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HomeMy WebLinkAbout2004 08 23 Informational 303 COMMISSION AGENDA ITEM 303 CONSENT INFORMATIONAL X PUBLIC HEARING REGULAR Authorization August 23,2004 Meeting MGR ;e...--/DEPT REQUEST: The Finance and Information Services Departments wish to update the City Commission on the Status of Payment Methods for Utility Customers. PURPOSE: The purpose of this Agenda item is to update the City Commission on the status of payment methods for utility customers, such as credit cards, debit cards and bank drafts. CONSIDERATIONS: During the public input sections of the Commission meetings as well as by telephone calls received by our utility billing service department, members of the public have inquired as to when ACH transactions will be available to them. There are two types of ACH (or Automated Clearinghouse) transactions, which are ACH credits and ACH debits. ACH credits are entries which occur when an Originator initiates a transfer to move funds into a Receiver's account, such as direct deposit of payroll in which the City is the Originator and the employee is the Receiver or when an entity initiates a transaction to credit (or increase) the City's account such as the Seminole County Tax Collector (Originator) with the City's (Receiver) Property Tax distribution that they collect on our behalf. Although, the use on-line banking alone by our residents does not guarantee that their on-line banking transaction is an ACH credit. The majority of the payments received from on-line banking services companies are checks and list (or printed) reports to the resident's (Originator's) service provider (or Receiver). Each Receiver must setup the ability to receive an ACH credit from each of the on-line banking services or payment remittance networks. Due our current banking institution, Bank of America's, on-line banking knowledge and expertise, the City is currently evaluating their RapidPay service described below. ACH debits are entries which occur when funds are transferred from the Receiver's account to an Originator's account, even though the Originator initiates the transaction. This will occur with the City's bank draft program, where the City is the Originator and the resident is the Receiver. Informational Agenda Item 303 August 23, 2004 Page 2 of3 On July 14, 2003, the City Commission authorized the acceptance of credit cards and debit cards using SpeedPay and bank drafts for utility billing payments. City staff was further directed that implementation should not begin until after a policy has been created and adopted by the City Commission. Placed on the agenda for tonight, August 23, 2004, you will notice Consent Item 203, which requests the City Commission adopt a bank draft policy and authorization to work with the City Attorney to create a bank draft authorization agreement form with appropriate legal disclaimers. City staff has been working with MUNIS, the City's Utility Billing software company, as well as the Bank of America, the City's banking institution, to properly test and train for this service. Once the policy is approved and the bank draft authorization form is complete, we will mail the authorization form to all of our citizens to begin utilizing this service. Information will also be placed on the website announcing this new service. The Bank Draft service is estimated to be $75.00 per month, based on approximately 600 customers (out of approximately 12,000 customers) utilizing this service at a flat fee of $15.00 per month plus $0.10 per item (customer). This fee will be paid for by the City's Water and Utility Fund. As for the acceptance of credit cards and debits cards, City staff began working with SpeedPay and found issues with SpeedPay's security and fraud prevention mechanisms, fee schedules and the MUNIS software interface. As a result, City staff began researching different providers for credit card and debit card services. A company by the name of Official Payments Corporation ("OPC") has been found to have many advantages over SpeedPay. Staff is currently working with the City Attorney on the contract. A City Commission agenda item should be forth coming in the next month or two. All fees associated with this service will be paid for by the customer directly to OPC at a rate of $6.50 per credit card transaction, with the possibility after three months of activity to reduce the rate, depending on how large the average transaction is. City staff is currently researching a service called RapidPay, which is offered by Bank of America. With the advent of online bill paying services, many of our utility customers have begun to pay their bills online. However, this does not mean that their bill is paid electronically to the City. The payment mechanism depends on the how the recipient (the City) is setup to receive payments. The City currently only receives checks from the online bill paying services, which means that instead of a two to three day delay there is sometimes as much as ten day delay between the initiation of the payment by the customer to the application of the payment by the City. Unfortunately, not all customers ensure adequate processing time. As a result, many customers either receive late fees or, worse, have their utility services interrupted for non-payment due to this timing delay. Bank of America provides a service whereby they accept payments from multiple bill payment service providers, combine the data and dollars, edit for incorrect or missing da~a, and send one file in a format that meets the client's posting needs. This would mean that the manual keying of approximately 500 online bill payment checks could potentially be eliminated each week and replaced by a downloadable file to the City's MUNlS Utility Billing software. City staff is working with Bank of America to verify if this file would be compatible with the MUNIS Informational Agenda Item 303 August 23, 2004 Page 3 of3 software. The projected cost of this service is: a one time fee of $200 for initiation; and monthly fees of $125.00 for maintenance and $0.07 per item charge (or approximately $265.00 per month). Bank of America estimates that it would take about six to