Section 4 Payment Processing Billing and Risk Intuit

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Section 4: Payment Processing, Billing, and Risk Intuit Financial Services University FIS Bill Pay Certification Training (Process Date Model)

Bill Pay Certification Section Objectives This section prepares you to understand processing details, consumer billing, and possible risks associated with bill pay including potential blocks to bill pay accounts. By the end of this section, you will be able to: q Explain the finer points of bill pay processing, as required from customer questions and issues q Decide how your consumers are billed for bill pay q Mitigate the two types of bill pay risk q Support consumers if they experience a debit return or a bill pay fraud situation, including a blocked account Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 2

Bill Pay Certification Payment Processing Section 4: Processing © 2012 Intuit Financial Services All

Bill Pay Certification Remittance Methods FIS uses one of the following two methods to remit payments: 1. Electronic - If the payee is found in the database, the payment is sent out electronically. • All electronic payments go through the Federal Reserve. • The payment includes the consumer’s account number with the payee. • The financial institution sees the standard ACH code/description when received from the Automated Clearing House. 2. Paper Check - If the payee is added manually, the payment is sent out via paper check. • The paper check is drawn against FIS’ corporate checking account. • The check is printed with consumer’s name, address, account number, payment date and payment amount. The envelope with the payment has FIS’ address as the return address. • Reissued paper checks are not debited a second time. • The paper check is void after 90 days. If the payment is not posted and it is approaching the 90 -day mark, a service request is automatically created by FIS. • A manually added payee can be converted at a later date to an electronic payee, if there is a match in the FIS database. Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 4

Bill Pay Certification Send On Date When setting up a payment, the consumer clicks on a calendar to view the Send On and Deliver By dates which automatically adjust based on the payment method. Send On date - the day that a payment starts to process. FIS begins processing payments at 9: 30 pm Central Time on this date. Consumers can schedule, edit or cancel the payment through Bill Pay anytime before 9: 30 pm Central Time. Note: Consumers can set the Send On date out a year in advance. Deliver By date - the date that FIS guarantees the payment arrives at the payee. This should be on or before the bill’s due date. For electronic payments: The calendar automatically adjusts the Send On and Deliver By dates three banking business days apart. For check payments: The calendar automatically adjusts the Send On and Deliver By dates five banking business days apart. Note: Payments are only processed on days when the Federal Reserve is open for business. Weekends and holidays are grayed out on the calendar. Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 5

Bill Pay Certification Schedule Payments - How do I choose the Process Date? Mon Tues 1 2 3 7 8 9 14 15 21 28 Sun Wed Thurs Fri Sat 4 5 6 10 11 12 13 16 17 18 19 20 22 23 24 25 26 27 29 30 Example #1 Due date for the bill: 22 nd Form of Payment: Electronic Last day a consumer can set up a bill for guarantee-on time arrival: 17 th Funds debited via ACH: 18 th or 19 th Example #2 Due date for the bill: 18 th Form of Payment: Check Last day a consumer can set up a bill for guarantee on-time arrival: 11 th Funds debited via ACH: 12 th or 15 th Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 6

Bill Pay Certification Processing Automatic Payments Sometimes a payment date for a automatic payment falls on a nonprocessing day. When this occurs FIS processes that payment on the following banking business day. Friday Business Day Saturday Automatic payment falls on Saturday: • FIS processes the payment on Tuesday, the next business day. Payment could be late because this is three (3) days after the consumer intended it to go out. FIS would have processed the payment on Monday if it had been a regular business day. Sunday Monday Bank Holiday Automatic payment falls on Sunday: • FIS processes the payment on Tuesday, the next business day. Payment could be late because this is two (2) days after the consumer intended it to go out. Tuesday Business Day Automatic payment falls on Monday: • FIS processes the payment on Tuesday, the next business day. Payment could be late because this is one (1) day after the consumer intended it to go out. Tip: Advise consumers to check their automatic payments at the beginning of each month and adjust if needed. Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 7

