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Monday, March 19, 2018

New NACHA program supports B2B invoicing

N ACHA – The Electronic Payments Association, is making a play to get businesses using more electronic data exchanges in cash management operations. The ACH rules group has approved a new Request for Payment program that leverages electronic data interchange (EDI) standards to support electronic invoicing and collections. The program, which is voluntary, aims to nudge businesses closer to faster, more integrated handling of business-to-business billings and payments.

Checks have long been a preferred method of payment by businesses large and small. A 2016 report by the Association for Financial Professionals found 94 percent of businesses still use checks to pay major business partners. But change is occurring. Whereas 65 percent of payments by businesses to major suppliers were made by check in 2007, that share had fallen to 41 percent by 2016. Eighty-three percent of businesses in 2016 also used ACH credits to pay at least some trading partners, according to AFP; 24 percent used ACH debits, 79 percent paid by wire transfer and 48 percent made some B2B payments with purchasing cards.

The AFP’s research put the mix of payments received by businesses from major trading partners in 2016 at: 39 percent checks, 33 percent ACH credits, 5 percent ACH debits, 16 percent wire transfers and 2 percent purchasing cards. (Slim percentages of businesses use other payment methods, such as traditional credit cards, for sending and receiving B2B transactions, the AFP reported.)

Many experts attribute business preferences for checks to cash management systems and processes that have long been in place to support check payment exchanges, like paper-based invoicing and receivables management. NACHA’s Request for Payment program offers an alternative to paper billing statements that leverages a payment messaging network many businesses already use: the ACH.

“Businesses today are looking for ways to effectively and efficiently manage complex payment and cash application processes in our changing global environment,” said George Throckmorton, Managing Director of Network Development and Strategic Alternatives at NACHA. The new Request for Payment program responds to that demand with an EDI standard that supports invoicing. (The automated clearing house [ACH] supports EDI payments through existing messaging formats like CTX which was developed to handle transmission of payments with corresponding remittance details.)

Leveraging EDI standards

The new NACHA program relies on ISO 20022, an international EDI standard for financial transactions. As the Federal Reserve noted in a paper published in 2013, ISO 20022 “has emerged as an enabler of a single, common ‘language’ for global financial communications that can assist organizations in responding to evolving demands.” Building a consensus around the use of ISO 20022 has been a key consideration in the Fed’s faster payment initiatives.

The new NACHA program is available to any business that wants to use the ACH to send invoices, regardless of payment method used to satisfy those invoices. “Although the Request for Payment invoice does include payment instructions, the rules and guidelines do not include payment message standards. Payers have the option to send any B2B payment type” a NACHA spokeswoman explained. Businesses wishing to participate in the program can download the Request for Payment rules from NACHA’s website,, and must reference the rules in trade agreements.

Throckmorton said adoption of the new messaging format should help businesses improve receivables processing, which in turn should help them save money. The program means “businesses can leverage an ISO 20022 message to standardize invoicing and payment collection, and automate the cash application process, as remittances can flow with the payment to support straight-through processing,” he said. “And with the ACH network’s connection to all financial institutions and thus all accounts in the U.S., through the program businesses can expand their reach and better support existing and future customers,” Throckmorton added.

Straight-through processing (commonly referred to as STP) has attracted significant attention from businesses, particularly large and mid-sized corporations eager to improve cash flow through greater automation of billing and receivables processes. The end game is to facilitate corporate treasury transactions from start to finish with little or no human intervention.

NAC's Choke Point battle rages on
Friday, March 16, 2018

W hile the U.S. Department of Justice officially terminated Operation Choke Point Aug. 16, 2017, it appears numerous financial institutions have not received the memo. Opponents claim the Obama-era anti-fraud initiative, originally designed to combat criminal activities, has inadvertently harmed millions of legitimate business owners.

Critics maintain that by stigmatizing entire industry sectors, the OCP measures have led to stringent "de-risk" policies that inhibit high-risk merchants from opening and maintaining bank accounts and lines of credit. Their claims are further supported by an independent study published in March 2018, by the National ATM Council Inc., a trade association representing the retail ATM industry.

