How to Leverage the Small Business Payments Toolkit

How to Leverage the Small Business Payments Toolkit



hello and welcome to our webinar today our topic is how to leverage the small business payments toolkit created by the remittance coalition I'm Aimee Vaughn with the Federal Reserve and I'll be your facilitator joining us today is Mary Hughes from the Federal Reserve Bank of Minneapolis and Matt Davies from the Federal Reserve Bank of Dallas let's move on to slide 2 to cover the logistics of today's call this call is being recorded and will be made available at Fed payments improvement website the remittance coalition page at a later date if you haven't done so yet click on the webinar link your received when registering this option offers a few benefits you can watch the slides as they are advanced you can type questions to us you can download a PDF version of today's presentation and you can even listen to the audio through your PC I would like you to know that the webinar performance does depend on your connection so if at any time you're having problems just pick up the phone and dial the toll-free number and as I mentioned earlier you can submit questions for the presenters at any time by clicking the ask question button in the webinar tool we will be addressing those questions at the end of the call now with all that covered we're ready to get started and I'm happy to turn the call over to Matt Davies all right thank you very much first let me I guess introduce myself real quickly and momentarily I'll ask Mary to do the same just so you guys know who I am my name is Matt Davies I am the payments outreach officer for the Federal Reserve Bank in Dallas and I oversee everything that the Dallas bank does in the way of payments related outreach to financial institutions so banks credit unions as well as to businesses headquartered in the Dallas Fed District so today we're going to be talking with you a little bit about a tool that a group called Thurmond Coalition in which we participate has developed called the small business payments toolkit in addition to sort of making you aware of the toolkits availability we're going to talk with you about the materials that are contained in the toolkit and then also because Mary and I do interact quite a bit with banks credit unions and small businesses I want to try to add sort of some color commentary around the material that you'll find in the toolkit that we hope will be helpful for you in your work with small businesses so with that in mind we'll we'll dive a little bit deeper into us payment trends I'll give you a brief primer on small business payment types and then we'll talk about how to talk to small businesses about payments and educating them about payment related fraud so that's kind of the agenda for today and with that I will turn it over to Mary to introduce herself and take it away thank you Matt hi everyone my name is Mary Hughes and I work at the Minneapolis Fed in the payments information and outreach office and I was the project manager who helped facilitate the creation of this small business payments toolkit that we're going to be talking about today so what is the small business payments toolkit as you see on slide four it is a free resource that you can use to when you counsel small businesses or you can provide it to the small businesses themselves and it's simply a 32 page PDF document that resides at the leaks noted on that slide at set payments improvement org and I wanted to point out that our document is not copyrighted and we hope that everyone who has an interest will share it with any of their colleagues that can use it and it's also okay to modify our document if you happen to possess the Adobe professional program you can insert your logo the name of your office you can edit content you're free to do with the toolkit what you wish we've been very pleased with the response to the toolkit so far we've had over 10,500 downloads of the toolkit since it was first published in April of this year and this document was created by a volunteer work group who are members of the remittance coalition and basically approach we took was to say if you could get a small business to spend say half an hour 45 minutes and they're willing to learn about payments what would you want them to know so the volunteer group of about 18 individuals representing Bank Service Providers corporations the Fed standards organizations NACHA and others put this document together moving on to the next slide slide 5 this tells you about the remittance coalition which is the umbrella group that decided to create the toolkit this is a national group it's about five years old it has about 440 members and growing there isn't any fee or criteria to join we're just seeking parties who want to help solve the remittance coalition mission which is to try to promote the use of electronic payments in the business-to-business space and also try to seek solutions to processing of remittance data so that businesses can achieve what's called straight through processing which is the most efficient way to process payments and the associated detail that tells what the payment is for the remittance detail 5/6 just a link to the remittance coalition website and you can visit there if you're interested in learning about the various projects the Ramez coalition is completed if you want to join it if you want to volunteer on a project or if you want to listen to recorded webinars that we've offered in the past so 5:7 tells us what is in the toolkit and today's webinar is going to cover highlights of the first four sections and we definitely encourage you to download the toolkit if you haven't already and read through it to learn much more than than what you'll get today the toolkit starts by providing basic information on payment types and that's going to cover that next then it goes on to a section we call understanding ACH and that's a term you'll hear a lot today ACH stands for automated Clearing House payments and examples of those are like when you get direct deposit of payroll or when you allow a direct debit to your checking account for a mortgage payment for example so we spend some time in the toolkit educating small businesses about ACH we explain why it's attractive for them what they should keep in mind if they want to start originating or receiving ACH payments we have a list of ideas of tell them when it makes sense to pursue