Bill Pay Certification On Time & Secure Payment Guarantees • FIS covers any late-payment related charges (up to $50. 00) should a payment arrive after its due date, as long as the consumer scheduled the transaction in accordance with FIS’ on time payment guarantee. • FIS sends the late-payment related charges to the consumer, not the Payee. Note: This guarantee pertains to Check and Electronic payments; see next page for payment guarantee details on Expedited Payments. Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 8

Bill Pay Certification Payment Guarantees - Expedited Payments Payment Guarantees • If the electronic payment is delivered late due to an FIS error, the consumer can request to have the convenience fee and any incurred late fees refunded. • If the overnight check is delivered late due to FIS or delivery vendor error, the consumer can request to have only the convenience fee refunded. Any late fees incurred are not refunded. • Note: The financial institution is responsible for refunding the convenience fee to the consumer. Intuit Financial Services refunds the financial institution for the transaction amount specified in their contract for the specific payment type. Other Notes: • Expedited payments are listed separately on the financial institution's invoice. The invoice also displays the total number of convenience fee transactions processed as well as the total dollars collected. • Expedited payment information (number of expedited payments by type (check/electronic), total $ amount of expedited payments by type, number of convenience fees by type, total $ amount of convenience fees by type) are found in the CBS Report in CST. • The convenience fee is a separate transaction in Internet Banking, in the Customer Service Tool and on the financial institution's bill. Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 9

Bill Pay Certification OFAC Compliance As a provider of "pay anyone" Bill Pay services, FIS recognized the need for implementation of an OFAC (Office of Foreign Assets Control) suspect list analysis solution to identify potential payee suspects. They implemented a procedure for identifying and reporting exact payee name and address matches with the SDN list. If a match suspect is identified, FIS calls your financial institution with the payee name and associated payments. It is the financial institution’s responsibility to contact that consumer. Read more on FIS’ OFAC screening solutions on the Client Site at https: //www. diclientsite. com/prodserv/bill_pay_metavante. html Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 10

Bill Pay Certification Restrictions on Use Section 4: Processing © 2012 Intuit Financial Services

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Bill Pay Certification Billing Section 4: Processing © 2012 Intuit Financial Services All rights

Bill Pay Certification Consumer Billing The financial institution has the choice to handle billing internally or have FIS bill the consumer. This billing arrangement is set up during the implementation process. There are two types of fees: monthly fees, and all other fees like debit returns. The financial institution decides if FIS debits the consumer for monthly fees, other fees, or both. The following applies if FIS is handling the billing: When does the consumer pay monthly fees? • Between the 1 st and the 5 th of the month, the consumer sees an ACH debit for the monthly fees in their account history, typically labeled “Bill Payment Service Fee” (this label depends on your processor). How are the fees routed to the financial institution? • Intuit Financial Services’ invoice, which is processed on the last business day of the month, includes all of FIS’ charges; for example, you may see a New User Setup fee, Per User Fee or Per Item Fee. Note: These may differ on your invoice - it all depends on your contract with FIS. The financial institution decides if they want to use any credit from the general ledger account to reconcile Intuit Financial Services' bill. When does the financial institution receive the fee revenue? • On the 20 th of the month Intuit Financial Services credits or debits the financial institutions’ general ledger account with the consumers' fees. Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 14

Bill Pay Certification Risk: Debit Returns, Fraud, and Blocks Section 4: Processing © 2012

Bill Pay Certification Types of Risk There are two types of risk with FIS Bill Pay & Presentment. 1. Credit risk: Credit risk is defined as the potential for a payment to get returned. NSF is the most common reason, but any return reason code applies. Ways to manage credit risk: • Up-sell, or even require, an overdraft account for all bill pay users. • The FI can decide to pay or return a check or ACH debit from FIS if funds are not available. If paid, this essentially transfers the risk to your financial institution. • Talk to your ACH department. They should know how to identify ACH debits and checks coming from FIS. Create procedures for when to return or not return the payment back to FIS. For example, some financial institutions always pay checks or ACH debits from FIS for wealth management customers. 2. Fraud risk: Fraud risk is defined as the potential for a payment to be made fraudulently, i. e. not approved by the bill pay consumer. Ways to manage fraud risk: • Be upfront with FIS and their Fraud team about your business model, e. g. let them know if you have a lot of customers in foreign countries. • Know that most often a fraud alert is a false positive. • Understand how FIS manages fraud risk by reading the “FIS Bill Pay Risk Factors and Mitigation” document (found on the Client Site). Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 16