The retail ATM industry has rigorous compliance guidelines in place, noted NAC Executive Director Bruce Renard. "U.S. ATM owners and operators are thoroughly vetted before and after entering the ATM business; and, as such, they are not 'high risk' accounts that should be having these sorts of problems in obtaining bank accounts or access to cash," he stated. Renard said the association will continue to advocate on behalf of its members, to fully eradicate OCP's unwelcome residual effects on the national independent ATM community.

NAC Chairman and Access One Solutions Chief Executive Officer George Sarantopoulos said NAC is using practical approaches to end bank account blacklisting. He said NAC leaders and members are working with regulators, field examiners and financial institutions to restore ATM ISOs' and independent ATM deployers' access to financial services. He urged members to remain vigilant, stating, "NAC will continue the fight for the independent ATM operators who continue to struggle with bank account issues, despite Choke Point going away."

NAC returns to Washington

In July 2017, NAC directors and members met with Senate Banking Committee and House Financial Services Committee members to address ATM industry issues, with OCP topping the agenda. When OCP was disbanded a month later, NAC leaders declined to take full credit but acknowledged their efforts may have helped end the program.

On Feb. 15, 2018, Timothy W. Baxter, NAC founding director and President of Dallas-based Swypco LLC, testified before the Financial Institutions and Consumer Credit Subcommittee of the House Financial Services Committee. Both Renard and Sarantopoulos attended the hearing, titled "Examining De-risking and its Effect on Access to Financial Services."

Renard returned the following month to meet with congressional leaders. In a series of meetings, held March 6 through 9, 2018, he presented NAC survey highlights and OCP's ongoing residual effects on retail ATM stakeholders. Survey demographics show independent ATM deployers provide nearly 60 percent of the 470,135 ATMs in the United States. A majority of these "non-bank" ATMs are located outside major banks' footprints, Renard said, adding that these independent ATMs provide critical banking services to un-banked and under-banked consumers.

"I am encouraged that this un-American, anti-consumer, and anti-competitive blacklisting of independent/retail ATM bank accounts is finally getting the attention it deserves in Washington," Renard stated.

Midmarket to drive global cybersecurity spend
Thursday, March 15, 2018

O ver the next four years, midmarket companies are expected to drive 70 percent of global investment in cybersecurity solutions, which could reach $134 billion in total combined global annual spending by 2022, according to U.K.-based Juniper Research Ltd.

Juniper cited cybercriminal exploit of "low-hanging fruit" as a persistent concern, especially among midmarket companies. Small businesses have long been a stable target of cybercriminals, the focus of 43 percent of cyber-attacks launched in 2015, according to Symantec Corp. Research by the cybersecurity firm revealed that in 2017, hackers managed to steal $172 billion from 978 million consumers in 20 countries.

Increasingly aware of the rising cost of fraud to consumers, midmarket companies are equally concerned about the devastating toll on businesses compromised by fraud in recent years. The National Cyber Security Alliance reported that 60 percent of businesses affected by cyber attacks close their doors within six months of an attack. Juniper predicted the cumulative cost of data breaches from 2017 to 2022 will reach $8 trillion.

IoT complicates matters

Perhaps one of the biggest challenge in the years ahead will be how to effectively secure Internet of Things (IoT) devices. Juniper estimated that global penetration of Internet-connected devices will reach 46 billion activated units by 2021.

According to Juniper, because modern devices are typically deployed for years at a time in the marketplace, forward-thinking cybersecurity strategies will need to be flexible enough to react to future demands as more advanced exploits by cybercriminals render modern approaches less effective over time.

As a result, stakeholders must plan in terms of risk mitigation rather than prevention, Juniper noted, adding that in some cases service providers in high-risk environments will be forced to restructure their networks to avoid potential compliance breaches, data theft and even service outages.

"Once a single endpoint is breached, the big danger is lateral movement across the network," wrote Juniper research author Steffen Sorrell. "Layered networks, proper lifecycle management and user 'least privilege' approaches will prove key to containing serious breaches." For more market insights, Juniper offers a free whitepaper, Cybersecurity -- How can service providers save the bottom line? In addition, the firm's Cybersecurity: Mitigation Strategies for Financial Services, Operators, Enterprise & IoT 2018-2022 report is available for purchase online at .