ACH explain the main benefits of it explain the terminology associated with ACH we have a section on ACH and remittance solutions which explains the critical data points that are needed for ACH payments and give small businesses key questions they should always ask before they start paying electronically we have a third section called working with your banker that has excellent practical advice on what small businesses should know before they meet with their banker in order to try to improve their payments processing there is a hefty section on fraud prevention and mitigation tips in fact that's about one third of the content in the toolkit and then finally we have a resources section from providing links that are available on the internet for those who are curious about a particular topic and want to want to learn more so next I'm going to turn it over to Matt and he's going to describe the payment types most commonly used by small businesses all right thanks Mary so I think you'll see that on the next title slide and then we'll move on to what I believe it's slide 9 so when we're talking about small business payment types on the slide here you'll see a variety as Mary talked about ACH and I think business cheque is probably the most familiar in a lot of businesses especially in the small business environment it does tend to be the most familiar it's what we refer to really as the most ubiquitous it's you know you can make a payment via cheque pretty much to anybody you know without needing to know their account information so it makes it pretty easy to pay that way in addition then you have opportunities for wire transfer credit and debit cards and then we have internet bill pay labeled separately here but as we'll talk about as we go through I would really kind of lump that as a front end on ACH or or sometimes check on the backend so on the next slide to delve into some of the material that the toolkit gets into as far as you know when we're talking about these different payment types what are the pros and cons of using them from a business check perspective I think one of the main pros there is it is a legacy system it's been around the check has been around for a long time it is ubiquitous so you can you can typically make a payment with a check for anything although some people I the first company that springs to mind is Wendy's you I know you can't write a check for a hamburger at Wendy's anymore so I think we're starting to see some businesses look at checks and decide that they're not worth the hassle of accepting them again as I mentioned earlier when when making a payment by cheque you don't need to know the bank account number for the party that you're making the payment to as far as cons of business checks obviously a higher cost there is in addition to you know the paper and ink that you might need to buy in the cheque stock to actually print them there are costs typically for clearing those through a financial institution there is a lot of manual handling so a lot of hands touch a cheque a lot of eyes look at the data that's on there and in many cases that leads to an increased opportunity for fraud so instead of check a lot of organizations have have looked or are looking at moving items to electronic opportunities such as ACH typically you have with ACH much lower fees when compared to wire transfers for example you have you know it's a higher more automated process you have fewer people who are looking at that account data and thus that helps to cut down on instances of fraud one of the issues with ACH is for our settlement goes is that the the settlement for an ACH credit that's originated is not final on the day that the payment is sent so typically if a business needs funds to move very quickly they need confirmation of you know it immediate or near immediate settlement typically they have to move over to the wire channel as opposed to ACH and with ACH you do need to know the routing and account number information of the party to whom you're making the cheque so from a consumer perspective that's often why you have a business requesting a copy a voided check for example from a consumer to help with the setup of that item to go back to the left hand corner at the bottom there you have wire transfers which like ACH are very secure the difference though is whereas ACH is a bat system for processing wires are a real-time or at least near real-time option for making payment and you have certainty of delivery one of the cons there is that both parties to a wire transfer transaction are typically charged and as you guys are probably aware banks are typically making a lot more money off of wire transfers than they are off of ACH items I know as a consumer having received an international wire before I get dinged for a 15 dollar fee just for receiving that item into my account and again with wire transfer you do need the routing and account number one other issue that I mentioned here is reconciliation of payment I actually just spoke with a business a former business person today who mentioned that one of the difficulties with wire transfer payments is that a wire transfer comes in and often there is no information associated with it to indicate what that payment is for so it often requires the folks at the business to to do some recon work to figure out what that payment is for that is getting better I think as the wire format has been expanded and allows for remittance data to be included in the wire format but the uptake of that has has been a little bit slow so far but I think something you may see change as far as internet bill pay goes you know as I mentioned earlier I think you might look at that as sort of a front end through which payments are actually made via ACH or sometimes check on the back end so obviously use of Internet bill pay can save time there is also a cost savings there and on the front end at least a reduction in paper that's a good segue into the cons though because unfortunately depending on the relationship between the bank through whom the the internet bill pay is being made the relationship between them and the biller on the back end some of those payments actually while they seem to be made electronically on the front end they actually sort of dummy down into check mode and the the bank is printing checks and sending those to the biller and lastly in the bottom right corner you have credit and debit cards they are easy