Table of Contents AHA! Page . .page 1 Since PSU Last Year . page. 2 Third-Party Sender Registration . .page 8 Fraud Trends . page. 19 Regulatory Update . page. 20 Payment Trends . .page 23 Same Day ACH Debits . .page 31 Certificate of Completion . page. 37 PARTICIPANT GUIDE ii ©2017. EPCOR®. All Rights Reserved. AHA! Page PARTICIPANT GUIDE 1 ©2017. EPCOR®. All Rights Reserved. Since PSU Last Year EMV Compliance Mandate – October 2015 Liability Shift Who Is Liable? Liability Condition – Counterfeit (Issuer or Merchant) • Mag stripe only card Issuer • Mag stripe only terminal Merchant • Chip card Issuer • Mag stripe only terminal Merchant • Mag stripe only card Issuer • Chip terminal Merchant • Chip card Issuer • Chip terminal Merchant PARTICIPANT GUIDE 2 ©2017. EPCOR®. All Rights Reserved. Since PSU Last Year Same Day ACH Status Merchant and Card Notes: ________________________________________________________________________________________________ ________________________________________________________________________________________________ ________________________________________________________________________________________________ ________________________________________________________________________________________________ ________________________________________________________________________________________________ ________________________________________________________________________________________________ U .S . Treasury Proposal and NACHA Request for Comment on IAT Notes: ________________________________________________________________________________________________ ________________________________________________________________________________________________ ________________________________________________________________________________________________ ________________________________________________________________________________________________ ________________________________________________________________________________________________ ________________________________________________________________________________________________ PARTICIPANT GUIDE 3 ©2017. EPCOR®. All Rights Reserved. Since PSU Last Year ACH Rules Update – Minor Changes Aug 2016 Clarification of Reinitiation 18 Effective August 18, 2016 Standard Entry Description ACH Rules Page OR 31 – Subsection 2 .12 .4 .2 Page OR 115 – Company Entry Description Summary of ACH Rule Change: Clarifies that the RETRY PYMT descriptive statement applies to all cases of reinitiation and supersedes any other company entry description, including Rules-mandated company entry description for original entries . Applicability to RCK ACH Rules Page OR 31 – Subsection 2 .12 .4 .1 (d) & (e) Summary of ACH Rule Change: Clarifies the reinitiation rules as applicable to RCK Entries by eliminating the separate section on reinitiated RCK entries and re-locating RCK-specific details to within the general rule on reinitiated entries . Non-Applicability to Corrected Entries Related to R03/R04 Returns ACH Rules Page OR 31 – Subsection 2 .12 .4 .1 (h) Summary of ACH Rule Change: Clarifies that corrected entries resulting from R03/R04 returns are not considered to be reinitiated entries . PARTICIPANT GUIDE 4 ©2017. EPCOR®. All Rights Reserved. Since PSU Last Year Aug 2016 Rules Enforcement 18 Effective August 18, 2016 Monitoring of Class 2 Violations ACH Rules Page OR 226 – Subpart 10 .4 .7 .4 (9) Summary of ACH Rule Change: Re-defines a Class 2 rules violation as the fourth or subsequent recurrence of a rule violation, where that fourth or subsequent recurrence takes place within one year of the resolution date of the immediately preceding infraction . Protection of the National Association from Liability for Enforcement of the Rules ACH Rules Page OR 228 – Subpart 10 .4 .7 .7 Summary of ACH Rule Change: Modifies Appendix Ten to expressly provide that the ACH Rules Enforcement Panel, the Appeals Panel, the National Association (including staff), and members of its committees have no liability in connection with their role in enforcement matters . Appeal Process for Suspension from the ACH Network ACH Rules Page OR 227 – Subpart 10 .4 .7 .6 Summary of ACH Rule Change: Expands Appendix Ten to define a process by which an ODFI may appeal the suspension of its Originator or Third-Party Sender customer when suspension has been mandated by the ACH Rules Enforcement Panel as the penalty for a Class 3 rules violation . PARTICIPANT GUIDE 5 ©2017. EPCOR®. All Rights Reserved. Since PSU Last Year Aug 2016 Clarification of Originating DFI Indentification for IAT Entries 18 Effective August 18, 2016 ACH Rules Page