NACHA – The Electronic Payments Association will conduct a pilot program in which companies will deliver billing information electronically using the Automated Clearing House Network. Sponsored by NACHA’s Council for Electronic Billing and Payment, the Electronic Billing Information Delivery Service pilot could serve as a model for the universal electronic distribution of consumer bills to all 20,000 financial institutions that use the ACH Network.
“Consumer online bill payment has grown phenomenally over the past year, yet the transaction environment between financial institutions and billing companies remains fragmented and frequently includes non-electronic bill presentment and payment processes,” said Mike Taipale of the Federal Reserve Bank of Cleveland and the Chairman of the CEBP. “EBIDS strengthens the electronic connection between billers and financial institutions through the existing, standardized ACH infrastructure.”
Under the EBIDS model, a billing company would originate a zero-dollar ACH transaction that contains a summary of a consumer’s billing information in an attached addenda record, and enter the transaction into the ACH Network through its corporate bank. The consumer’s financial institution would receive the transaction via the ACH Network, and present the billing information at its Internet banking web site. The consumer would enter the Internet banking web site, using the financial institution’s existing logon procedure, and view the bill and authorize payment. The consumer’s financial institution would then send an ACH credit back to the biller’s bank, along with remittance information.
There are numerous potential benefits of the EBIDS model for all parties in an electronic bill payment transaction. Consumers would have access to more of their bills at a single web site where they already do their online banking. The privacy of their financial information would be improved since they authorize payments via their financial institutions rather than providing payment information at billers’ web sites.
Consumers’ financial institutions would be able to offer enhanced Internet banking and bill payment services by increasing the number of electronic bills presented on their web sites. Payment and remittance information processing would be improved, providing cost-savings and customer-service improvements compared to non-electronic alternatives.
Billing companies would be able to present more bills electronically to their customers through a secure, standards-based network that is linked to thousands of financial institutions. They would receive non-revocable ACH credit payments, reducing their payments risk, and eliminating the burden of safeguarding consumers’ financial information. Billing companies would also experience payment and remittance information processing improvements, and the resulting cost-savings and customer service benefits.
Billers’ financial institutions would have new revenue opportunities for corporate payment services for originating and receiving ACH transactions on behalf of billers, as well as remittance information processing and reporting. “The EBIDS model is a win-win-win for billers, financial institutions, and consumers,” said Taipale. “It can also improve the payments industry as a whole by enabling more ACH credit payments.”
The EBIDS pilot will test the technical and economic conditions for using the ACH Network as a bill delivery channel, and identify and evaluate the operational requirements necessary for each transaction participant to become “EBIDS functional.”
Organizations interested in participating in the pilot can obtain pilot documentation on the Council’s web site as http://cebp.nacha.org. Pilot participants will be required to be CEBP members and to sign a pilot agreement with NACHA.
NACHA will host a teleseminar on the EBIDS pilot on September 4, 2003. Teleseminar information is available at http://www.nacha.org/conferences/teleseminars.
The Council for Electronic Billing and Payment was formed in 1993 to act as a forum to facilitate, educate and promote the use of electronic consumer- initiated billing and payment programs and services to all interested stakeholders in the payments industry. The Council currently has 83 members. The Council also maintains a public education web site at http://www.ebilling.org.
About NACHA – The Electronic Payments Association
NACHA is the leading organization in developing electronic solutions to improve the payments system. NACHA represents more than 12,000 financial institutions through direct memberships and a network of regional payments associations, and 650 organizations through its industry councils. NACHA develops operating rules and business practices for the Automated Clearing House (ACH) Network and for electronic payments in the areas of Internet commerce, electronic bill and invoice presentment and payment (EBPP, EIPP), e- checks, financial electronic data interchange (EDI), international payments, and electronic benefits transfer (EBT). Visit NACHA on the Internet at http://www.nacha.org.