to use widely accepted as many of you probably know you don't need to know any type of routing and account number information to make that payment you just need the card and/or you know possibly even just a number and a couple of other numbers from the card so the cons there the cost tend to be higher there there's equipment that needs to be in place to actually process the card transaction and then the processing of them and fees that can be incurred for chargebacks or we say reversal there but you might know that as a chargeback so that's kind of a high-level overview of what the payment types look like that we discussed so moving on to slide 11 this is some data I don't want to read this to you guys but it may be of interest to you as you're talking with small businesses about payment types this kind of walks you through you know depending on what type of attribute you're looking when for when making a payment this might help to kind of put some color around what type of payment might work best so for example you see here on least costly the second line from the bottom probably your best bet there is going to be an ACH transaction if you're looking for you know what type of payment is most commonly accepted by the people that you might be making a payment to as you see from the top line that's probably going to be the cheque so again not to belabor that but I think some good information as far as payment attributes go moving on to slide 12 as far as challenges in payment processing go as it's noted on the slide challenges mostly resolved from manual payment management and and do not differ between larger and small organizations so again to go back to like the wire transfer situation that I mentioned before you know not having that that payment related information having to reconcile payments like that that's a problem that you would find at a large organization as well as a small let's see so moving on actually to the next slide I'm going to turn things over to Mary and she is going to walk us through current u.s. payment trends thanks a lot Matt in this next section we're going to review recent trends in usage of payments we'll look at which payment types are the most popular among businesses we'll consider why it is that Tech's continue to be such a popular choice and we're going to identify a trend that shows that businesses are starting to adopt electronic payment types and don't worry when you see all the content on these slides we're not going to be going into lots of detail on each slide the idea of this section is to give you the big picture and to leave behind some reference material if you come back to this subject later and one additional detail so moving onto slide 14 the Federal Reserve every three years conducts a very important and unique study of the u.s. payment system in which we attempt to take a snapshot in time of where our economy is in terms of its usage of non-cash retail payments and the data that's presented on slide 14 there has to do with what we've learned about cheque usage from 2006 until 2012 which is the most recent year that this survey was conducted you can see that if you look on the exhibit there for 2006 there were 33 point 1 billion checks that's billion with the beat written in the US that year but by the time we got to 2012 that number had declined to about 21 billion so there's a definite trend in which the number of checks written in the US is declining and what this graph does is show you four different counterparties the purple line at the top chronicles check-writing written four checks written by consumers to other consumers and that stay pretty much the same over time the green bar chronicles checks written by consumers to businesses we call that C to B and here you can see a definite decline as consumers are really stopped writing so many checks especially younger consumers and they're turning to electronic methods of payment such as ACH and cards the red bar tells us the checks written by businesses to consumers has declined somewhat – and then the blue bottom blue bar at the bottom is the point that I'm trying to illustrate here with this exhibit that the checks written by businesses to other businesses has really stayed quite stagnant over the past six years there were in 2006 the BBB checks accounted for eight point three billion of the checks written and that dropped only to about 6.8 billion checks in 2012 moving on to slide 15 the this presents the results of a survey of businesses in which they were asked what percent of your total payments were made by each of these various payment types and this confirms that nearly 65% of all b2b payments were made by cheque and the second most popular payment type was ACH followed by wires and then cars moving to slide 60 a recent study by pay stream advisors asked what percentage of your supplier related payments is processed using the following methods and the blue bar indicates that that particular payment type is used for at least half of b2b payments and if you and the thing that stands out for me there is that 63% of these respondents said that they used cheques for at least half of their b2b payments and the red bar tells us what type is used for at least one-fifth of the payments you make to another business and here 82 percent said yeah I do use checks to pay at least one-fifth of the payments I make to other businesses so this chart just reinforces the fact again that cheques are dominant with the second most popular method of payment from one business to another being ACH 5:17 tastes data from the previous slide and examined the characteristics of organizations that are heavily reliant on checks and what this survey found is that most of what we call the heavy check users are small to medium-sized businesses that have under 100 million dollars in annual revenue and it makes you think a little bit about what is the main reason behind resistance to e payments what are the barriers or problems that keep businesses reliant on checks and seem seems to make them kind of reticent to turn to electronic payment methods it could be that many businesses stick with their manual payment methods because they're simply more comfortable with them and they kind of fear moving away from tried-and-true payment method and also payment processing pains might be more prevalent among small to medium sized businesses that lack a lot of automation and IT resources so they might