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AUGUST 2022 PAYMENTS CONNECTION NEWS PaymentsFirst is Members First SEPTEMBER NATURAL DISASTER PREPAREDNESS MONTH The United States is prone to its share of disasters Depending on where your financial institution is located wildfires tsunamis hurricanes earthquakes droughts floods landslides tornadoes lightning riots cybersecurity risks medical emergencies and economic crises can create havoc on society Historically people within their community look to their financial institutions for assistance guidance and direction The FFIEC Guidelines require financial institutions to implement a solid business continuity planning strategy SOLUTIONS PAYMENTS CONFERENCE 22ND ANNUAL September 28 29 2022 Chattanooga TN Hybrid Event Early Bird Pricing Ends September 9

Have you registered The Westin Hotel Chattanooga TN Hybrid Live Event Online 18 Concurrent Sessions 3 Tracks Operations Fraud Risk Compliance Emerging Payments 4 Keynote Speakers Come meet with 3 Insightful Payments Panels Payment Professor Multiple Vendors C level Invitation for Data Privacy Keynote Wednesday 28 4 5 pm ET One Complimentary Virtual Invitation per registered member location Discounted Rooms Early Bird Pricing ends Agenda is available September 9 Register Today www.paymentsfirstsolutions.org

PAYMENTS CONNECTION NEWS PaymentsFirst Monthly Issue FedNowSM Service Provider Showcase NEWS HIGHLIGHTS Monthly Issue 2022 Payment Industry Update Micro Entries Rule Effective September 16 2022 Risk Compliance News Industry Partner News PaymentsFirst News Update Third Party Sender Roles and Responsibilities Effective September 30 2022 Learn More

Payment Industry News Nearly 80 of Americans would consider switching to a community bank Grain survey says By Cision PR Newswire Grain Technology the only digital credit card alternative designed to make credit accessible from your existing debit card no credit check required today announced survey results surrounding the current perception of community banks in America Designed to understand people s familiarity with community banks and current trends in banking What is a Virtual Credit Card By U S News As the name suggests this isn t a physical card that you hold in your hand A virtual credit card has a randomly generated credit card number that changes every time your real credit card account is used for purchase A virtual credit card works kind of like chip credit cards With chip credit cards the merchant gets a single use number or token which changes every time your chip card is used Big Banks Push Back on CFPB Effort to Oversee Customer Service By Bloomberg Law Big banks told the Consumer Financial Protection Bureau to stay away from policing their customer service operations The consumer finance watchdog lacks authority to write rules or otherwise review how banks interact with individual customers the American Bankers Association the Bank Policy Institute and the Consumer Bankers Association said Monday in a joint comment letter Banking as a Service Market 2022 Emerging Trends and Global Demand During the COVID 19 Period till 2030 By EINPressWire com Allied Market Research published a report titled Banking as a Service Market By Component Platform and Service Type API based Bank as a service and Cloudbased Bank as a service Enterprise Size Large Enterprises and Small Medium Enterprises and End User Banks FinTech Corporations NBFC and Others Global Opportunity Analysis and Industry Forecast 2020 2030 Member Resources COMPLIMENTARY RESOURCES FOR MEMBERS ONLY READ MORE READ MORE READ MORE READ MORE

Risk Compliance News What s Changing with the Adoption of New Visa Dispute Evidence Rules By Chargeback911 Known as Visa Compelling Evidence 3 0 or CE 3 0 for short the initiative will make it easier for merchants to lower chargeback rates and avoid revenue loss The benefits may vary however based on the type of chargebacks typically received Supervisory Guidance on Multiple Re Presentment NSF Fees By FDIC The FDIC is issuing guidance to FDIC supervised institutions to address certain consumer compliance risks associated with assessing multiple non sufficient funds NSF fees arising from the re presentment of the same unpaid transaction Additionally the FDIC is sharing its supervisory approach when a violation of law is identified as well as expectations for full corrective action The Convergence of Payments and Commerce Implications for Consumers By CFPB In recent years the payment space has moved from an ecosystem with clear constraints and established players to a rapidly evolving environment While there has been significant attention paid to specific technologies and solutions e g blockchain there has been less attention paid to the broader changes occurring across the ecosystem The Inspectors General Community Stresses Warning About Scams Criminals will Pretend to be from Any Federal Government Agency By Office of the Inspector General Criminals pretending to be from federal government agencies are tricking victims into sending money or sharing personal information Criminals will continue to try different tactics until they find one that works No matter what these scammers say they pressure victims to act immediately and to pay using methods that are not typical for federal government business P A Y MEN T FOLLOW PAYMENTSFIRST PUBLICATIONS READ MORE READ MORE READ MORE READ MORE

