper Social Security check for millions of baby boomers and others applying for federal benefits, a move that will save taxpayers $1 billion over the next 10 years. As of May 1st, anyone newly applying for Social Security, Veterans Affairs or other federal benefits is required to choose an electronic payment method – paper checks will no longer be an option. But those currently receiving their benefits via paper check have been given until March of 2013 to make the switch.

The way I see it, backing the move to paperless Federal benefit payments is my patriotic duty. And putting some urgency to the switch from checks to electronic benefit payments is a moral imperative. Forget the fact that those currently receiving federal benefits checks have until 2013 to make a change - we need to speed things up!

Delaying the move for almost two years isn't helping to reduce the budget deficit. In fact, it's costing us big time. Do the math - .92 cents (cost to create and mail a check) times 9 million existing US Treasury payment recipients equals $8.28 million dollars per month. Now multiply that by 12 months. That's a whopping $99 million dollars (plus) per year!

So why is Direct Deposit such a hard sell when there are so many logical reasons for choosing it?

A paper check is no match for Mother Nature. When severe weather strikes, evacuations and mail disruptions can prevent people from getting their Federal benefit checks on time. By signing up for Direct Deposit, they can still get to their money. Check out Protect Your Payments from Natural Disasters.
Electronic payments eliminate the risk of stolen checks and help protect benefit recipients from financial crimes. Last year alone, more than 540,000 Social Security and Supplemental Security Income checks were reported lost or stolen.
Direct Deposit recipients get immediate access to their funds from virtually anywhere. I wonder how many people turn down offers to travel (or leave their house) around payment date because they have to wait for their check to hit their mailbox...

Can we really afford to wait until 2013 to become all-electronic? I don't think so, and I don't want to. But I don't have to look far to find resources that will help me reach out to those who may be dragging their feet and avoiding the change. Go Direct®, sponsored by the U.S. Department of the Treasury and the Federal Reserve Banks, is on a mission to increase electronic payments and reduce the use of paper checks for federal benefit payments. The GoDirect website is loaded with information and tools that make it easier for all of us to help:

    Research and Statistics
    How Many Federal Benefit Checks Are Being Mailed to Your State?
    The 10 Billion Dollar Impact of Retiring the Check

Join the crusade:

Take advantage of grab-and-go articles and copy that can easily be added to newsletters, websites and other communication vehicles
Post statistics on Twitter, Facebook, and in email signature messages
Display campaign materials in your facilities
Link to GoDirect from your website
Order free promotional tools, including:
- Materials for financial institutions
- Materials for community-based organizations

And last, but not least, keep spreading the word. Let's not wait until February of 2013 to go looking for ways to spread the news about the March 2013 deadline for all-electronic federal benefit payments. We need to get busy now!

Written by Anne LaPine, AAP, Director of Marketing and Membership, The Payments Authority

Fool me once...

Fri, 29 Jul 2011 15:17:00 -0400

"I'm sorry ma'am, but your card was DECLINED." Words you never want to hear when standing at the check-out trying to make a large purchase. But, yet there we were at Dick's Sporting Goods, feeling several pairs of eyes and ears staring and listening as the cashier delivered the unfortunate news. We had just picked out an Elliptical machine feeling great about the prospect of getting in shape. But that quickly changed to confusion and embarrassment. My husband and I looked at each other as if to say, "didn't you pay the bill?"

After finding an alternative payment method, we left the store with our tails between our legs and promptly called the credit card company. They explained to us that thousands of their card holders had been breached due to a hacker, and they were sending new cards right away. In the meantime, we would be unable to make purchases. OK - that would have been nice to know before the Dick's snafoo.

Our new cards arrived in the mail and we began the time consuming task of marrying the new account numbers with our Quicken Money management system (which we use to track our spending). What a hassle.

Fool me twice...

Fast forward two months. "Im sorry ma'am, but your card was DECLINED." Once again, our card was declined at the register for the same problem. Our NEW card numbers had been breached again along with hundreds of thousands of others. This time it was an inside job. New cards were on the way, again.

We had been cardholders with this bank since 1987. We cancelled our cards, not because of the hassle in marrying the new numbers with Quicken, but because we were not notified before the point of sale (or declined sale, as was the case). To do that is putting the customer last, not first.

P2P Odyssey Gets Bumpy

Fri, 08 Jul 2011 15:57:00 -0400

As you know, I've tried a couple different P2P applications, Venmo, ZashPay and PayPal. And I'm always on the lookout for the P2P mechanism which will win the P2P race. Recently, my P2P journey got bumpy.