OR 125 – Originating DFI Identification Summary of ACH Rule Change: Revises the description of the Originating DFI sept 2016 Identification field for IAT entries to reflect a current business practice . Funds Availability for Same Day Entries in Time Zones East of the Continental U.S. 23 Effective September 23, 2016 and March 16, 2018 ACH Rules Page OR 43 – Subsection 3 .3 .1 .1 Page OR 211 – Part 8 .3 (d) mar 2018 Summary of ACH Rule Change: Under Phase 3 of Same Day ACH, RDFIs will have to make funds from Same Day credits available to Receivers by 5 PM in the RDFI’s local time . For 16 RDFIs located in time zones ahead of Eastern Time, it is unlikely they will be able to meet this requirement . For example, RDFIs in Puerto Rico and the U .S . Virgin Islands are in the Atlantic Time Zone, which is one hour ahead of Eastern Time . The ACH Operator distributes files at 4 PM ET, which equates to 5 PM Atlantic Time; thus, these RDFIs would not be able to meet the funds availability requirement . Effective March 16, 2018 RDFIs in Puerto Rico and the U .S . Virgin Islands must make funds from a Same Day credit available for withdrawal by 6 PM Atlantic Time; and for RDFIs in Guam and the Northern Mariana Islands in the Chamorro Time Zone, they will be required to make Same Day credits available to Receivers for withdrawal no later than the opening of business on the Banking Day following the Settlement Date of the Entry . Additionally, the Rules compliance audit requirement 8 .3 (d) was modified effective September 23, 2016 to adopt more general language referencing an RDFI’s obligation to comply with the funds availability requirements stated in the above paragraph . PARTICIPANT GUIDE 6 ©2017. EPCOR®. All Rights Reserved. Since PSU Last Year sept 2016 Alignment of ENR And Same Day Language 23 Effective September 23, 2016 ACH Rules Page OR 14 – Subsection 2 .5 .7 Summary of ACH Rule Change: This section of the Rules has been revised to make it clear that ENR Entries cannot be Same Day Entries . Alignment of TRC/TRX Same Day Language Effective September 23, 2016 ACH Rules Page OR 119 – Effective Entry Date Page OR 133 – Settlement Date Summary of ACH Rule Change: Removes language from the Effective Entry Date field description and the Settlement Date description that became outdated when Same Day ACH went into effect . This results in language for TRC and TRX entries being fully aligned with other SEC Codes, where settlement is based on the Effective Entry Date . PARTICIPANT GUIDE 7 ©2017. EPCOR®. All Rights Reserved. Third-Party Sender Registration Identification of Third-Party Senders A Third-Party Service Provider is an organization other than an Originator, an ODFI or an RDFI that performs a function of ACH processing on behalf of the Originator, the ODFI or the RDFI . PARTICIPANT GUIDE 8 ©2017. EPCOR®. All Rights Reserved. Third-Party Sender Registration ACH Operations Bulletin #2-2014: ACH Transactions Involving Third-Party Senders and Other Payment Intermediaries ACH Rules Page OG 339 – Appendix N Summary of ACH Rule Change: NACHA revised the definition of a Third-Party Sender (TPS) effective March 21, 2014 and issued an ACH Operations Bulletin to assist financial institutions in understanding the role of a Third-Party Sender and to help them identify Third-Party Senders . Two Key Questions to Identify TPS 1. What is the underlying transaction? 2. Who has the Origination Agreement? _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ LM Third-Party Sender Identification Tool D PARTICIPANT GUIDE 9 ©2017. EPCOR®. All Rights Reserved. Third-Party Sender Registration Property Partners Friendly Bank provides ACH origination services to Property Partners . Property Partners provides services to Home Owner’s Associations (HOAs) . One of the services allows the HOA to use the ACH Network to collect monthly HOA fees from their members . The HOA obtains an authorization from the member to debit their account, and the HOA provides the payment information to Property Partners . Property Partners creates an ACH file to debit the members’ accounts and sends the file to Friendly Bank for processing . 1 . Is there a Third-Party Sender in the scenario? If so, who and why? _________________________________________________________________________________________ _________________________________________________________________________________________ _________________________________________________________________________________________ 2 . Which parties, if any, should have agreements? _________________________________________________________________________________________