©Szabo Associates, Inc. 2014. All PRESORTED rights reserved. Materials may not STANDARD be reproduced or transmitted U.S. Postage PAID without written permission. Atlanta, GA Permit No. 747 Collective Wisdom® is a publication of Media Collection Professionals, S Z A B O A S S O C I A T E S , I N C . V O L U M E 2 9 , I S S U E 1 , M A R C H 3 1 , 2 0 1 4 3355 Lenox Rd. NE, Suite 945, Atlanta, Georgia 30326 Tel: 404/266-2464, Fax: 404/266-2165 Website: www.szabo.com e-mail: [email protected] Get Paid Quickly and Efficiently with Automated Clearing House Processing Dear Friends: Many of today’s credit and collection Payments Association) was formed The method of payment that your challenges are the same challenges from regional organizations to customers choose can make a sub- that managers have always faced. establish rules and standards for stantial difference in your cost of Customers who pay late or never, ACH transactions. NACHA doing business. Checks and credit dispute and discrepancy issues, Operating Rules govern the ACH cards, respectively, top the list of bankruptcy . . . the list goes on. Network, guiding risk manage- preferred methods in the media One challenge that current technol- ment and creating payment cer- industry. We believe, however, that ogy may allow us to meet head-on tainty for participants. now may be the time to depose with relatively little effort and a very Historically, the ACH Network the number two choice, the credit high percentage of success, however, has been used for payroll direct card, and replace it with Automated is payment processing. The media deposits and U.S. Government Clearing House payment processing. industry generally has relied on payments to vendors and Social This issue’s feature discusses the traditional forms of payment, such Security recipients. In 1999, the pros and cons of ACH, as well as as checks and credit cards, and Federal Reserve opened the what you need to do to implement manual systems of payment process- Network to corporate use. This the program. ing that require significant time and effort was initially met with mea- expense. In the meantime, the ger acceptance by consumers and Our spring calendar begins with volume of paperless financial trans- low adoption by businesses; how- the MFM/BCCA 54th annual actions has continued to grow in ever, early adopters realized the conference, “Media Finance Focus industries and businesses seeking benefits of ACH in lower costs 2014,” on May 19-21 at the Hilton to increase their efficiency and and higher profits. Hotel in Miami, Florida. Szabo is lower their costs. form available for download. continue to be the most common pleased to sponsor the opening The most important piece of this How ACH Works. Get Paid— 5. Implement procedures. form of payment to media for night party at Nikki Beach, South paperless puzzle is the Automated The ACH process begins when Work with your financial institution —continued from page 3 some years to come. The explo- Beach. We also look forward to Clearing House, or ACH. The ACH a “Receiver” authorizes an or payment processor to review sive growth of Automated Clearing attending the Georgia Association is a secure computer network “Originator” to issue an ACH debit to electronicpayments.org, an sound business practices and to House payment processing— of Broadcasters Awards Program designed to connect individuals, or credit to an account. The educational website sponsored by implement and test the secure serv- fueled by its convenience, cost on June 6 here in Atlanta. businesses and banks through the Originator (which may be a person, NACHA, to find information and ice. Enter customer account num- savings, speed, and security—will Federal Reserve System, enabling an organization, or a company) checklists to help you put the bers and institution routing num- continue, however. We predict Best wishes for a wonderful spring, currency to securely move from must receive authorization from program in place. Involve senior bers into the secure service software. that ACH payment processing sender to recipient in a fraction of the Receiver in written, verbal, staff, department heads, and sales Initiate test transactions through will take over credit card payment a second. or electronic form, depending on staff to solicit support and share the secure service to make sure the as the number two payment the ACH transaction. The written ideas. Use the sample authorization information is properly set up. method to media properties. A Brief History. authorizations include ARC form on the electronicpayments.org Promptly correct any errors that And, in our opinion, that’s a ACH was created in the early 1970s, (accounts receivable conversion), website as a guide in developing your institution or processor good thing. o when the mountain of paper checks a consumer check converted to your own. reports to you. Notify customers was overwhelming available com- a one-time ACH debit, and POP 4. Promote ACH to your of the transactions in advance Robin Szabo, President puter systems. The Federal Reserve (point-of-purchase), a check customers. Use your website as required. Szabo Associates, Inc. agreed to provide systems capable presented in person to a merchant to explain the benefits of ACH of handling ACH transactions as an ACH