Bill Pay Certification Credit Risk – Debit Processing FIS uses a risk-based processing model, which means the payment is sent to the payee without verification of funds or confirmation that the account is still open. The consumer’s bank account is debited via ACH one to two business days after the specified Send On Date (i. e. the date that the payment starts to process). The debit transaction displays on the Internet Banking Account History screen as an ACH transaction. Two bill payments scheduled for the same day will result in two separate ACH withdrawals – not one lump sum. How are transactions identified? • The ACH file that FIS sends to the financial institution is identified with FIS’ company ID of M 391165550. • The description that the consumer sees for their bill pay transactions within Internet Banking and on their statements is “Online bill pay” (the financial institution may change the description – limited to 16 characters). Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 17

Bill Pay Certification Credit Risk – Debit Returns If the financial institution returns an ACH debit or a check back to FIS, FIS places a block on the bill pay account. How does the consumer know this happened? • The consumer receives email alerts when their bill pay account is blocked, unblocked or when a debit return occurs. • Refer to the Training Resources page on the Client Site for a Quick Help Guide on Sample Alerts. How does the block affect current payments? • Consumers can view their e-bills and cancel pending payments but cannot schedule new payments. • Single payments scheduled for delivery during the blocked timeframe are cancelled. • Automatic payments that occur while the account is blocked are cancelled. Future-dated automatic payments are processed once the block is lifted. Besides the block, what else happens? • FIS may attempt to debit the account up to three times for a payment. The return item fee is assessed for each debit return. • FIS attempts one time to place a stop payment on any debit return (check) over $500. If they cannot stop the payment, they charge a returned item fee and send the debit return straight into the collection process. Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 18

Bill Pay Certification Credit Risk – Blocks Below are questions you may hear when supporting consumers whose accounts are blocked because a payment was returned to FIS. How is the block removed? • FIS uses an automated process to block and unblock an account. • If more than one item was returned back to FIS, everything must clear before the block is lifted. When is the block removed? • Bill Pay is blocked for three (3) business days after the consumer resolves the returned item(s); consumers can access Bill Pay on the fourth (4 th) business day. • FIS runs an account block/unblock review daily at 2: 00 am, 1: 00 pm, 6: 00 pm Central Time. What if the funds are not collected? • FIS closes a Bill Pay account if collection of debit returns is unsuccessful. • Accounts blocked for more than one year or for which a collection item is determined to be unrecoverable by FIS are automatically terminated. Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 19

Bill Pay Certification Credit Risk – Expedited Payments How are debit returns handled for Expedited Payments? Expedited Payment Debit Return If FIS’ debit for an expedited payment is returned, the same process that is in place to handle a debit return for a standard payment is followed. To recap: • The Bill Pay account is placed in a Blocked status. • FIS attempts to debit the account a total of 3 times. • The Block remains in affect until 3 days after FIS successfully collects on a re-debit attempt. • After 3 failed attempts, the account goes to collections. • The financial institution is charged for each debit return the amount in their Bill Pay contract. Convenience Fee NSF If FIS’ debit attempt on the consumer’s account for the convenience fee is returned, no further attempts are made to collect it. However, the uncollected convenience fees are deducted from the monthend settlement owed to the financial institution. In addition, the financial institution is charged for one debit return. The consumer’s account is not blocked if the debit return on an Expedited Payment is only for the convenience fee portion. Expedited payments, as you learned in Section 3, is an add-on feature, so this page may or may not apply for you. Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 20