INDUSTRY PARTNER NEWS UPDATE Removing Friction in the Used Car Sales Process with Real Time Payments Lithia Motors one of the largest automobile dealers in the United States and owner of the Driveway com used car marketplace recently started to send real time payments to sellers on Driveway com to help remove friction with the payment which was traditionally done via check ACH or sometimes cash Now with real time payments over the RTP network sellers can receive payment for their vehicle even before it leaves the driveway TCH Joins Trade Groups in Petitioning the CFPB to Ensure Data Aggregation Services Market is Fair and Consumers are Protected The Clearing House Association L L C TCH together with the American Bankers Association ABA Consumer Bankers Association CBA Credit Union National Association CUNA Housing Policy Council HPC Independent Community Bankers of American ICBA National Association of Federally Insured Credit Unions NAFCU and National Bankers Association NBA together the joint trades sent a letter to Consumer Financial Protection Bureau CFPB Director Rohit Chopra to petition the CFPB to engage in rule making to define larger participants in the market for aggregation services but also to the entire high value payment system in the United States TCH Comments on the Treasury Department s Notice and Request for Comment on Ensuring Responsible Development of Digital Assets The Clearing House Association L L C TCH submitted comments in response to the Treasury Department s notice and request for comment on Ensuring Responsible Development of Digital Assets TCH in its letter observed that privately issued digital assets and private token based cryptocurrency have grown tremendously over the past decade and pose a number of significant risks With respect to these digital assets TCH commented that i banks which are subject to comprehensive supervision and regulatory frameworks that help ensure their digital asset related activities are conducted safely and soundly and that consumers are protected should be no less able to engage in digital asset related activities than non banks Intelligent Document Delivery via the RTP Network Document Exchange is a new service that will enhance The Clearing House s RTP network capabilities by providing easy access to documents such as bills invoices and remittances in the same transaction flow with the payment or payment request It is part of secure two way communication for billers suppliers and providers of benefits payroll insurance and more Access to documents not just data The RTP network already has capabilities for participants to send and receive information back and forth across a secure bank channel Thank you Solutions Payments Conference Gold Sponsor

INDUSTRY PARTNER NEWS UPDATE New service announcement FedPayments Insights Service Coming this fall we are excited to launch a new service FedPayments Insights to help meet industry needs for ACH analytical tools to help inform operational risk management and strategic decision making for your institution This new FedACH business intelligence and analytics tool will allow financial institutions to interact with their ACH data in a dynamic user interface to easily review daily and historical trends Watch a quick video or read the full announcement for more information Additional ACH File Delivery effective September 12 Effective September 12 2022 FedACH Services will provide an additional ACH file delivery to all customers at 11 30 p m ET every Monday through Friday The later delivery is in response to ACH industry participant requests and will accelerate the delivery of ACH transactions to RDFIs throughout the business week RDFIs are not required to do anything new and can continue to process the files the next morning prior to 8 30 a m ET settlement Read this announcement for more detailed information Get Ready for the Fedwire Funds Service November 2022 release Effective November 21 2022 Federal Reserve Financial Services will implement changes to the Fedwire Funds Service s proprietary message format Tag 8200 will be added as an optional tag in bank transfer BTR and cover payment CTP COVS messages Learn more including testing opportunities in this recent Fed360 article Pioneers of Now Andrew Haskell of BNY Mellon shares his favorite instant payments use case Pioneers of Now represents a cohort of engaged financial institutions and service providers that are united by their commitment to the early adoption of the FedNowSM Service Check out the second article in this series featuring Andrew Haskell of BNY Mellon sharing his favorite instant payments use case Synthetic Identity Fraud Mitigation Toolkit How can financial institutions and other payments professionals more effectively fight fake identities used for fraud involving payments Explore the Synthetic Identity Fraud Mitigation toolkit for resources to help improve awareness detection measurement and mitigation In the business to business B2B payments space there has been great progress toward establishing a more modern electronic payment process But how does an einvoice travel from point A to point B in an exchange framework This short video provides a step by step overview of how an e invoice moves through an exchange framework from supplier to buyer Thank you Solutions Payments Conference Bronze Lanyard Sponsor