entry rather than as a payment to your customers. The Future of Payment Options. between financial institutions. In physical check. The difference Consider making an authorization Paper checks will most likely 1974, the National ACH Association between ARC and POP is that ARC (NACHA, also known as the Electronic can take place with a mailed-in —continued on page 2 4 1 2012, the number was over 21 card transaction for the same return fee. You may also contact This is not to imply that ACH is to plan and execute coordinated Get Paid— billion, totaling $36.9 trillion. amount would cost, on average, your customer to request another completely without security risk. action to disrupt some of the —continued from page 1 Cost. While you may think your $25. Credit investigation, partic- type of payment, or to ask for the As with credit and debit cards, ACH more notorious cybercrime opera- check, while POP must take place method of payment processing is ularly for customers who buy less date when the account will have also carries some risk of account tions. According to NACHA, their in person. The third type of efficient and inexpensive, consider than $2,000 per month or for sufficient funds to allow you to and identity theft. The only infor- ongoing efforts have significantly written authorization is PPD the following question: Efficient one-time customers, is simply manually resubmit the transac- mation that a fraudster needs to impacted the cybercriminals’ (prearranged payment and and inexpensive compared to what? inefficient. The time it takes to tion. The resubmission can be perpetrate ACH fraud is a checking infrastructure and operations. deposits), which are used to Traditional forms of payment and chase after and pore over credit only for the original amount; the account number and a bank rout- Firms that offer ACH-related credit or debit a consumer payment processing are expensive. applications and financial state- ACH return fee cannot be added. ing number. The fraudster then technology have been developing account. PPD is widely utilized Paper checks, the most common ments for these customers could In order to collect the return fee, uses the account and routing num- and enhancing security tools to for payroll direct deposits and form of payment to media, require be time more productively spent you must have it authorized as a bers to pay bills or make purchases. include more verification layers preauthorized bill payments. A multiple time-consuming steps. on larger advertisers. separate ACH transaction. A more sophisticated ACH fraud, and checks on transaction integri- direct payment processed as an First, an employee accepts the Alternatively, according to ACH accomplished by criminal rings, is ty. Additionally, NACHA has pub- ACH credit pushes funds into an check. Then another employee, Risk Management. Check pay- processing company Pay Simple, instigated with a computer “Trojan” lished sound business practices account, while a direct payment possibly engaged full time in this ments are the riskiest form of you can include a statement in that fraudsters install on a comput- for companies, financial institu- processed as an ACH debit pulls capacity, reconciles the payment. payment. They can be returned the Terms and Conditions that, at er, usually through a “phishing” tions, and third-party service funds from an account. Verbal The process of depositing the for insufficient funds, the the same time the initial transac- attack (an email that fools the vic- providers to combat “Corporate authorization, or TEL (telephone- money is also costly, requiring customer can stop payment, or tion is authorized, also authorizes tim into running malicious soft- Account Takeover,” business iden- initiated entry), allows the employee time as well as bank the check can get “lost in the a second transaction to collect the ware). The Trojan allows criminals tity theft whereby a criminal entity issuance of an ACH entry such as charges and fees. This assumes, mail,” either legitimately or by return fee for an NSF transaction. to install additional software that steals a company’s valid online checks by telephone. Electronic of course, that you received the excuse. Additionally, because a Security continues to be an logs the user’s keystrokes to obtain banking credentials. The organi- authorization, WEB (Web-initiated check in the first place. paper check passes through important issue among ACH logins for bank accounts. This zation’s website, www.nacha.org, entry), uses the Internet to create Besides the cost of supplies and several hands, inside and outside providers and customers. Your information then allows them to offers a wealth of information for the ACH entry. postage to send invoices, there is your organization, human error customers may be reluctant to create their own login information companies and institutions that Once the Originator receives the cost to send second and third is bound to happen at some time. provide bank account and rout- and transfer funds out of the account. use or facilitate ACH transactions. authorization, it creates an ACH notices when the bill is not paid Credit card transactions, while ing numbers, even though they As the volume and processing entry to be transmitted to an on time. Phone calls to delinquent less risky