not really have a way to address their courage in efficient manual processes and as this exhibit tells us the heavy check users yet if you look at that second line there that over half of them are really complacent about their check usage they haven't addressed check usage in the past two years they just keep kind of doing what they want has been doing and another forty nine percent feel locked into checks because of the demands of their suppliers because suppliers tell them we want to be paid by tech so the business feels like it doesn't have any other choice and then the outcome of that is that 44 percent complains that high processing cost is one of their greatest payment challenges because as is well documented writing checks is a very expensive way to go it's labor-intensive and you know exposes a business to fraud risks moving to slide 18 the good news is is that a studies show that end-to-end efficiency of payment is much higher when electronic payments are employed and so this recent survey from Pei Stream advisors tells us that businesses are really trying to increase their use of a payments 52 percent said that they had attempted to increase the use of ACH in the past year 45 percent said that they are relying they're trying to rely more on cards in the past year than before and and the other good news is that if you look at the bottom line there are 63 percent said that they are making efforts to decrease their use of cheques and I guess the party line of the remittance coalition and of the small business payments to look at work group is that we feel that any of these electronic payment types are preferable to checks so turning to our next section which starts on slide 19 talking with small businesses what we're going to think about next is if you as small business consultants and advisors are talking with one of your small business clients and the subject comes up of you know is there a way that the small business can improve its payment processing what are some talking points that you might want to keep in mind as you help educate them about their payment choices slide 20 gives you some relevant talking points regarding why electronic payments can be a very smart choice for small business studies have shown that it improves the efficiency lowers the cost of processing payments it frees up valuable staff time to perform other duties there is an enhanced security to using electronic payments and will potentially lower the cost of losses due to payments fraud electronic payments tend to be more reliable and a very big thing is that the small business can potentially enhance customer loyalty and retention by setting up Carine payments does the small business rely on a weekly or monthly payment from its own customers something like a daycare business or a gym that offers memberships or an insurance company that wants to collect monthly premiums if they set up a recurring ACH payment that does help keep that customer because the customer has some you know a they have a built a relationship with the customer by doing that another really key and I would suspect and I think Matt would agree with me one of the most important ways for a business to start using ACH is to start allowing its employees to have their paychecks directly deposited into their selected bank accounts and they would see a boost in employer productivity as a result of this because people would no longer be running out the door on payday to deposit their checks and it provides a real service for their employees as well because they have the certainty of knowing that the paycheck has been deposited and then finally relying on electronic payments can open doors for a small business it can visit position them for new contracts from larger trading partners and perhaps the government that require that if you're going to do business with them that they want to pay you via ACH so those are all some good reasons turning to slide 21 one can use so the electronic payments do for a small business it can improve their cash flow it gives them a more predictable and managed way of posting transactions it potentially gives them an opportunity to take advantage of discounts and one of the bankers on our work group offers this next point that turning to electronic payments can help impose requirements on flow paid customers because they can require that the payment is due before the product or service is delivered and can execute that payment electronically say the ACH credit or card payment and then the final point here is that it's a small business may find that they're being offered an incentive to pay early if they are willing to accept say a card payment instead of a check a lot of businesses will offer better terms so that the person who has to accept the card game card payment can recoup part of their interchange fee so there's various ways of working this out and a lot of progressive trading partners out there will try to encourage a small business to go electronic and offer them you know better terms or or attractive make things more attractive for them to accept cards or perhaps do ACH so now I'm going to turn things back to Matt and he's going to offer some considerations for small businesses who may be thinking about using ACH alright thanks Mary yeah this is something that the toolkit gets into as well in a little more depth but just kind of wanted to give you an overview here so Mary talked already a bit about direct deposit and one of the things that we suggest is that there are a number of small businesses who already understand the ideas of ACH because they're familiar with direct deposit of payroll and possibly direct debit of their mortgage their car payment etc so those direct deposits and direct debits have been you know sort of the bread and butter of ACH payments since it was established back in the mid-70s so that would be probably a good starting place for discussion about ACH with small businesses so you know we encourage a banker to talk with the small business about what is the fee structure for ACH what are the options they're typically a bank is going to have probably a monthly maintenance fee as far as using ACH goes but then they may also have other fees such as a file fee or per item fee or both you know for originating payroll for example there is a sense I think and I don't know that there is any hard data on this but some peace some small businesses have a sense that you