INDUSTRY PARTNER NEWS UPDATE 1 Million Same Day ACH Limit Not a Greater Fraud Risk Nacha s RMAG Finds Increasing the Same Day ACH dollar limit to 1 million per payment posed no greater fraud risk than the prior 100 000 threshold a new survey by Nacha s Risk Management Advisory Group RMAG found RMAG reviewed the proposal before it took effect in March weighing potential risks and benefits before advising Nacha s Rules and Operations Committee Are Your Entries in the ACH Contact Registry Helping Nacha is Checking Financial Institutions have been listing ACH contacts in Nacha s ACH Contact Registry since the platform went live in July 2020 Most banks and credit unions are entering quality data that meets the requirements under the Nacha Operating Rules That means phone numbers and email addresses for ACH operations and fraud risk management which are monitored during business hours and contacts kept up to date with any changes made within 45 days Yet there are some frustrations Nacha has heard about in using the ACH Contact Registry such as information being out of date or phones and emails not being monitored during business hours For those not fully complying with the registration requirement Nacha is doing more auditing and alerting FIs of problematic contact information Risk Management Portal Now Updated for Identification of Nested Third Party Senders Increasing the Same Day ACH dollar limit to 1 million per payment posed no greater fraud risk than the prior 100 000 threshold a new survey by Nacha s Risk Management Advisory Group RMAG found RMAG reviewed the proposal before it took effect in March weighing potential risks and benefiha s Rules and Operations Committee Additional Late Night ACH File Deliveries to Start in September 2022 Beginning in mid September 2022 the ACH Operators the Federal Reserve and The Clearing House will implement additional late night deliveries of ACH files to all Receiving Depository Financial Institutions RDFIs Both ACH Operators will offer similar services regarding the additional 11 30 pm Eastern Time deliveries of ACH files Upcoming Rules Implementation Dates Deadlines and Events Upcoming Rules Implementation Sept 16 2022 Formatting of Micro Entries Sept 30 2022 Third Party Sender Roles and Responsibilities Accreditations Oct 3 29 2022 AAP Exam Window Thank you Solutions Payments Conference Gold Sponsor

INDUSTRY PARTNER NEWS UPDATE to its share of disasters Depending on where your The United States is prone financial institution is located wildfires tsunamis hurricanes earthquakes droughts floods landslides tornadoes lightning riots cybersecurity risks medical emergencies and economic crises can create havoc on society Historically people within their community look to their financial institutions for assistance guidance and direction The FFIEC Guidelines require financial institutions to implement a solid business continuity planning strategy Not only do your customers look to their financial institution but regulators expect financial institutions to implement and have a solid reliable business continuity plan in place Many financial institutions throughout the United States found themselves without a solid contingency plan in 2020 Working in a remote environment for many businesses was a process felt to be a struggle The past few years have taught us the importance of a solid business continuity plan Is your financial institution ready to take on the challenges of any disaster in any form robbery power outages pandemics or data breaches The purpose of a Business Continuity Plan is to focus on a subset of operational risk factors identifying assessing and reducing risk to an acceptable level through the development implementation and maintenance of a written enterprise wide business continuity plan Business Continuity Example Procedures in place for continuity teams Contact list of critical employees The process to communicate with internal and external stakeholders Understanding critical vs noncritical functions and processes Relocation strategy and planned unanticipated expenses Business Impact Analysis and Risk Assessment are needed A solid contingency plan provides simplicity for any team member to know exactly what process to follow when urgency strikes The value of a detailed plan is imperative to help protect your organization and assist your team members to navigate through a crisis successfully If your organization has a solid contingency plan are you testing regularly Does your team know where the plan is in the case of an emergency If a disaster occurs can your team access the plan easily Does your plan include a method of communication with your customers members Management while using a business impact analysis and risk management processes to identify and monitor risks should focus on risk mitigation avoidance and acceptance strategies When disaster strikes it is important to lean on the multiple resources available to your organization Not only will your payment association be an asset but the Federal Reserve Bank FFIEC IRS FEMA Red Cross and many others have valuable information to help your community prepare and get through a disaster The payment associations represent a group of hard working payment experts dedicated to assisting financial institutions through business continuity planning education consultative audits and risk assessments providing guidance through various payment rules and regulations Our teams depending on your location are ready to help you prepare implement a plan and guide your organization through a recovery effort when needed Collaborative effort PaymentsFirst and Center for Payments