than checks, allow gladly remit paper checks printed speed of ACH transactions have The Setup. Originating Depository Financial customers take employee time, customers to initiate chargebacks with the same numbers! That continued to increase, so have By its description, ACH sounds Institution (ODFI), which can be which might be used on more on the basis of dissatisfaction paper check might be lost, found by demands for beefed-up security complex, but setting up the any financial institution that productive tasks. Meanwhile, your with your product or service. anyone and, at the very least, looked measures. In 2012, NACHA joined process is actually rather simple: offers ACH origination. The entry DSO suffers while you essentially Electronic payments never get at by many people during processing. forces with Microsoft Corporation, 1. Contact entities that spe- is then sent to an ACH Operator, serve as a lending institution to lost or stolen. There are limited With ACH, the numbers are entered the Financial Services-Information cialize in ACH transactions. This which may be either FED your debtors. bases for dispute; specifically, an into a secure system, encrypted, and Sharing and Analysis Center could be financial institutions that (FedLine, operated by the Federal The convenience of ACH pro- ACH transaction can be disputed accessed only by computers during (FS-ISAC), Kyrus Tech, Inc., and have ACH payment platforms or Reserve) or EPN (Electronic cessing also contributes to higher only if the transaction was not transaction processing. financial institution representatives companies (such as National Payments Network), the only productivity. It can be set up for authorized, it was not for the Processing, Pay Simple, ACHQ, private-sector ACH Operator in one-time transactions as well as authorized amount, or it was and ACH Direct, to name a few) the country. The ACH Operator recurring billing and payment plans processed at an earlier date that have either online or soft- then passes the entry to the on an agreed-upon schedule. Once than authorized. ACH payments ware solution payment platforms. Receiving Depository Financial authorization is granted, ACH is as can bounce if the money in the All will require documentation, Institution (RFDI), where the easy as a credit card transaction, account is insufficient to cover including an application, finan- Receiver’s account is either but much less costly. the payment; however, that cials, and information regarding credited or debited. ACH is generally the lowest cost situation becomes quickly your volume of transactions, types The final step of the transaction option for accepting electronic pay- apparent. If a payment is of transactions (single, recurring, is “settlement,” the actual transfer ments. Transactions received by unsuccessful (for reasons such WEB, etc.). They will then estab- of funds from one financial insti- the financial institution during the as a bad bank account number, lish ceilings on debits and/or tution to another. The NACHA day are stored and processed later insufficient funds, a dispute, and credits you can transact daily Operating Rules require that ACH in a batch mode. Rather than so on), notification is returned and monthly. credits settle in one to two busi- sending each payment separately, from the ACH network, usually 2. Evaluate and compare ness days, and that ACH debits ACH transactions are accumulated within 2-4 business days of the services of several service settle on the next business day. and sorted by destination for trans- payment submission. providers. There are many institu- Transactions are posted to the mission during a predetermined ACH processing companies tions and companies that offer Receiver’s account on the date period, providing significant have protocols for dealing with ACH processing, but they differ in specified in the Originator’s file. economies of scale. unsuccessful payments. First cost and offerings. What security Most ACH transactions incur a of all, you will receive a report tools do they employ? How do The Benefits. flat fee, which generally range from that a payment was returned for they rate in customer satisfaction? The steady increase in ACH 25 to 75 cents per transaction. NSF. You may direct the ACH How small or large are their client volume over the past decade Credit card charges—interchange processor to configure your companies? Are they sensitive to affirms the advantages, in both fees, assessments, and merchant account to automatically resubmit issues unique to the media indus- services fees—generally run the transaction, although this cost and risk management, of this “It’s Automated Clearing House! No magazines, no sweepstakes, nobody try, and did they answer your ques- type of payment processing. The between 2% and 3%. For a $1,000 directive carries the risk of the showing up at your door with a check the size of a billboard. But we do tions satisfactorily? number of ACH payments in 2003 payment, the ACH option would transaction being returned again get paid faster, and you won’t have to spend so much time chasing after 3. Plan and communicate was approximately 10 billion; in cost, on average, 50 cents. A credit and incurring a second ACH those sales commissions!” within your organization. Log on —continued on page 4 2 3 