know they don't have enough employees to be able to justify using direct deposit of payroll for example I think if the business really gets into looking at that I don't know that there really is such a threshold but it could be you know something that a bank would talk with a small business about so then we also encourage the banker to talk about you know what are the implementation issues around ACH so you know how is the small business going to originate those items are they going to do so in-house which would mean you know do they have some type of accounting software you know maybe even if it's just QuickBooks you know can that generate a what's referred to as a NACHA formatted file so a National ACH Association format file that's the group that sort of writes the rules for the ACH network or do you want to hire a third party to do that so there are a variety of players in the industry you know including many CPA firms who will do ACH work for for small businesses like that one of the sticky points for for banks and small businesses and that I think it doesn't have to be a sticky point but but it ends up being sometimes is the idea that ACH is underwriting and the way that ACH works it is a lag settlement so typically for example if I'm a small business person who wants to pay my employees via direct deposit and I wanted them to have access to their funds at opening a business today if today's payroll or pay day I would have had to send that file to my bank yesterday or possibly even on Wednesday so typically you know the way that ACH has traditionally worked if I'm a company that sends that file to my bank my bank sends it in to the Fed they are for all intents and purposes to me a short-term loan until those items are actually settled so that that does mean that a bank typically will require underwriting for sort of the security around originating payments for a business of any size they are required by the natural rules to set an exposure limit for each customer for whom their originating one way that some some banks and businesses will work in partnership to kind of get around the requirement for for underwriting or if a business you know is not able to be underwritten by a bank one alternative that's posed on the slide here is the idea of pre funding which means that the bank would set on its system the ability so that when a business did upload an ACH file to online banking online banking looks at the the business's account and determined yes those funds are there and places an immediate debit on those funds and then allows the file to be released to the Fed so sort of an extra layer of security for the bank is this idea of pre funding there are also I think something that's become increasingly important here is this idea of the relationship between the bank and the business as far as who's managing what data there obviously if you're a business and you're maintaining the routing number and account information as well as other personally identifiable information for your employees that is a data protection issue and in light of all the data breaches that we hear about on a constant basis that's something that I think has really moved to the fore all right so on the on the next slide we we give some advice for small businesses about how to work with their bankers and and I do have to say that not all bankers are quite like rich uncle Pennybags from monopoly there who's in the top right corner but some things that we we indicate in the toolkit you know as a small business if you want to to take a further look at using electronic payments like ACH it is possibly something especially with a community bank that you might need to be proactive about you might need to contact them to discuss payment needs you can shop around you know financial institutions can talk with you about their pricing helping you to make a decision about what's best for you and can electronic payments you know can ACH be coupled with other services like remote deposit capture our will your bank offer merchant services as well if you want to if you want to accept credit and debit cards etc typically again this can vary by banks by size a bank location a bank etc but but the the person in the lobby at the bank may not be an expert in working with small business customers so it may be that you need to ask specifically for you know someone who's on the product side of the house you know somebody who might be more knowledgeable about small business issues in depth if you do meet with your banker you would probably want to be able to talk with them you know bring information about payroll some examples of you know what types of payments are you receiving what types of payments are you making if you do want to talk about credit and debit card usage you might bring if you're already accepting cars you'll maybe bring a current a recent statement from your current merchant services provider some financial institutions especially in light of the sort of increasingly risky environment with with all the cyber stuff some financial institutions are doing more to sort of deputize their customers or clients and providing free risk mitigation services like fraud alerts and things like that on accounts and on cards so you may be able to to get some freebies there as a small business definitely talk about pricing unfortunately you know from a small business perspective there may not be as much leverage to negotiate with a bank but there's definitely no harm in trying also talk with them about as we mentioned on the previous slide you know what requirements do they have around security and control and then ask about you know best practices that they might be able to offer as far as managing you know your pay database all your employees to whom you're making payments your vendors etc so moving on to the next slide I believe this is slide 24 a little bit more about accepting cards so when you know outside of the check ACH and wire world accepting credit and debit cards adds an additional layer or multiple layers of things that you need to be aware of things you need to do so one of the things we think is a pro of accepting cards is that it may mean that a small business can be more competitive may be able to boost sales depending on what your you're selling what your services are etc it may be easy easier for you as people continue to increasingly use credit and debit cards however if you are accepting cards