Bill Pay Certification Fraud Risk – Fraud Monitoring FIS offers a Fraud Management Service that checks all outgoing payments to mitigate fraud exposure. The service includes transaction monitoring, alerting and case management. The monitoring service is a real‐time analytics engine that enables FIS to monitor the bill payment activity. FIS’s Risk Management department analyzes the suspicious activity alerts to determine fraudulent activity through the review of account activity, fraud patterns and If an alert occurs, an investigator FIS fraud analyst calls experience. the consumer to confirm whether or not the payment if fraudulent. If the consumer is unavailable, FIS then calls the financial institution. Fraud monitoring begins immediately upon implementation, and the system achieves optimum scoring of bill pay activity once 90 days of history has been accumulated by the scoring models. False-positives are more common during this 90 -day “learning” period. Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 21

Bill Pay Certification Fraud Risk – Fraud Alerts When a consumer calls in asking questions about a fraud alert, it’s important to explain the basics and help with troubleshooting. What are some situations that can trigger a fraud alert? • Login from a foreign location • High dollar payment to a personal payee outside the state • Fraud trends and patterns in the industry • Unusual high dollar payments may trigger a call to verify funds (rather than a fraud alert) What are the steps when a fraud alert is triggered? • FIS calls (never emails) the consumer first to see if the payment is legitimate or fraudulent. • The FIS fraud analyst says they are calling on behalf of the Bill Pay Service at XYZ Financial Institution. They don’t identify themselves as the Fraud Department. • If FIS cannot reach the consumer, they call the financial institution. What happens when FIS cannot reach the consumer or the FI? • If neither the consumer nor the financial institution cannot be reached to confirm that the payment is NOT fraudulent, a block is placed on the bill pay account. • The consumer gets an email alert that their account is blocked. Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 22

Bill Pay Certification Fraud Risk – Blocks If FIS does block the account because no one can be reached, this information is important to resolve the situation in a timely manner. How do I get in touch with FIS’ Fraud department? • To respond to a fraud alert, the consumer or financial institution call (800) 720 -1818 and a 5 digit extension for the fraud analyst who left the message. • To report fraud or suspected fraudulent activity, or to clear a fraud block, call (800) 278 -6133. How does a fraud block affect current payments? • The impact is the same as a debit return block: • Consumers can view their e-bills and cancel pending payments but cannot schedule new payments. • Single payments scheduled for delivery during the blocked timeframe are cancelled. • Automatic payments that occur while the account is blocked are cancelled. Future-dated automatic payments are processed once the block is lifted. How is the block removed? • FIS must receive confirmation that the fraud alert was a false-positive; FIS releases a fraud block in a matter of hours (versus 3 days for a debit block). • Ensure IFS and FIS have your up-to-date fraud contacts, ideally multiple contacts in case the first person is unavailable (even your toll-free support number). This can prevent a block in the first place or expedite the block removal. Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 23

Bill Pay Certification Practical Applications – Payment Processing 1. How does FIS determine how a payment is sent? 2. How many days does the consumer need to leave for processing? • • 3. Check payments Electronic payments Today is Feb 1 st and you have a bill that is due on the Feb 13 th. When is the last day you can set up the bill in order for the Payee to receive payment on time for an electronic payment? For a check? February Sun Mon Tues Wed Thurs Fri Sat 1 2 3 10 4 5 6 7 8 9 11 12 13 14 15 16 17 22 23 24 FED. HOLIDAY 18 19 20 21 25 26 27 28 Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 24

Bill Pay Certification Practical Applications – Payment Processing (cont’d) 4. When does the money come out of the consumer’s account and when is the Payee paid? 5. When can the consumer cancel a payment and how? 6. What are the advantages of using FIS’ consumer billing? 7. Describe the steps FIS takes if the financial institution returns a Bill Pay item. 8. How do expedited payment debit returns differ from regular payment debit returns? Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 25

Bill Pay Certification Section Objectives - RECAP In this section, you learned how to: þ Explain the finer points of bill pay processing, as required from customer questions and issues þ Decide how your consumers are billed for bill pay þ Mitigate the two types of bill pay risk þ Support consumers if they experience a debit return or a bill pay fraud situation, including a blocked account Section 4: Processing © 2012 Intuit Financial Services All rights reserved. CONFIDENTIAL AND PROPRIETARY. Page 26

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