2012, the number was over 21 card transaction for the same return fee. You may also contact This is not to imply that ACH is to plan and execute coordinated Get Paid— billion, totaling $36.9 trillion. amount would cost, on average, your customer to request another completely without security risk. action to disrupt some of the —continued from page 1 Cost. While you may think your $25. Credit investigation, partic- type of payment, or to ask for the As with credit and debit cards, ACH more notorious cybercrime opera- check, while POP must take place method of payment processing is ularly for customers who buy less date when the account will have also carries some risk of account tions. According to NACHA, their in person. The third type of efficient and inexpensive, consider than $2,000 per month or for sufficient funds to allow you to and identity theft. The only infor- ongoing efforts have significantly written authorization is PPD the following question: Efficient one-time customers, is simply manually resubmit the transac- mation that a fraudster needs to impacted the cybercriminals’ (prearranged payment and and inexpensive compared to what? inefficient. The time it takes to tion. The resubmission can be perpetrate ACH fraud is a checking infrastructure and operations. deposits), which are used to Traditional forms of payment and chase after and pore over credit only for the original amount; the account number and a bank rout- Firms that offer ACH-related credit or debit a consumer payment processing are expensive. applications and financial state- ACH return fee cannot be added. ing number. The fraudster then technology have been developing account. PPD is widely utilized Paper checks, the most common ments for these customers could In order to collect the return fee, uses the account and routing num- and enhancing security tools to for payroll direct deposits and form of payment to media, require be time more productively spent you must have it authorized as a bers to pay bills or make purchases. include more verification layers preauthorized bill payments. A multiple time-consuming steps. on larger advertisers. separate ACH transaction. A more sophisticated ACH fraud, and checks on transaction integri- direct payment processed as an First, an employee accepts the Alternatively, according to ACH accomplished by criminal rings, is ty. Additionally, NACHA has pub- ACH credit pushes funds into an check. Then another employee, Risk Management. Check pay- processing company Pay Simple, instigated with a computer “Trojan” lished sound business practices account, while a direct payment possibly engaged full time in this ments are the riskiest form of you can include a statement in that fraudsters install on a comput- for companies, financial institu- processed as an ACH debit pulls capacity, reconciles the payment. payment. They can be returned the Terms and Conditions that, at er, usually through a “phishing” tions, and third-party service funds from an account. Verbal The process of depositing the for insufficient funds, the the same time the initial transac- attack (an email that fools the vic- providers to combat “Corporate authorization, or TEL (telephone- money is also costly, requiring customer can stop payment, or tion is authorized, also authorizes tim into running malicious soft- Account Takeover,” business iden- initiated entry), allows the employee time as well as bank the check can get “lost in the a second transaction to collect the ware). The Trojan allows criminals tity theft whereby a criminal entity issuance of an ACH entry such as charges and fees. This assumes, mail,” either legitimately or by return fee for an NSF transaction. to install additional software that steals a company’s valid online checks by telephone. Electronic of course, that you received the excuse. Additionally, because a Security continues to be an logs the user’s keystrokes to obtain banking credentials. The organi- authorization, WEB (Web-initiated check in the first place. paper check passes through important issue among ACH logins for bank accounts. This zation’s website, www.nacha.org, entry), uses the Internet to create Besides the cost of supplies and several hands, inside and outside providers and customers. Your information then allows them to offers a wealth of information for the ACH entry. postage to send invoices, there is your organization, human error customers may be reluctant to create their own login information companies and institutions that Once the Originator receives the cost to send second and third is bound to happen at some time. provide bank account and rout- and transfer funds out of the account. use or facilitate ACH transactions. authorization, it creates an ACH notices when the bill is not paid Credit card transactions, while ing numbers, even though they As the volume and processing entry to be transmitted to an on time. Phone calls to delinquent less risky than checks, allow gladly remit paper checks printed speed of ACH transactions have The Setup. Originating Depository Financial customers take employee time, customers to initiate chargebacks with the same numbers! That continued to increase, so have By its description, ACH sounds Institution (ODFI), which can be which might be used on more on the basis of dissatisfaction