eight weeks to implement this system. The City would need to ensure that adequate testing and training occurs before the service is implemented. If necessary a policy would need to be written. We have spoken to Mr. Bill Herman at City of Pompano Beach, Florida, whose City is currently a RapidPay customer. He spoke highly of the service and mentioned that the interface between his software, HTE, and Bank of America worked well. He has had not problems with the service. A future determination would need to be made if the City's Water and Sewer Utility Fund would be able to bear the cost of this service. So to recap, the City will be sending out applications for one type ACH service (ACH debit), bank draft, in the next few months, and could potentially be offering another type of ACH service (ACH credit), RapidPay, by calendar year end. The RapidPay service option will be brought back to the Commission when the MUNIS file compatibility question has been answered. FUNDING: None at this time. RECOMMENDATION: None at this time. ATTACHMENTS: Bank Draft Fee Schedule OPC Fee Schedule Rapid Pay Fee Schedule RapidPay Brochure COMMISSION ACTION: Pricing Schedule City of Winter Springs July 7, 2003 Service Description Per Item Activity Chan!e ACH Bank Drafting (ACH Debit) Set Up Fees - One time fee ACH Set Up 50.00 ACH Testing 50.00 On Going Fees ACH Maintenance- Per Month 15.00 ACH Per Item 0.10 ACH Transmission - Per Transmission 15.00 Additional Service Charges based on activity ACH Returns/NOC (Notice of Change) - Per Item 3.50 ACH Reversals 7.50 ACH Reclears 2.50 ACH Return Item Notification (Fax) 3.00 ACH Return Item Notification (Phone) 5.00 ACH Return Notification (via Bank of America Direct) - per 1.00 return Services utilized but not listed on the above schedule of fees will be charged and appear on the City's monthly analysis statement. Please contact your Bank of America representative for additional information. ylCl,\.L PAYl\JENTS Co 01' IUiUI ~~ Exhibit A Convenience Fee Schedule For Utility Payments I - Schedule of Convenience Fees to be Paid by Citizens Credit and PIN-less Debit Card Transactions Flat $6.50 with a $500 maximum one-time payment Payments over $500 will require 2 payments Electronic Check Transactions Convenience Fees to be charged to Citizen by OPC: $ 3.00 per each Payment Transaction less than or equal to $10,000.00 $15.00 per each Payment Transaction greater than $10,000,00 Agency Fees to be charged to Agency by OPC: $4.00 as a Returned Transaction Fee for each Return Transaction (does not include a Representment option) $5.00 as a Returned Transaction Fee for each initial Return Transaction (includes one Representment) BankOfAmeriC. RapidPay Fee Schedule Set-up and Implementation Standard Validation............................................................... Additional payees added/modified after initial implementation .............. Check Digit Validation. . .. . . . . .. . .. . .. . . . . .. . . . . . . . . . . .. . .. . .. . .. . . ... . . . . . . . . . . . . Additional payees added/modified after initial implementation. . .. . .. . .. . ... Positive File Validation........................................................... Negative File Validation.......................................................... Client Customization.............................................................. Monthly Maintenance (per data transmission) Standard InpuUOutput Bank of America Account. . . . . .. . . .. .. . .. . . . . . . . . . . . . . .. . .. . .. . . . . . . . .. Non Bank of America Account.... .................................... Special Input/Output (includes Standard InpuUOutput Maintenance) Positive Files Bank of America Account.. . .. .. .. . . . .. .. ... .. .. .. . .... .. .. . .. .... . .. ... Non Bank of America Account...................... ................... Negative Files Bank of America Account.. . ....... ..................................... Non Bank of America Account......................................... Item Processing (includes account mask verification) 1 - 19,999................................................................. 20,000 - 49,999................................................................ 50,000 - 74,999................................................................ 75,000 - 99,999................................................................ 100,000 - 149,999............................................................... CCCS Transactions 1 - 49,999.................................................................. 50,000 - 99,999............................................................ 1 00,000 +. . . . . . . . .. . . . . . . . . . . . . . .. . .. . . . . .. . .. . . . . . . . .. . .. . . . . .. . . . . . . . .. . .. Exception Items Unpostable Returned Items with Dollars: Manual Sendbacks/Returns Customer Services Remakes (within 7 calendar days of original creation date). . .. . . .. . . . . . . ... *Available in certain areas 1 Price /Unit $ 200.00 $ 150.00 $ 300.00 $ 300.00 $ 3,000.00 $ 3,000.00 $ 3,000.00 Isetup,add,or modification ladd,or modification Isetup,add,or modification ladd,or modification Isetup,add or modification Isetup,add or modification Isetup,add or modification $ 125.00 $ 200.00 Idata transmission Idata transmission $ 250.00 Idata transmission $ 400.00 Idata transmission $ 250.00 Idata transmission $ 400.00 Idata transmission $ .070 litem $ .065 litem $ .060 litem $ .055 litem $ .050 litem $ .12 litem $ .10 litem $ .08 litem $ 3.00 litem $ 15.00 Itransmission BankofAmerica ~~ ~ RapidPay - Biller Concentration Services Online banking has become a popular means for consumers and small businesses to use a personal computer, touchtone telephone or personal management software to conduct their financial affairs. In 2000, 13-15% of U.S. households used online banking and that use is expected to double in volume by 2003. Many online banking service providers offer online bill payments where consumers and small businesses can initiate bill payments from their homes, offices or while they are on the road -- a powerful payment method because it lets your customers control when and how they make their payment. At the same time, corporations have