you know that is there is some risk there so in you'll find in the toolkit some tips that we put together to help small business owners look at how to keep how to keep that risk low when they're accepting cards how to prevent acceptance of fraudulent cards' considerations to help avoid internal card fraud if you are using corporate cards for employees within your organization and then education about you know there is this idea with a card if if I buy something or if a fraudster buys something on my card and at some point that charge becomes undesirable whether you know the goods didn't arrived they were they were damaged or whether I claim it's a fraudulent transaction I somebody can try to dispute that transaction it may be charged back to me so that's a process that needs to be that the business needs to be familiar with the other thing I would mention on here too that we actually include but that I would would would definitely is that when you are accepting credit and debit cards there is what's referred to as PCI compliance you guys may be familiar with that basically there are I believe twelve major areas that the PCI Security Council has outlined as far as it's not you know an audit checklist but it's a list of of areas where entities accepting credit and debit cards need to follow the this guidance for PCI compliance that's typically larger merchants tend to be PCI compliant more regularly it's something that small business people just because of I think time and education tend not to deal well with PCI compliance so it is something that that's definitely an issue with card acceptance so moving on from there we are going to talk about payment related fraud so I believe on slide 26 the toolkit does talk about different types of fraud I think one of the things to keep in mind here is that as it says at the bottom of the slide and big bold print all payment methods regardless of what type of payment you're making or accepting there is going to be some risk of fraud there so the toolkit does contain a bit of information about the different payment types the risks associated with those and how you might be able to mitigate those risks so on slide 27 you see again kind of back to the different payment types I think some of the things I don't want to read to you guys but a few things that I would would highlight obviously as we mentioned check fraud continues to be an issue there are things that need to be done there you know it there are working with your bank we talked a lot about a service you see in the second bullet they're called positive pay which allows a small business to work with its bank the small business provides the bank with what's referred to as an issue file that is these are the checks we've issued these are this is the dollar amount this is the check number the data was issued cetera as the items come in to clear against the bank the bank is trying to match against the issue file and if there's a mismatch so an item comes in that was not provided by the business the bank presents that to the business to online banking and says you know we we received this item do you want us to pay it or do you want us to return it a number of small businesses I think statistically 80 percent of businesses in the US are using positive pay I would posit that a number of the businesses in the 20% that aren't would be small businesses and a lot of times a banker will tell me I I talked to a business about positive pay and they say well I don't need that I've never had a fraudulent check before unfortunately that's not really how it works you need to look at positive pay really as sort of an insurance policy against the potential for check fraud one of the things that's mentioned under Bowles ACH credits or origination or sending out of ACH credits as well as wire transfer is this idea of dual control and that is I know this is hard for small business but it there needs to be somebody ition who is initiating a wire in the bank's online banking and then somebody different who is approving that wire and I always like to give my banks and my businesses that I talked with the example of a fairly recent piece of case law I'm not an attorney so I'm not giving legal advice here but I think a case to look at in that situation is choice escrow versus BancorpSouth bank choice escrow was a small title company and I believe they're in Springfield Missouri or were in Springfield Missouri I don't know that they're still around they had one woman who was typically in the office and she was originating initiating wire transfers through the bank's online banking platform because they were a small organization she often had difficulty in getting someone to approve those wires and as you guys know at a title company funds need to move quickly so the company decided that the best setup for them was to allow the woman in the office to initiate wires as well as to approve them online in online banking so the issue there that should be setting off alarm bells for potential for internal fraud the other issue though was when a hacker got into her PC and captured her online banking credential the hacker also didn't need dual control and was able to send a wire with just one person initiating it so the case went to court and in the the verdict fell in favor of the bank because the bank had encouraged the customer to use dual control what the customer was not doing so and the case was appealed and the appeal verdict upheld again in favor of the bank so just something to keep in mind there the other thing I would mention in the mobile banking box is you know this is something that is I think going to be increasingly a hot topic so you have Apple keeps the iPhone operating system pretty tightly locked down Google Android operating system is is more open so you end up you know with some danger there as number of people using mobile phones proliferate and as banks start to roll out business services on to mobile again that's just something that we need to be wary of purchasing cards again I think I alluded to this earlier that there are some you know there is some potential for internal fraud with P cards so if you are using P cards within your organization you can work with your bank so to talk with them about reporting you know ability to monitor transactions have the statement go to someone other than the person who is using the card some things like that so in the interest of time the