paper check might be lost, found by demands for beefed-up security complex, but setting up the any financial institution that productive tasks. Meanwhile, your with your product or service. anyone and, at the very least, looked measures. In 2012, NACHA joined process is actually rather simple: offers ACH origination. The entry DSO suffers while you essentially Electronic payments never get at by many people during processing. forces with Microsoft Corporation, 1. Contact entities that spe- is then sent to an ACH Operator, serve as a lending institution to lost or stolen. There are limited With ACH, the numbers are entered the Financial Services-Information cialize in ACH transactions. This which may be either FED your debtors. bases for dispute; specifically, an into a secure system, encrypted, and Sharing and Analysis Center could be financial institutions that (FedLine, operated by the Federal The convenience of ACH pro- ACH transaction can be disputed accessed only by computers during (FS-ISAC), Kyrus Tech, Inc., and have ACH payment platforms or Reserve) or EPN (Electronic cessing also contributes to higher only if the transaction was not transaction processing. financial institution representatives companies (such as National Payments Network), the only productivity. It can be set up for authorized, it was not for the Processing, Pay Simple, ACHQ, private-sector ACH Operator in one-time transactions as well as authorized amount, or it was and ACH Direct, to name a few) the country. The ACH Operator recurring billing and payment plans processed at an earlier date that have either online or soft- then passes the entry to the on an agreed-upon schedule. Once than authorized. ACH payments ware solution payment platforms. Receiving Depository Financial authorization is granted, ACH is as can bounce if the money in the All will require documentation, Institution (RFDI), where the easy as a credit card transaction, account is insufficient to cover including an application, finan- Receiver’s account is either but much less costly. the payment; however, that cials, and information regarding credited or debited. ACH is generally the lowest cost situation becomes quickly your volume of transactions, types The final step of the transaction option for accepting electronic pay- apparent. If a payment is of transactions (single, recurring, is “settlement,” the actual transfer ments. Transactions received by unsuccessful (for reasons such WEB, etc.). They will then estab- of funds from one financial insti- the financial institution during the as a bad bank account number, lish ceilings on debits and/or tution to another. The NACHA day are stored and processed later insufficient funds, a dispute, and credits you can transact daily Operating Rules require that ACH in a batch mode. Rather than so on), notification is returned and monthly. credits settle in one to two busi- sending each payment separately, from the ACH network, usually 2. Evaluate and compare ness days, and that ACH debits ACH transactions are accumulated within 2-4 business days of the services of several service settle on the next business day. and sorted by destination for trans- payment submission. providers. There are many institu- Transactions are posted to the mission during a predetermined ACH processing companies tions and companies that offer Receiver’s account on the date period, providing significant have protocols for dealing with ACH processing, but they differ in specified in the Originator’s file. economies of scale. unsuccessful payments. First cost and offerings. What security Most ACH transactions incur a of all, you will receive a report tools do they employ? How do The Benefits. flat fee, which generally range from that a payment was returned for they rate in customer satisfaction? The steady increase in ACH 25 to 75 cents per transaction. NSF. You may direct the ACH How small or large are their client volume over the past decade Credit card charges—interchange processor to configure your companies? Are they sensitive to affirms the advantages, in both fees, assessments, and merchant account to automatically resubmit issues unique to the media indus- services fees—generally run the transaction, although this cost and risk management, of this “It’s Automated Clearing House! No magazines, no sweepstakes, nobody try, and did they answer your ques- type of payment processing. The between 2% and 3%. For a $1,000 directive carries the risk of the showing up at your door with a check the size of a billboard. But we do tions satisfactorily? number of ACH payments in 2003 payment, the ACH option would transaction being returned again get paid faster, and you won’t have to spend so much time chasing after 3. Plan and communicate was approximately 10 billion; in cost, on average, 50 cents. A credit and incurring a second ACH those sales commissions!” within your organization. Log on —continued on page 4 2 3 ©Szabo Associates, Inc. 2014. All PRESORTED rights reserved. Materials may not STANDARD be reproduced or transmitted U.S. Postage PAID without written permission. Atlanta, GA Permit No. 747 Collective Wisdom® is a publication of Media Collection Professionals, S Z A B O A S S O C I A T E S , I N C . V O L U M E 2 9 , I S S U E 1 , M A R C H 3 1 , 2 0 1 4 3355 Lenox