Micro Entries Rule Effective September 16 2022 This Rule will define and standardize practices and formatting of Micro Entries which are used by some ACH Originators as a method of account validation This Rule will Define Micro Entries as ACH credits of less than 1 and any offsetting ACH debits used for the purpose of verifying a Receiver s account Standardize the Company Entry Description and Company Name requirements for Micro Entries Establish other Micro Entry origination practices Apply risk management requirements to the origination of Micro Entries This Rule will become effective in two phases Phase 1 September 16 2022 The term Micro Entry will be defined and Originators will be required to use the standard Company Entry Description and follow other origination practices Phase 2 March 17 2023 Originators of Micro Entries will be required to use commercially reasonable fraud detection including the monitoring of Micro Entry forward and return volumes The Rule will define Micro Entry as a type of ACH Entry A Micro Entry would be a credit or debit Entry used by an Originator for the purpose of verifying a Receiver s account or an individual s access to an account A credit Micro Entry must be in the amount of less than 1 00 One or more debit Micro Entries must not exceed in total the amount of the corresponding credit Micro Entries This definition accommodates the existing practices of offsetting the amounts of credit Micro Entries with one or more debits which nets the total verification practice to 0 and permits a debit offset to be greater than 1 00 only to offset the amounts of credit Micro Entries The Rule will standardize formatting for Micro Entries In the Company Entry Description field the Rule will require the use of ACCTVERIFY A standard description will make Micro Entries more easily identifiable and better enable ODFIs to apply any desired processing routines or other controls Like other rules for the standardized use of the Company Entry Description ODFIs will not be required to review validate or correct an Originator s formatting The Company Name must be readily recognizable to the Receiver and be the same or similar to the Company Name that will be used in future Entries Permitted to have minor variations to accommodate processing needs Mirrors the Company Name requirement from the recently approved rule on Reversals The Rule will establish other origination requirements An Originator that is using debit Micro Entry offsets must send the debits and the corresponding credit Micro Entries simultaneously for settlement at the same time Better enables the simultaneous delivery of credit Micro Entries and corresponding debit Micro Entry offsets to RDFIs in the same file The total amount of the credit Micro Entry ies must equal to or greater than the value of the debit MicroEntry ies The aggregate total of the debits and credits cannot result in a net debit to the Receiver s account An Originator using Micro Entries may initiate future Entries to the Receiver s account as soon as the Originator s process for validating the amounts of the Micro Entries has been completed The Originator is in the best position to know when the validation process is complete A future Entry may not be originated simultaneously with Micro Entries ODFIs are not required to review or inspect files to enforce this The Rule will apply risk management requirements to Originators An Originator of Micro Entries must conduct commercially reasonable fraud detection on its use of MicroEntries including by monitoring of forward and return volumes of Micro Entries The use of commercially reasonable fraud detection is intended to minimize the incidence of fraud schemes that make use of Micro Entries Monitoring forward and return volumes at a minimum establishes a baseline of normal activity An Originator would not be required to perform an entry by entry review
Download Nacha's one-page pdf on this new rule.