let's see slides 27 and 28 actually go into they sort of repeat the data from check and ACH that you see on you saw on slide let's see that was like 27 so slide 28 and 29 are sort of a repeat of the check and ACH data so again you sort of see positive on slide 29 I guess one thing I would highlight would be as far as ACH goes we talked about dual control four credits but on the debit side what I think banks are pretty much any size anymore are able to offer a business could talk with their bank about we want to use this account but we do not want it to be debited by ACH items at all or we want it to be debited by Z certain items so can you do a filter on what's coming in or and/or can you give us some type of alert when we receive a debit maybe any debit or over a certain dollar amount for example all right so I believe then moving over to slide 30 I'm going to turn things back over to Mary thank you Matt so when you meet with your small business clients these next two slides include things that all small businesses should consider doing if they want to avoid being victims of payments fraud so and there are many more tips that are included in the toolkit in the fraud section but we pulled these out as being ones that really everyone should consider doing the first thing is to check accounts daily because if ACH item or a fraudulent check slips in there are rules as to how quickly the cart that account holder must notify the bank that there's a fraudulent item in order to return it so the simple thing is to check accounts every day we've been kind of talking about the second bullet quite a bit today the importance of using fraud protection services the key point here is that some of these services might be free or at a relatively low cost available from a small business's bank and so they should should seek that out and find out what might benefit them as far as these types of fraud protection services that are available on bank accounts the third bullet there talks about the importance of making sure that fraud prevention is an organizational objective one simple thing that many small businesses don't consider is what information am i providing on my website am I making it potentially too easy for fraudsters to find out information about my company you might want to counsel your small business clients to kind of take a suspicious eye and look at what's on their website and see if they really have to provide all that information and to think about what are they potentially providing to fraudsters in terms of names and titles and phone numbers and that sort of thing that may not necessarily have to be on the website moving on to slide of 31 here employee education is a common theme throughout the small business payments toolkit because obviously the small business owner or the officers that run it can't do it all themselves and they need to train and educate employees so that everybody is on the same page as far as practicing safe payment processes also we have identified a number of best practices the few which are listed here as far as the need to secure important bank information lockup paper documents to use strong passwords and change them and to attempt to monitor and measure what sort of fraud attempts and losses the business is experiencing and one really basic thing that a lot every business can do is simply use a separate computer for financial transactions and to not allow emails on the computer or social media do siege or web surfing just simply have one computer dedicated to financial transactions and then finally unfortunately small businesses can't afford to be complacent about protecting and defending their businesses assets against fraudsters because fraud are continually changing their methods of attack so the best practices that a small business may put in place today might not be effective a few months from now so businesses have to always strive to keep up with what the attacks that fraudsters are perpetrating 5:32 we want to reinforce to you that we would love it if you would take and distribute the toolkit to clients that you would think may benefit from it it's a free resource use it and share it we would ask – that you would consider posting the link to obtain the current copy of the toolkit on your development centers websites and as I mentioned previously that link appears on slide 4 of our presentation today and also we hope this Spurs your interest in the Fed payments improvement org website you'll find a lot more information there but we only wanted to alert you as well that the work group that developed this initial toolkit is developing new additional content for version 2 of the toolkit and few of the topics we're going to cover next will be the EMV migration which refers to the migration from magnetic stripe cards to integrated chip cards in the US and we'll have an article on what small merchants need to know about about chip card acceptance and the chip card migration will have an article on emerging alternative payments including a little bit about Bitcoin and things like that and a focus on some of the new mobile payment types that we're all seeing and we'll have practical information like authorization forms we'll have additional content on handling ACH returns and we're going to have some success stories we'll be interviewing small businesses that have effectively moved away from checks to electronic payment methods and talked about the benefits that they have as a result and if you have ideas for additional content related to payments that you think we should include in the next version of the toolkit we welcome your suggestions and there's an email address on the first page of the toolkit where you can send your ideas to us and then on slide 33 we wanted to remind you that we have a lot of links in the resources section of the toolkit that would provide a lot of additional information for people that want to get content on a particular topic and so we encourage you to pursue that when you have an interest so in conclusion Matt and I wanted to thank you very much for spending time with us today to learn more about payments and hope that you gain useful insights that you can share with your small business clients and that you and your clients will benefit from the toolkit so at this point I guess some we will take questions thanks Mary I'll remind everyone that you can ask a question by typing into the webinar tool there's a