NRF identifies flaws in data breach bill
Thursday, March 15, 2018

I n a March 7, 2018, meeting with U.S. House Financial Services Committee members, the National Retail Federation urged the committee to rewrite proposed legislation pertaining to data breach notifications. The NRF, which has long pushed for uniform data breach legislation, called the bill a good effort that falls short of protecting retailers. At issue are a "one-size-fits-all" approach and overly protective stance toward select parties, according to NRF Vice President and Senior Policy Counsel Paul Martino.

Martino found loopholes in the bill's first draft that he claimed would exempt financial institutions and third-party service providers from punitive actions, as well as allow organizations to hide major data breaches from public view. "We want to work with the committee to develop an airtight bill that covers all industries and ensures that all data breaches are subject to notification no matter where they occur," he stated.

Proposed guidelines introduced by Reps. Blaine Luetkemeyer and Carolyn Maloney call for federally enforced data security and data breach notifications overseen by the Federal Trade Commission. Ideally, these uniform protections would create a flexible, technology-neutral data security standard. They would also require breached parties to notify consumer and law enforcement immediately when personal information has been stolen or compromised.

Four critical principles

In a March 7, 2018, letter, the NRF and other retail organizations, collectively representing more than a million U.S. consumers, petitioned the House Financial Services Committee to include four critical principles in the proposed data breach legislation: create a uniform, national law; set reasonable security standards; maintain appropriate enforcement; and notify all breached entities. They also brought up the following issues:

Call for equal responsibility

In addition, the authors voiced concerns that the legislation sets an "immediate" standard for notice that they believe may be unachievable. The letter was signed by the following parties:

NRF representatives maintained that varying approaches to data breach enforcement in 48 states are inconsistent and conflicting, which can be confusing for consumers and multistate retailers. The association is calling for a uniform federal law that holds banks, card processors, telecommunications companies and other entities equally responsible for managing sensitive consumer data.

Tradeshows flourish, new products shine
Tuesday, March 13, 2018

T here is a tradeshow for just about every type of payment professional these days. This week, for example, the Southeast Acquirers Association is hosting its annual show March 12 through 14 in Orlando, Fla. And across the world, Money20/20 Asia is taking place March 13 through 15 in Singapore. One is regional; the other is international; both offer considerable educational, inspirational and networking opportunities.

Companies often take advantage of the buzz surrounding tradeshows to introduce new products into the marketplace. For example, at Money20/20 Asia, Verifone just introduced what it described as "the first in a line of commerce solutions that brings mobility, payment, and commerce into one powerful, portable device. From tier one retailers to small businesses, merchants around the globe will soon be able to accelerate their business with Carbon Mobile 5."

Carbon Mobile 5

Verifone noted that Carbon Mobile 5 fits into the palm of a merchant's hand and, in addition to enabling checkout, it offers the ability to run Android apps such as POS, loyalty and inventory management. Carbon Mobile 5 will begin rolling out this year and will be available with and without an integrated printer, and both variations come with the advanced feature set necessary to support in-aisle sales, clienteling, endless aisle solutions and much more, the company added.

“We’re seeing our global merchant partners increasingly dedicating resources to the customer experience. Through one-to-one customer interactions and targeted programs, retail leaders are demanding technology to personalize the shopping experience,” said Julie Johnson, Senior Vice President of Global Product Management. “The priority is to get to know the customer, and Carbon Mobile 5 provides the platform to engage customers and ‘do it all’ from a single, mobile device.”

STA, ETA shows coming up

Meanwhile, at SEAA in the Sunshine State, merchant level salespeople, ISOs, processors, hardware and software manufacturers, the media (including representatives from The Green Sheet Inc.), as well as startups and entrepreneurs with bold ideas, are receiving up-to-date information on the industry's challenges, opportunities and trends; connecting with potential partners and reconnecting with old friends; honing their presentation skills; and getting recharged to better the odds they will reach their business goals.

Also coming to Orlando will be the Secure Technology Alliance, which will host Payment Summit 2018 from March 26 through 29. To register for that show, visit .

Less than a month later, Transact ‒ Powered by ETA will take place in Las Vegas from April 17 through 19.This dynamic, comprehensive show promises a mix of traditional events, presentations and showcases along with new offerings such as Next Gen Park for accelerators; Biometric + Identity Zone, powered by IBIA; Contactless Zone; and ETA Law School. For details, visit .

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