found that PC initiation of a payment does not always equate to an electronic stream of dollars or data. In fact, companies are reporting that the majority of these payments are received as a check and list. With our approach, RapidPay, we provide an all-electronic solution between PC- initiated payments and your receivables systems. We accept payments from multiple bill payment service providers, combine the data and dollars, edit for incorrect or missing data, and send one file in a format that meets your posting needs. Bank of America has offered online banking services to consumer and small business clients for over 17 years, which has grown to over 3 million users nationwide. The benefits of Rapid Pay include: . Receiving information with payments In a format that meets your specific criteria . Accelerating your cash flow by three to five days . Improving service by decreasing posting delays and errors . Eliminating data entry and minimizing exception handling . Receiving Consumer Credit Counseling Service (CCCS) payments on the same electronic file RapidPay replaces the inefficiency and expense of receiving and posting paper check and list remittances with a streamlined and cost-effective means of collecting and processing payments. Understanding the Processing Flow Online banking users expect that since they initiate the payment electronically, the payee will receive the payment in the same manner. Although some payees do receive the funds electronically, most payments are still processed the old- fashioned way - a mailed check with a list of the payment details. This is where the problems begin. In a retail lockbox environment, the check and list are exception items that require data entry. In addition to the keying expense, there are no edits to assure that a paper payment has either sufficient or accurate data. Bank of America RapidPay Service Page 1 of6 Consumers then blame the billers for late or inaccurate posting, resulting in a growing problem. Using RapidPay, you can receive a single remittance file to facilitate the end-to- end electronic handling ofthese online bill payments. Here's how it works: 1. The bill payment service providers route the online bill payments (including CCCS payments) to Bank of America. 2. The bill payments are edited according to your criteria so you only receive clean payments for valid account numbers. 3. You receive a remittance file that is formatted according to your specifications, and we electronically deposit the funds to your account. 4. You post the payments to your accounts receivable system. S. You rely on Bank of America to serve as your single point of contact for payment inquiries, regardless of the source. Banks and other bill payment service providers have three ways to make payments on behalf of consumers. They can write either a single check per remitter or batch remitters on one check; send an ACH transaction(s) with remittance data attached or in a separate file; or send the information through a payment remittance network such as, CheckFree, MasterCard RPPS or VISA ePay. These networks are specifically equipped to handle PC-initiated payments, including biller edits on account numbers. We edit account numbers in the files to ensure that they meet your specific requirements as defined during implementation. Data can then be consolidated and reformatted for transmission to your receivables system. In the event you cannot post a customer's payment, you can return the item to Bank of America for forwarding to the original source. Customizing to meet your needs We recognize that accounts receivable systems and corporate policies vary, and that you may have special processing needs. Our clients can select from the wide range of options summarized below, and customize the RapidPay service to maximize the value of this service. Depositing to Your Account Our clients receive a credit to their Bank of America account for the total dollar amount of all RapidPay payments delivered to them each day. They can specify other deposit instructions, such as separate deposits for customer segments (e.g., geographic locations). Bank of America RapidPay Service Page 2 of6 Data Delivery Our clients may select the type of data transmission method from the following options: . Bisynchronous communications . Asynchronous communications . FTP with PGP encryption . HTTP with SSL encryption . Direct Connect NDM The electronic remittance file is available for transmission to you each banking day. Our clients may also choose to receive a facsimile daily containing summary information such as, total number of payments and total deposit amount. Formatting the Remittance File The Bank can match an established format used and accepted by your system (e.g., a retaillockbox transmission), or you may chose a standard or proprietary format. Files can be transmitted in one of the following formats to accommodate your internal needs: . EDI 820 . NACHA CIE . BAI . Proprietary (customized by the client) Flexible Batching RapidPay can customize the contents and number of items contained in a batch for online bill payments and CCCS payments. Batches can then be consolidated and transmitted as a single file. The default size of a batch is 99,999 items, or our clients can set "batching parameters" to assist with internal processing requirements. Providing Payment Details Our clients can receive the following information for each payment on the RapidPay file as provided by each bill payment service provider: Standard information: . Dollar amount of the bill payment . Customer's account number with your company name . Processing date Bank of America RapidPay Service Page 3 of6 Optional information: . Trace number or reference number which contains the sending financial institution's transit-routing number . Abbreviated customer name Validating the Data To improve the posting accuracy and screening of the customer's correct account number, you may provide Bank of America with your account format requirements. We use your designated account format to pre-screen incoming transactions, so you receive only those payments meeting your account requirements. This improves your posting accuracy and automatically