Bump is an app for Smartphones (available for iPhone & Android phones) which enables you to share by physically "bumping" the phones together. Share what? Contacts, videos, photos, and money, just to name a few.

So, I enlisted the help of my latest guinea pig, Adrian Brown, Education & Professional Services, here at The Payments Authority. First, we downloaded the Bump and PayPal apps. It was the blind leading the blind here, but hey, we're both Gen X'ers so to all of you Gen Y'ers, please give us some slack.

Hoping the app is user friendly, we fired up the PayPal app and selected, "Pay with Bump." I selected Adrian from my contact list and we waited for the Bump App to "warm up." Oops, location setting has to be ON. Try this again. The app indicated it was warmed up and ready. We started bumping the phones together and we got an error message that said, "No match." Upon researching this problem online, I discovered "No match" means one or both of our phones wasn't getting 3G or a Wi-Fi signal (necessary to bump). Picture Adrian and I standing near the window, one leg up in the air trying to get a signal. Reminds me of the old TV rabbit ear antennae days when my Dad would send me with tin foil over to the tube to try and get a better picture. Some things never change, eh?

Meanwhile, since Adrian is a contact in my phone and he has a PayPal account, I noticed that I could pay him simply by choosing him from my contact list or entering his cell number. No need to Bump! So, this Gen X'er is wondering...if it is so easy to simply select a contact AND I don't need to be in the same proximity in order to Bump, why would I want to? Obviously, because it's cool (duh).

If you would like to check out Bump, here is a video of the CEO talking about Bump and more info here. Part II of this blog coming when Adrian and I find a common signal. We'll keep you posted. Have you tried Bump? Let us know how it worked for you.

"Hey, Linda!"

Fri, 03 Jun 2011 15:36:33 -0400

I normally blog about payments, but last week I witnessed something important to all kinds of businesses: teamwork.

Picking up two boxes of Joe-to-Go and some donut holes was the last thing on our Office Move To-Do List (the coffee makers were packed of course). I zipped out of Dunkin Donuts with the 'Joe' in tow on moving day. Now, off to the Big Move.

The necessary calls and arrangements had of course been made. The phones, cable, IT support, moving crates packed and stacked, post office forwarding, moving company ready to roll, new stationary ordered...every T was crossed and I was dotted ahead of time.

Linda Hergott, Office Administration, was the star of the show (pictured back row, left). She worked closely with Amy Smith, President & CEO to make it happen. This blog post is a nod to Linda and the team, for making it happen. Imagine 11 people plus movers calling your name throughout the day. "Linda, Linda, Linda!!" She made it look easy, but I assure you, it was not.

Tech support was delayed by the movers, IP address had to be changed, water running inside the new windows (who knew it would rain buckets?) and she systematically put out each fire (and flood) as it came along. I left at 4pm Monday without even a desk in place. Like magic, two days later we were almost completely unpacked and back to work.

At The Payments Authority, we put our members first and that means being there for you, with as little down time as possible. So my personal kudos go out to Linda, and the rest of our staff for a great team effort. If you happen to be in our new neighborhood, stop in and check out our new digs!

New address: 580 Kirts Boulevard, Suite 301, Troy, MI 48084
New phone: 248-688-9720
New Fax: 248-688-9730

Facebook’s Ugly Sibling – Facebook Credits

Mon, 02 May 2011 12:10:28 -0400

On the surface facebook credits sound like a cool new way to pay, however, there is a cost and it could be your friends. Here's my understanding of how it works...let's say you really need a new alarm clock so you go shopping (for real, not online) at Best Buy or JC Penney. When you find the clock you want, you launch the facebook credit app on your phone and indicate you want to purchase it. Now, you walk to the check-out and present a bar code on your phone. The cashier scans the bar code which triggers the purchase through facebook. Here's the rub. You get a discount on the item when you use this because a post is broadcast to all your FB friends. "Denise just purchased a clock at Best Buy and saved 40% (for example)" and, "if you would like to make the same purchase, youâ€™ll save 20%." Of course, if your friends turn around and broadcast a similar post to all their friends, they save bigger, and so on and so on.

This begs the question: will people decide to turn off FB because they really can't be bothered to know I bought a clock? OR, will the savings be too attractive to resist. And if I save 40% on the backs of my so called friends by riddling them with sales pitches, will I have any friends left? Will they "hide" me on FB?

