Treasury Services
EZ Clear to image-enabled savings bond processing provides efficiencies
February 2012Since the 2004 implementation of the Check Clearing for the 21st Century Act (Check 21), the financial services industry has made a significant shift away from a predominantly paper-based environment. Today, over 99 percent of deposits and over 95 percent of presentments at the Federal Reserve Banks are presented via electronic images. Having benefitted from cost reductions and efficiencies gained from electronic check processing, financial institutions expressed interest in a more efficient savings bond redemption process.
In response, the U.S. Department of the Treasury’s Bureau of the Public Debt approved an initiative to transition the processing of redeemed savings bonds from the EZ Clear Program to image-enabled processing. As announced on November 14, 2011, the Federal Reserve Banks expect to begin accepting savings bonds in a FedForward® image cash letter (ICL) in the second quarter 2012. The EZ Clear Program will be decommissioned following the transition.
“Moving savings bonds to image-enabled processing provides financial institutions an opportunity to remove the last remaining paper from their back room.”
Prepare your operations
The Federal Reserve Banks are collaborating with Public Debt to prepare for this transition so your organization can benefit from a more streamlined and cost-effective alternative for redeeming savings bonds.
On January 30, 2012, we communicated operational details to customers regarding this initiative. An EZ Clear to Image-enabled Savings Bond Processing Quick Reference Guide, available online in the next several weeks, will outline the major operational changes that could affect your institution, including the handling of redeemed savings bonds in mixed and separately sorted ICLs and mixed paper and facsimile savings bonds.
Visit the Image-enabled Savings Bond Processing Resource Center for additional information. Please bookmark this link for future reference and share this information with others in your organization as well as any image vendors.
"We are excited to partner with the Retail Payments Office to provide financial institutions an opportunity to benefit from the improved efficiencies of image-enabled savings bond processing.”
Become a FedForward depositor
If you do not currently deposit FedForward ICLs with the Federal Reserve Banks, we encourage you to contact your account executive or Check Services Customer Support at (877) 372-2457 to begin the process of signing up for these services. The FedForward Services Setup page provides step-by-step instructions to guide you through the process to become a FedForward depositor. No action is required for current FedForward ICL depositors.
Sign up for email notifications
We will continue to provide details regarding this initiative, including the timetable for the conversion, in future FedFocus issues. To be sure you are on our mailing list for future communications, or to include other staff members at your institution on the distribution list for future communications, please have each individual complete the email notification form.
Need more information?
If you have additional questions, please contact Savings Bonds Customer Support at (800) 553-2663.
Fedwire® Services
How to facilitate payment notification services using field tag {3620}
February 2012The Federal Reserve Banks value your input as we strive to meet your needs for secure, reliable and efficient payments services. Over the years, your feedback has been invaluable in enhancing existing services and shaping new product offerings. Based on the results of the 2006 Business-to-Business Wire Transfer Payments study , the Fedwire Funds message format was changed on November 21, 2011, to allow much more detailed remittance information to be included in the messages. The input you provided in the study was the impetus for another change the Federal Reserve Banks introduced along with the format changes.
During the study, you told us that in certain circumstances when you send high-value wire transfers it may be important to confirm whether or not a particular payment order has been processed; and that in order to make that determination, it is often necessary to make multiple phone calls to determine whether a particular financial institution has executed a payment order in the funds transfer. This insight was the foundation for the creation of a payment notification feature.
Payment notification utilizes field tag {3620} to allow a sending bank that is a Fedwire Funds Service participant and a member of the Payment Notification User Group (PNUG) to request an email notification from a beneficiary’s bank when the beneficiary’s bank credits or otherwise pays the beneficiary of a particular funds transfer.
How does payment notification work?
The Wholesale Customer Advisory Group of the Federal Reserve Bank of New York created the Payment Notification Guidelines , which serve as a market practice document to allow financial institutions handling funds transfers to offer payment notification services to their customers. The payment notification process is initiated when the originating financial institution populates three data elements in field tag {3620} of the wire transfer:
- A notification indicator
- A notification electronic address (email address)
- An end-to-end identification number
Optional data elements include a contact name and phone or fax numbers.
Field tag {3620}, Payment Notification, is designed to facilitate notification that the amount of a funds transfer has been credited to the beneficiary’s account (or that the beneficiary has otherwise been paid). If the beneficiary’s financial institution is a member of the PNUG, it is supposed to send a notification email (see Figure 1 below) to the notification electronic address included in tag {3620} after it has credited or otherwise paid the beneficiary (unless it has rejected the payment order or has chosen to “return” the funds it received). The notification email will include the ABA number, BIC or other identifying number of the party sending the email, the end-to-end identification number, status code (ACSC or RJCT) and a time stamp indicating when that status was achieved.
Figure 1
In certain circumstances, intermediary financial institutions may send notifications by email as they process their respective payment orders (see Figure 2 below).
Figure 2
What do I need to do to use payment notification?
To use payment notification, a financial institution must join the PNUG, which is a group of financial institutions that have agreed to use their best efforts to follow the Payment Notification Guidelines. The steps for Payment Notification User Group Setup are easy to follow. To become a member of the PNUG, a financial institution must either be a Fedwire Funds Service participant or arrange to have a Fedwire Funds Service participant that is a PNUG member agree to act on its behalf. In either case, the appropriate agreement must be submitted to the Customer Contact Center. The benefits of the payment notification feature will grow as more PNUG members sign up and begin using field tag {3620}, thereby increasing the universe of beneficiary financial institutions from which your institution could receive email notification that a beneficiary of a particular funds transfer has been credited.