button that says ask question you can type it in there okay we do have a few that have come in first one is when will new content be added to the toolkit I can take that one we are planning to add new articles to the toolkit later on this year and we will be continuing to add new content probably through the end of first quarter 2016 and what what we'll do is simply embellish the current PDF that resides at that link so they'll do be just one document but as you come back to it over time hopefully each time it will be bigger and better great thank you other questions what does check fraud why does check fraud continue to be such a problem and I can take that one I think I I think as as Mary talked about earlier with with businesses this checks whereas check volume in general has continued to decline business-to-business checks have pretty much remained flat so I think there's an issue there where check payments you know are still being made by a lot of businesses – a lot of businesses so there are a lot of opportunities there for fraud for fraudsters to get in there and and try to defraud a business one other thing I would mention there – I think it's an interesting perspective that a business that we talked with recently mentioned that they feel like as as credit cards as the United States is moving to chip cards and that starts to cut down on the ability of fraudsters to clone you know create new fake cards and go out and use those that that's going to kind of lock fraudsters out of point-of-sale card fraud and this business mentioned that they've already started to see a spike in check fraud and they think that the two are directly related so that again if you think of fraud you know kind of like a balloon if you start to squeeze down on point-of-sale card fraud the fraudsters are probably going to pop out somewhere else and in this case it may be that we'll see an increase in check fraud Thank You Matt here's another question that has come in what is a small business wants to use ACH but their bank doesn't offer ACH origination services um I can take that one we have talked about this a lot among the work group that developed the first version of the small business payments toolkit because that is the case that if a small business well-intentioned wants to start for instance pain its employees with direct deposit of payroll they may propose that idea to their bank and the bank might not be in a position to offer those ACH origination services to prepare the initial file and it could be that the business less IT resources and really can't do it by itself so there are a lot of third-party vendors who provide ACH file origination services and for you know small business would have to shop around of course but for reasonable fees they can hire a service provider to perform that function for them and in the upcoming new and improved toolkit that we're working on we will be embellishing the links in the resources section and we have found an excellent link at the National automated Clearing House association that has a list of a quite a lengthy list and their scores of them of service providers throughout the nation that will help businesses process and create files for ACH so even if a bank can't do it on behalf of a business and the business can't do it on behalf of themselves there are third-party service providers that can perform that function very good here's another question what is the most cost efficiency of moving to electronic payment I'll take a crack at that and then that maybe you can chime in I think one of the the biggest costs that can be eliminated if one of a business would stop writing so many checks is staff costs because it's really expensive to hire someone to create checks and then have somebody else sign them and really you would be enhancing your employee productivity if you didn't have to create and process all those checks and there's also all the the paper shuffling and the reconciliation and that's a lot of staff time that could be spent elsewhere on behalf of the small business and there's costs associated with printing with printing checks with mailing them with the envelopes there's a lot of you know paper and associated things so I think there are some real dollar savings that companies can enjoy if they would stop right in so many checks and perhaps turn to up a cost effective payment method like ACH instead Matt would you add anything to that sure I think I think the one thing I would point out is that and it you know there are different perspectives and as I mentioned earlier you know every payment type has different types of potential risk and fraud associated with it but one of my concerns with with continued check writing would be you know that the typically ACH and wire do tend to be more secure systems basically anyone to zoom you're writing a check has access to your routing number and account number and then the ability to you know copy that routing number and account number to to make their own checks so I think while not every company has been victimized by fraud so it's hard to say you know specific dollar amounts associated per company but I think moving to electronic payments more broadly is definitely a reduction in fraud so I think you know that's sort of a lot of times a cost or a potential cost that's forgotten but I think that's something that can be reduced by reducing check writing okay thank you I shall we just have a about a minute left so let me get some quick questions in here one attendee says this is great information please repeat what ACH stands for and that would be automated Clearing House very good okay and also can you repeat how to get the toolkit oh yeah you if you have the slide deck in front of you on slide four you can visit a website which is fed payments improvement org and we have the entire web address there but if you go to slash WP – content forward slash uploads for a slash small business toolkit dot PDF you will get there but I promise that when we send out a confirmation email with a post survey you know following the webinar that we will give you the link in the email very nice that's right said payments improvement dot org there's the remittance coalition page on that site and there's a Fed events page on that site so we we are out of time so any questions that we did not get to today those will be followed up on so thank you for

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