Let's take it a step further...will merchants and FB be able to tell how many friends are hiding me and base the size of the discount on that?

So my value as a customer is equal to how large my network is. Yikes. We need to be mindful of the implications of prostituting our network for the sake of personal gain.

From Paper to Plastic to Electronic – there’s an app for that!

Thu, 31 Mar 2011 10:54:00 -0400

I've blogged before about the hassle of receiving paper coupons at the point of sale - for your next visit - only to stuff them in a pocket never to be seen again. The plastic rewards cards are a little easier to keep track of on your keychain or in your wallet, but still cumbersome. You should see my keychain!

Like just about everything else, there's an app for that! Have you heard of HandyCards ? It's an app found on the Droid app market. It enables you to scan the barcode on the back of all your rewards cards. It creates a list of barcodes, so when you get to your favorite store, you can pull out your phone, pull up the app and have the cashier scan the barcode right on your phone.

Get rid of the paper and plastic! It's one more move toward mobile wallet. Stop with the paper point of sale coupons! Can't you figure out a way to put them on my phone? And while you're at it, I'd like the Sunday paper coupons on my phone too!

Have you run into any stores who are getting this right? If you know of any apps to this end, please comment here. I'd love to try it out.

Girls Scouts are Always Prepared

Thu, 17 Mar 2011 11:41:00 -0400

The simple green jumper. The pledge. Earning colorful badges. The annual cookie drive. I remember it like it was yesterday (or 38 years ago)! But did you think that in 1912, when Juliette Gordon Low established the Girl Scouts of America in Savannah Georgia, she envisioned her followers to be on the cutting edge of social networking and e-payments? As FI payments professionals we work hard to stay in tune with the latest advances and trends in funds movement. We are busy retooling our operations, educating our employees and communicating with our account holders about the latest payment alternatives. As corporate payments professionals, we are talking to our bankers, networking with our peers and looking for ways to speed up the collections process and streamline outgoing payments. Nothing like being outdone by a 9 year old! The motto "Always be Prepared" has taken on new meaning. It appears a small group of girls scouts (with the help of a silicon valley dad) were able to sell 400 boxes of cookies per hour! No red wagons. No following your daughter by car through the neighborhood as she goes door to door. Simply establish a Facebook event online announcing your on site sale, and with the help of a small hardware device called Square, you outfit a cell phone to accept debit and credit card payments. The story is very interesting and very cool! Speed, efficiency and convenience are the name of the game. Today's consumer is younger, tech savvy and on the go. They want money to move from point A to point B with little effort but maximum security. Just reading about innovation to be ready for the water cooler talk is not enough. It has never been more critical than now that when you look at your current payment processes (or those of your account holders) you think outside the box. In this case...the cookie box. Got any great stories about automated payments and their application in the real world? Trying to solve a problem but need insight from others? Who needs Facebook when you have your peers at b2bsynergy.org. I would love to hear about the applications you are working on. BTW...my favorites...Tagalongs.

2% and 5 Million

Wed, 02 Mar 2011 13:16:00 -0400

For those who know me, I spend a lot of time thinking through issues that nag at me. According to my husband, I talk about them a lot as well. Lately, I have been spinning away on the recent Federal Reserve Payments Study results, measured in 2009. According to the study, from 2006 to 2009 business use of paper checks for payment to other businesses (B2B) dropped a whopping 2%! No offense to those who have moved the needle, but seriously...is that the best we can do? Sure big business is all over electronic payments. But according to the US Census Bureau, in 2004 they accounted for only 17,000 of the over 5.6 million businesses who had employees (there were another 17 million businesses with no employees...sounds like another issue to blog about). Follow me on this....so well over 5.6 million businesses who were paying other businesses for products or services migrated to e-payments by 2% in 3 years. Folks, this is nothing to celebrate. In fact, it's just sad. When are we going to eliminate the dependency on paper checks if we keep this "feverish pace"? Never. So go back to the numbers. If you take 17,000 (large companies; more than 500 employees) away, you still have 5.6 million small and medium sized businesses. I realize the Census is underway right now and this number might be different, but humor me. There are potentially 5 million opportunities to really make a difference here! I am tired of hearing about what's happening in Europe! Congrats to the folks across the pond for outpacing us in their adoption of electronic payments for B2B transactions. There, I said it! What are WE going to do about it? The White House and State Governors across the country are hanging their hats on the small and medium sized businesses and their impact on the economy. I say we join them! I have made "2%" my Raison d'être! It's a French phrase meaning "reason for existence." (quick shout out to Mercy High School's foreign language department). And my target is the small and medium sized business. And my weapon? The small to medium sized financial institution! Calling all community banks and credit unions! What do you plan to do about "2%"? How do you feel about 5 million opportunities? You can expect The Payments Authority (and me personally) to spend some quality time on "2%". In fact, of the six overarching strategic objectives we have for 2011, "2%" is a driving force behind 4 of them. So when the FRB does their payment study again in a couple years, perhaps we will have something to celebrate in the B2B space. How do you plan to deal with "2%"?