The Federal Reserve Banks will make a directory of financial institutions that have joined the PNUG available on FRBservices.org for download as a Microsoft Excel® spreadsheet, and will also make certain other information available directly to PNUG members that are Fedwire Funds Service participants. A participant member who is also an Agent Bank shall make this information available to nonparticipant members. For more information about the PNUG member directories, please see Appendix E of Operating Circular No. 6 Funds Transfers through the Fedwire Funds Service .
Need more information?
To start using this service, visit Payment Notification User Group Setup. For more information about the Fedwire Funds Service, contact your account executive or the Wholesale Operations Site that supports your district.
Check/Check 21 Services
Driving the new, contemporary check platform forward
February 2012As you know, changes in the payments industry have been rapid and continue to move at high speed. To meet these ever-shifting demands, we continually enhance the technology platforms that support our Federal Reserve Financial Services so we can continue to deliver innovative, efficient and reliable solutions to meet your requirements. The Federal Reserve Banks' Check Platform Modernization initiative is in the final stages of development and external testing is scheduled to begin in the near future.
Migration to the new platform is targeted to occur in the second half of 2012 and will result in a fully centralized, scalable and flexible processing environment to support high quality, efficient check services. This transition will result in a centralized processing infrastructure, moving from multiple electronic processing sites to one to support high-quality, efficient processing.
As stated in our January 18, 2012, letter, we will be completing rigorous internal and customer testing as part of the implementation process. Internal testing is underway, and we are already communicating with the processor/vendor community on our customer testing approach. We expect to begin testing with processors/vendors by the end of the first quarter and the larger customer community in the second quarter.
“We will continue to keep you updated regarding various aspects of the project, including the implementation timeline and other operational changes that will occur with the migration.”
As testing draws closer, we will provide detailed information via direct communication. For your convenience, please visit the Check Platform Modernization Resource Center for information regarding this initiative or contact Check Services Customer Support at (877) 372-2457 with any questions.
FedACH® Services
New year, new FedGlobal® ACH Payments opportunities to explore
February 2012Many use the start of a fresh, new year to explore new opportunities. The Federal Reserve Banks’ FedGlobal ACH Payments may represent one such opportunity with potential benefits to your institution that extend beyond those typically realized by automated clearing house (ACH) operations alone. Your retail banking leadership may appreciate how the expanded European payment opportunities can benefit their business clients while your community development staff should be aware of how the new account-to-receiver option for payments to Latin America can solve a need within their constituencies. The reach of international FedACH payments extends to more than 35 countries around the world, and the account-to-receiver option facilitates payment delivery to unbanked receivers in Latin America.
By offering two delivery vehicles, three foreign exchange options and access to more than 35 countries, FedGlobal ACH Payments presents an opportunity worthy of exploration.
Explore the wild, blue yonder of available resources
The FedGlobal ACH Payments page outlines payment destinations, delivery options and foreign exchange options. FedGlobal ACH Payments Processing Resources present a variety of guides, manuals, access to daily exchange rates and an unbranded presentation on the Dirécto a Mexico® effort.
Start a conversation by contacting your account executive or FedACH sales specialist. Find their contact information by entering your ABA into the My FedDirectory® service.
Events and Education
Education is KEY for you and your staff
February 2012Ongoing education is an effort worthy of more than just the occasional New Year’s resolution. Keeping skills fresh and current is a commitment for many, and the Federal Reserve Banks' Events and Education curriculum strives to support such efforts.
The check adjustments webinar series illustrates how our curriculum can help you and your staff fulfill the goal to “keep educating yourself.” The webinars in the program are designed to build on previous sessions. The learner’s proficiency at processing check adjustments is advanced as he or she moves through the series, making it easy to keep building knowledge. The sessions are repeated often, offering a variety of dates and times throughout the year. This year-round availability provides your institution with a readymade curriculum for:
- Educating new adjustments staff
- Refreshing the skills of existing staff
- Training staff members to serve as trainers themselves
- Delivering educational opportunities
There are no prerequisites to webinar participation. However, the series follows a progression: it starts by covering basic concepts then builds by concentrating on detailed functionality.
Start educating yourself, and your staff, by registering today for one of these introductory check adjustment webinars. The first two webinars, “Basic Principles and Concepts of Forward and Return Check Adjustments” and “Basic Principles and Concepts of FedLine Web® and Documents to Follow” cover the foundations of adjustments processing. Then, keep educating yourself, and your staff, by continuing on with the series.
Featured Federal Reserve Bank Events
Register online for Federal Reserve Bank educational sessions.
Check Adjustments
| Event Title and Description | Dates | Event Type |
|---|---|---|
Basic Principles and Concepts of Forward and Return Check Adjustments The most basic session of the check adjustments training curriculum. Explains the concept of adjustments, including how to determine the entry type needed and the case submission requirements for submitting an adjustment. Walks through the steps of filling out an adjustment request, for several investigation types, explaining the required fields and documentation requirements for each. | February 9 10:00 a.m. or 2:00 p.m. ET | Fee-based Webinar |
Basic Principles and Concepts of FedLine Web and Documents to Follow Another basic session in the check adjustments training curriculum. Explains how to use the FedLine Web access solution to submit adjustment requests and supporting documentation, commonly referred to as Documents to Follow (DTFs). | February 14 10:00 a.m. or 2:00 p.m. ET | Fee-based Webinar |
| Review details and register today |
For information on dates and times, seminar details or newly added offerings, please visit Federal Reserve Bank Events. Be sure to bookmark the page as a favorite for future reference.