Rd. NE, Suite 945, Atlanta, Georgia 30326 Tel: 404/266-2464, Fax: 404/266-2165 Website: www.szabo.com e-mail: [email protected] Get Paid Quickly and Efficiently with Automated Clearing House Processing Dear Friends: Many of today’s credit and collection Payments Association) was formed The method of payment that your challenges are the same challenges from regional organizations to customers choose can make a sub- that managers have always faced. establish rules and standards for stantial difference in your cost of Customers who pay late or never, ACH transactions. NACHA doing business. Checks and credit dispute and discrepancy issues, Operating Rules govern the ACH cards, respectively, top the list of bankruptcy . . . the list goes on. Network, guiding risk manage- preferred methods in the media One challenge that current technol- ment and creating payment cer- industry. We believe, however, that ogy may allow us to meet head-on tainty for participants. now may be the time to depose with relatively little effort and a very Historically, the ACH Network the number two choice, the credit high percentage of success, however, has been used for payroll direct card, and replace it with Automated is payment processing. The media deposits and U.S. Government Clearing House payment processing. industry generally has relied on payments to vendors and Social This issue’s feature discusses the traditional forms of payment, such Security recipients. In 1999, the pros and cons of ACH, as well as as checks and credit cards, and Federal Reserve opened the what you need to do to implement manual systems of payment process- Network to corporate use. This the program. ing that require significant time and effort was initially met with mea- expense. In the meantime, the ger acceptance by consumers and Our spring calendar begins with volume of paperless financial trans- low adoption by businesses; how- the MFM/BCCA 54th annual actions has continued to grow in ever, early adopters realized the conference, “Media Finance Focus industries and businesses seeking benefits of ACH in lower costs 2014,” on May 19-21 at the Hilton to increase their efficiency and and higher profits. Hotel in Miami, Florida. Szabo is lower their costs. form available for download. continue to be the most common pleased to sponsor the opening The most important piece of this How ACH Works. Get Paid— 5. Implement procedures. form of payment to media for night party at Nikki Beach, South paperless puzzle is the Automated The ACH process begins when Work with your financial institution —continued from page 3 some years to come. The explo- Beach. We also look forward to Clearing House, or ACH. The ACH a “Receiver” authorizes an or payment processor to review sive growth of Automated Clearing attending the Georgia Association is a secure computer network “Originator” to issue an ACH debit to electronicpayments.org, an sound business practices and to House payment processing— of Broadcasters Awards Program designed to connect individuals, or credit to an account. The educational website sponsored by implement and test the secure serv- fueled by its convenience, cost on June 6 here in Atlanta. businesses and banks through the Originator (which may be a person, NACHA, to find information and ice. Enter customer account num- savings, speed, and security—will Federal Reserve System, enabling an organization, or a company) checklists to help you put the bers and institution routing num- continue, however. We predict Best wishes for a wonderful spring, currency to securely move from must receive authorization from program in place. Involve senior bers into the secure service software. that ACH payment processing sender to recipient in a fraction of the Receiver in written, verbal, staff, department heads, and sales Initiate test transactions through will take over credit card payment a second. or electronic form, depending on staff to solicit support and share the secure service to make sure the as the number two payment the ACH transaction. The written ideas. Use the sample authorization information is properly set up. method to media properties. A Brief History. authorizations include ARC form on the electronicpayments.org Promptly correct any errors that And, in our opinion, that’s a ACH was created in the early 1970s, (accounts receivable conversion), website as a guide in developing your institution or processor good thing. o when the mountain of paper checks a consumer check converted to your own. reports to you. Notify customers was overwhelming available com- a one-time ACH debit, and POP 4. Promote ACH to your of the transactions in advance Robin Szabo, President puter systems. The Federal Reserve (point-of-purchase), a check customers. Use your website as required. Szabo Associates, Inc. agreed to provide systems capable presented in person to a merchant to explain the benefits of ACH of handling ACH transactions as an ACH entry rather than as a payment to your customers. The Future of Payment Options. between financial institutions. In physical check. The difference Consider making an authorization Paper checks will most likely 1974, the National ACH Association between ARC and POP is that ARC (NACHA, also known as the Electronic can take place with a mailed-in —continued on page 2 4 1