The Payments Authority Goes Slumping

Fri, 11 Feb 2011 18:15:46 -0400

...that's Slumping, not Slumming (which would probably get more views)! Once a year the staff here at The Payments Authority gets together and does something just for fun. One year it was putt putt golf. This year it was Glass Fusing or Slumping. We all stepped away from our cell phones for two hours and got crafty! Not only was it great to have a creative outlet, it was freeing to be OFF the electronic grid - away from cell phones, laptops and devices (if only for a short time).

I recently saw an interview with Sherry Turkle, a Professor from MIT on the Colbert Report show (click here to watch video) about a book she wrote, Alone Together. The message in the book and interview is this: even though we are physically together (at the dinner table or in meetings) if the person you are with is checking their emails or text messages you start to feel alone. She was not against social media and/or technology, but feels there is a time and place for it.

None of us had ever slumped before, and I could sense a cloud of skepticism among the group. How would these pieces turn out? Maybe we ought to give putt putt another try? And what if I miss an important call?

To our surprise and utter amazement, all of them came out fabulous (see photos)! And the world didn't come to a screeching halt because we didn't answer the phone. In fact, none of us even had any voice mail messages.

2010 Common ACH Audit Findings

Thu, 20 Jan 2011 13:51:00 -0400

The 2010 audit season is behind us. The audit is past, but work may still be ahead. The recommendations for corrections, findings, training and updates to policies and procedures may now be taking up your time. There are 3 components to the annual ACH audit; the first section pertains to all financial institutions, the second section to RDFIs and the third section to ODFIs. I compiled the most common findings within the first section of the audit requirements pertaining to all financial institutions. In sharing this, it may provide insight for future procedures and policies and help ensure the 2011 ACH audit is a breeze.

1. Secure record retention of all ACH records for 6 years Record retention problems may occur when Third Party Service Providers are receiving or sending ACH files on behalf of financial institutions. The other common reason for record retention issues may apply when financial institutions change in processor or processing system and records have been destroyed or lost during conversion. Recommendations: Review contracts with Third Party Providers to ensure record retention is addressed. Document procedures regarding ACH record retrieval. Ensure the checklist for conversion of systems, mergers, and acquisitions include ACH record retention for received and originated transactions.

2. Electronic records retained and ability to reproduce. Some financial institutions allow account holders to execute ACH documents i.e. authorizations, origination agreements and written statements via the internet. I found the most common electronic document used was consumer authorizations; and retention and reproduction of the authorization was a challenge for some financial institutions. (Note: authorizations must be retained for 2 years following termination.)Recommendations: Ensure all electronic documents can be reproduced. Review vendor agreements for record retention and reproduction or ensure your financial institution has access to these documents for later reference.

3. Previous years' audit issues had not been addressed. This was a new audit requirement for 2010 and it is important that financial institutions write and implement procedures to ensure previous years' audit findings are addressed.

4. Transmitting banking data via unsecured electronic networks. The first explanation that has to be made here is defining unsecured electronic network. This basically means email and internet connections and communications. I found this audit requirement to be in compliance more often than not, with the appropriate levels of encryption, for banking information moving between financial institution and Third-Party Service Providers and ACH Operator. The findings usually occurred with banking information transmitted via email between Originator and ODFI or between Receiver (consumer or business) and RDFI. Account holders and Originators may send account information to the financial institution using these unsecured methods of communication which opens the door for hackers to steal and compromise their account information. Recommendations: Training and education is the key. Account holders and Originators should be informed of the dangers of providing banking data over the internet or email. When a situation has been identified, document it and the action taken to ensure security of the account holders' banking information.

I hope you found these recommendations helpful and if you have ideas to share with other financial institutions to help ensure compliance with the ACH rules and audit requirements, please comment!