Third Party Sender Roles and Responsibilities EffectiveSeptember 30 2022 The overarching purpose of these Rules is to further clarify the roles and responsibilities of Third Party Senders TPS in the ACH Network by Addressing the existing practice of Nested Third Party Sender relationships and Making explicit and clarifying the requirement that a TPS conduct a Risk Assessment The two Rules will become effective on September 30 2022 with a 6 month grace period for certain aspects of each rule Nested Third Party Sender The rule will provide clarity and remove confusion about the roles and responsibilities of parties involved in a Nested Third Party Sender relationship Defines a Nested Third Party Sender and provides clarity on agreements and obligations of defined parties Further encourages a culture of compliance and risk management in ACH especially regarding TPS relationships Reasonably expands ODFIs due diligence to know whether TPS customers have Nested Third Party Sender relationships ODFIs should understand that risk may increase with additional levels of removal from the Originator Ultimately better clarity and knowledge by ACH participants about the roles and responsibilities of parties should help improve ACH quality TPS Risk Assessments Risk Assessments are vital to managing risk for any party in the ACH Network clarifying this requirement will promote active risk management by Third Party Senders Encourages a culture of risk management and compliance in ACH processing Aligns the ACH Network with the wider payments industry Improves the quality of ACH payments by elevating the prominence of risk assessment among additional ACH Network participants Download Nacha's one-page information sheet Learn More

Survey WINNERS Thank you so much for your feedback Tina Panoz Mutual Savings Bank FA Christina Webb South Carolina Federal Credit Union Carol Wilson Community First Bank Kim Bailey Cadence Bank 25 Gift Card Winners PaymentsFirst strives for excellence if there are ways we can improve our current offerings or if you have suggestions for opportunities in the future please let us know Thank you very much to those of you who have responded to our surveys We appreciate your feedback your time and consideration

Education ACH Origination Inside your House August 30 Identifying Third Party Sender Relationships September 6 2022 Visa Transaction Flows Rules October 6 MasterCard Transaction Flow Rules October 6 End User Payments Symposium October 19 RDC CHECK UCC REG CC October 12 Government Payments Bootcamp October 18 Please visit our website for additional information 2023 Education Calendar Coming Soon

WHEN WAS YOUR LAST ACH RISK ASSESSMENT The Nacha Operating Rules Guidelines specifically state a participating DFI and a ThirdParty Sender must conduct or have conducted an assessment of the risks of its ACH activities implement or have implemented a risk management program on the basis of such an assessment and comply with the requirements of its regulator s with respect to such an assessment and risk management program Allow a PaymentsFirst ACH expert to evaluate your complexity discuss your inherent risk and assess your residual risk The PaymentsFirst ACH Risk Assessment is a thorough assessment of ACH activities and risk management program that aligns with FFIEC Guidance and includes the following Prior to and Onsite Checklists Online Client Questionnaire Review of Policies Procedures and Agreements Written Report Including Sound Business Practices Recommendations to Strengthen Controls Risk Assessment Certification Form Please visit www paymentsfirst org or send an email to riskandcompliance paymentsfirst org today for a free proposal or to begin the scheduling process The ACH Risk Assessment can be conducted remotely or onsite depending on your preference Learn More

Are you ready for 2022 COMPLIANCE SERVICES PaymentsFirst offers a variety of risk and compliance services which include Schedule Preferred Dates Today 2022 Services Offered ACH Audit ACH Risk Assessment RDC Risk Assessment and Audit of internal Controls Wire Transfer Risk Assessment and Audit of Internal Controls Third Party Sender Third Party Service Provider ACH Audit Third Party Sender Third Party Service Provider ACH Risk 2022 Assessment PaymentsFirst PaymentsFirst has a courteous and knowledgable team of Accredited ACH Professionals AAP and Accredited Payments Risk Professionals APRP who are ready to work with your staff to successfully complete risk and compliance services Real Time Payments Audit PaymentsFirst is Members First Scheduling Regulatory Annually Customize Have you scheduled your Today s regulatory It is important to have your You can build a risk required annual audit and risk requirements and escalated payments audits and risk management package to match assessments Contact us early fraud make your payments assessments performed on an your needs with our Risk to schedule preferred dates audits and assessments more annual basis Compliance services important than ever before For a free proposal or to begin the scheduling process please complete our online Compliance Services Request Form by visiting www paymentsfirst org or send an email to riskandcompliance paymentsfirst org We are still accepting dates for 2021 Risk Compliance Services Contact us today