Opportunities, Challenges and Solutions UPIC & STP 820 Electronic Payments – Safe and Easy for Government Entities of all Sizes The Final Frontier Opportunities, Challenges and Solutions UPIC & STP 820 Sharon Jablon Business Development Manager August 18, 2009 1

TCH offers a full line of payment services that facilitate the migration of paper to electronic payments TCH provides private-sector, global payment systems and infrastructure to clear and settle 50 million payments for $2.2 trillion each day SVPCO - Check Services Regional paper check exchanges, transportation, settlement and adjustments SVPCO - Electronic Clearing Services Image Exchange Gateway & Settlement EPN ACH Processing & Association services CHIPS Wire: Large value, real time, final payments

Agenda Market Needs & Trends Today’s Solutions UPIC STP 820 Q&A 3 3

Market Needs & Trends Government Entities and Larger Corporations have been requesting electronic payments and would like to pay electronically Their smaller trading partners had no tools to comply

Large Receiver/Vendor Remittance Processing Associated With Check Processing Has to be keyed into receivables by receiver or Converted at the lockbox …..More accurate when keyed by sender from source ….......Much more accurate when comes directly from AP SMEs Large Receiver/Vendor

Customer Service calls to discuss payments take time and cost both payors and receivers money

Why $ and Data Together? Receivers do not want to: Be directed to web sites to find the payment related info Receive and review emails to find explanation about payments Receive Faxes with info pertaining to a payment All of these cause inconsistencies in reconcilement! This wastes time and $

What Stands in the way of Migrating To Electronic Payments? Reluctance to divulge sensitive banking information Preference for the Credit “push” versus Debit “pull” model Many AP/AR packages cannot create/receive electronic payments No integration with cash management and accounting systems Conflicting, multiple message formats A minimum amount of standard information is needed Float UPIC STP 820

Why Haven’t Electronic Payments between Trading Partners Grown More? We have had…. Software tools Trading partner incentives But we had challenges that impeded mass adoption… Limited software products Windows installations One-on-one training Lag in development of browser based tools And we haven’t had…. Easy to use formats and tools that were readily available Previous attempts were not elegant and did not gain adoption 9

Business-to-Business Payments A Solution Exists! EPN Research

Universal Payment Identification Code (UPIC®) Masks routing and account numbers Credit payments only, blocks debits Use with any cash management or accounts payable system Universal routing number Issued and maintained by banks Portable UPICs help prevent fraud

How UPICs Work

Requesting Electronic Payments We encourage you to send payments electronically via ACH credit or EDI Payments to: ABC Treasurer’s Office ABA # - 021052053 UPIC/Acct # - 3783000152 Reference # - RJ8049 Invoice # - 0147586342

Universal Routing Number Universal Routing Number Online Cash Manager UPIC / Account Number A/P Vendor Setup Screen UPIC / Account Number Universal Routing Number

Computer Manufacturing Wholesale Distributors Universal Payment Identification Code Receiving industry wide adoption around the United States Paper Supplier Telecommunications Real Estate Financial Services Hotel Industry Banking Association Agriculture Fund Raising Education Computer Manufacturing Government Agencies Employment Medical Technologies Benefits Administration Wholesale Distributors

What are UPIC Adopters Saying? Oregon State Treasurer State Treasurer of Nebraska Verizon NACHA

Financial Institutions offering UPIC: 23 Financial Institutions have issued 825 UPICs Total UPIC payments through August 1, 2009 1.45M valued at over $52Billion

The Past - Electronic Payment with Remittance Information Accounting Software & Cash Management Mostly manual entry and single invoice Accounting Software Limited electronic payment capabilities Cash Management Mostly manual entry and single invoice Financial Institution e-payment with Limited remittance information Remittance information Not delivered Fax Email Datafile 820 BAI Proprietary (custom) larger customers) Financial Institution e-payment with limited remittance information

Business-to-Business Payments A Solution Exists! STP820

What is the Straight-through Processing - STP 820? Streamlined standard for making electronic payments with remittance information. Easy to implement & easy to use.

STP 820 – Sleek…easy to implement in cash management and accounting software 10 Data Elements In the remittance area there are 10 data elements with places for explanation if desired. Fields Mandatory Customer Account Number X Customer Name X Invoice Number Invoice Date Invoice Gross Amount Amount Paid PO Number Discount Amount Adjustment Amount Adjustment Reason Code 12 adjustment reason codes 01 Pricing Error 03 Extension Error 04 Item Not Accepted - damaged 05 Item Not Accepted - Quality 06 Quantity Contested 07 Incorrect Product 11 Returns - Damage 12 Returns - Quality 59 Item not received 75 Total order not received 81 Credit as Agreed CM Covered by Credit Memo

STP 820 Implementation at Union Bank of California Making a Payment What could be easier

Approved/Certified by Critical Mass Approved/Certified by Promoted by Supported by Adopted by

Today: The Beauty of the STP 820 EDI820 EDI820 /STP820 STP820 Payables Receivables Accounting Software Customer Account Number Customer Name Invoice Gross Amount Amount Paid Invoice Number Invoice Date PO Number Discount Adjustment Amount Adjustment Code Accounting Software Customer Account Number Customer Name Invoice Gross Amount Amount Paid Invoice Number Invoice Date PO Number Discount Adjustment Amount Adjustment Code CTX with STP 820 Bank’s Web Cash Manager STP 820 ACH Operator CTX with STP 820 CTX with STP 820 A Standard that can be delivered by any bank

Payment to Energy Vendor Energy Company Posts to Receivables Customer Experience with Bank Cash Management Package “Any” Government Entity or Company UBOC Web Cash Manager Payment to Energy Vendor Energy Company Posts to Receivables

Customer Experience with STP 820 & Accounting Software Verizon Posts to Accounts Receivables - STP 820 module The Clearing House (Great Plains Dynamics Accounts Payable – STP 820 module) Citibank Verizon’s Bank ACH Operator

QuickBooks Accounts Payable from Coastal Software

How can Government & Trading Partners use the STP 820? Banking Cash Management Software Accounting software from resellers Middle-ware from software providers CALL TO ACTION!!!

But it will save money

Enabling CHIPS and Fedwire to Carry Remittance Information What the Future Holds Enabling CHIPS and Fedwire to Carry Remittance Information Research undertaken in October 2006 STP 820 data elements will simplify invoice payment and reconcilement ISO has amended the ISO 20022 standard to include all STP 820 data elements Fedwire & CHIPS working together on an implementation – Scheduled for 10/2010 www.chips.org

Adoption is Growing

Resources The Clearing House research, “The Remaining Barriers to e-Payments and Straight-through Processing” at: www.epaynetwork.com/cms/resources/research/corporate/001780.pdf EPN STP 820 materials http://www.epaynetwork.com/cms/services/001457.php UPIC materials http://www.epaynetwork.com/cms/services/processing/value/risk/001480.php Sign-up for webinars Next webinar will be August 26, 2009 2:00 P.M. http://www.epaynetwork.com/webregister/

Thank you Sharon Jablon, AAP EPN, Business Development Manager 212-613-0178 sharon.jablon@epaynetwork.com www.epaynetwork.com