returns invalid transactions to the bill payment service provider/consumer as early in the cycle as possible. By receiving a file of clean data, our clients eliminate the manual research of invalid payments. The "account mask" is the specific edit criteria for an account number. The mask defines the number of positions (ranging from 1 to 22 bytes) and the types of characters (e.g., alpha, numeric) permitted in the account number. The bank stores your account mask and pre-screens all incoming payments against this criteria. Payments that do not contain the proper data are returned to the bill payment provider. You can also specify a "check digit routine" for any digit in the account number. The mod check routine is an algorithm (e.g., modulus 10, 11, 12) used to verify the combination of the values contained in the account number. The calculated number that is a result of the algorithm is known as the "check digit." The check digit calculation provides an extra step to improve the validity of the account number. Verifying the Data Our clients can provide Bank of America with account-specific information to further improve the reliability of receiving payments for only valid accounts. Certain industries such as mortgage companies maintain a list of accounts for which they do not want to receive payments (e.g., foreclosed properties). Our clients send an electronic transmission of account numbers for which payments should not be accepted. The Bank verifies all incoming payments against this "negative" file. Matches are rejected and returned to the bill payment service provider marked as "payment declined." To improve the accuracy of the posting files, our clients can send an electronic transmission of only those account numbers for which payments should be accepted. The Bank verifies all incoming payments against this "positive" file. Any account numbers that don't match the file are rejected and returned to the bill payment service provider marked as "invalid account number." Bank of America RapidPay Service Page 4 of6 The RapidPay system is continuously available to receive and process updates to, or replacements for, positive and negative files prepared by you. The files are processed upon receipt, with the exception of any jobs already in process. The existing positive and/or negative files remain in production until a refreshment file or maintenance file has been received. Customizing the Data Elements Our clients may have additional editing requirements to manipulate the data related to posting online bill payments. You can provide us with your special processing instructions for dollar ranges, types of account number or transactions with special attributes. Customization may include adding, moving, changing or omitting characters in the customer's account number. You may have other exception handling needs, for which we may be able to provide one-time or ongoing support. We have provided special handling for companies changing account numbers en masse. For example, telecommunication companies that use a consumer's phone number as part or all of an account number have been faced with bulk changes due to splitting area codes. Bank of America RapidPay has brought its experience and talent to assist these companies with little impact to the company and consumers alike. Returning Unpostable Items Even with the most sophisticated use of data validations and verifications, you may occasionally receive payments that cannot be posted. You can send the RapidPay Operations a facsimile report of the payments that cannot be posted. RapidPay returns the payments to the applicable network and bill payment service provider. As an alternative, you can return unpostable items to Bank of America in an electronic file in a format designated by RapidPay. If you provide Bank of America with account corrections (where you have applied the consumer's payment, but want to change the account number for future payments), we will submit this information back to the originating bill payment service provider. Getting Started We work with you to convert the paper checks and lists currently being received from bill payment service providers to electronic payments. Your company can receive a database file containing the account number and name of online bill payment subscribers from the various bill payment originators making payments to you. You will need to validate the account numbers, and in some cases, provide the corrected account number. Simultaneously, we work with you to define your account edit criteria, conduct data transmission and file format testing, and set you up with each of the payment networks. In our experience, an implementation takes approximately six weeks. Additional time may be needed for positive and Bank of America RapidPay Service Page 5 of6 negative data verification. We assign a RapidPay project manager to work closely with your team, to plan and implement the service. Having One Point of Contact You will have one point of contact within the RapidPay support team for daily support inquiries including payment research, file transmission and settlement questions. We respond to all inquiries within 24 hours or by the next business day. Linking With Electronic Billing and Payment Electronic bill presentment is becoming increasingly important in our rapidly growing e-commerce marketplace. Industry research shows that consumers will view and pay 10% of all bills over the Internet by 2001, and more than 35% by 2007. The receipt of electronic bills completes the bill payment value chain for consumers and small businesses. They can now receive electronic bills and pay these bills through the same, secure online banking channels being used today. In April 1999, Bank of America was the first financial institution to offer a full suite of electronic billing and payment services for companies and the bank's extensive number of online banking users. Bank of America can create and distribute electronic bills to over 200 popular consumer payment service Web sites. RapidPay is an important component that compliments the billing and payment process, creating a true end-to-end electronic solution. Bank of America RapidPay Service Page 6 of6