Project Description

Michelle: Great. Thank you so much and welcome everyone to the Wells Fargo Webinar: It’s Time, Faster Payments Are Here. Thank you so much for joining us today. My name is Michelle Ziolkowski. I’m head of Global Payables for Treasury Management at Wells Fargo and I’ll be taking you through the webinar today. Today, we expect everything on demand. And that means an experience of immediacy in many aspects of our lives. Payments are aligning with this expectation, faster payments are here now. They are providing a better experience for consumers, employees, and suppliers. It’s time to make faster payments part of your business strategy. Are you ready to move ahead? And what’s the best path forward for your business? To help you answer these questions, we are joined today by Eric Foust. He is Senior Director of Product Management at Early Warning, Early Warning is a fraud prevention company that’s owned by seven banks. Early Warning owns the Zelle digital payments network, one of the faster payment solutions we will talk about today. Shaun Birnbaum is also with us. Shaun is the Investment Manager at Repwest Insurance Corporation. Repwest is leveraging faster payments as part of their business strategy and has a great story to share and we’re excited to hear from him today. Both Eric and Shaun are going to provide their perspectives and insights to help guide our discussions. Our conversation for the next hour will focus on what faster payments are and what’s accelerating their adoption; how to choose the right payment type for your business strategy including review of the four of the faster payment types available in the U.S. today and we’ll also take a look at Repwest Insurance Company and how they’re using faster payments to strengthen the business and finally, we’ll discuss reasons to fast track your faster payments plan and how you can prepare to move ahead. So let’s get started by a quick audience poll. Is your business seeing a demand for better payment experience from customers, suppliers, or employees? And please, select the option most applicable by using the voting buttons on your screen. I’m going to give it just another second to pull this together. And let’s see the results. Well, it’s certainly not surprising that a majority of you are seeing a need for an improved payment experience. Faster payments will help you deliver this, but it’s also incredibly important that you make sure it aligns with your business objectives as well. And so, what exactly, do we mean by faster payments? It’s a category of payments where speed is a driving factor. With faster payments, money still transfers between bank accounts. What’s different is how soon the money is available in the near real time exchange of information that can accompany the payment. Faster payments have moved beyond person to person. They’re aligned for business to business, business to consumer, and business to person types of payments. Faster payments are providing the solutions to long standing problems and addressing emerging needs of a dynamic and diverse economic landscape. We are also seeing a tremendous amount of interest in leveraging APIs, which is a version of real time messaging, if you will, for businesses as a way to connect to initiate and reconcile these emerging payments. And so, everything that we’re doing around the payment landscape is really focused on the need for immediacy. So Eric, in your opinion, what is driving the adoption of faster payments?

Eric: Sure. Well, there’s three things. First, there’s widespread adoption of mobile technology, specifically Smartphones. Nearly two thirds of the world’s 5 billion mobile phone users have Smartphones and that number continues to grow. And Smartphones, they’re shaping the way we behave and interact, for example, Google provides instant answers to questions you have. Amazon provides shopping on demand. Waze gets you from point A to point Z just by entering an address and if you want to send somebody a payment or pay a bill, you don’t need to wait to go home to log on to your desktop computer or your laptop. You simply take out your Smartphone and away you go. So consumers have this engrained understanding that having the ability to do something immediately, and doing it easily, should be simply available to them and as consumers, we bring these experiences and expectations into the workplace in our professional lives. Second, the expectations require instant gratification. 7.5 billion objects make up the Internet of things and connected objects will reach more than 25 billion in 2025. So the objects all around us are being wired for the on demand economy. Third, two thirds of the global connections will be 4G and 5G by 2025. The speed of connection supports this on demand world. The combination of a mobile lifestyle and digital commerce creates the need for payment speed. And the growing expectation today, in the corporate environment, is things should be as fast and as seamless as it is in your personal life. And that includes making and receiving payments. So all of this has laid the groundwork for accelerating the development and adoption of faster payment systems. We’ve seen this historical event here in the U.S. with the launching of a new payment rail RTP and we haven’t seen that happen in the last 40 plus years. And at the same time, the current rails that make up our system have been enhanced to meet these faster payment demands. Michelle?

Michelle: Yeah, I couldn’t agree with you more. For the longest time, business payments really only had three options, check, ACH, and wire. You know, four, when we introduced card to be readily accepted. And in the past two years alone, we’ve seen not only advancements in ACH, which we’ll talk about soon, but several new payment types that have become available in the market, we are seeing the shift and we are working towards making that shift as easy as possible for consumers, but we also recognize that for our business customers, all these new payment mechanisms can be incredibly challenged to manage and learn through, as part of the reason why we’re thrilled that you’re here today. So today’s commercial landscape is a mobile, digital, and contextual. Whether you’re a consumer, supplier, or worker in the on demand economy, you expect instant fulfillment. I like to use the example when I’m texting somebody and I see the three dots that I want to see the response immediately. And the same applies for payment, and that’s where faster payments comes in. You need to be where your customers are. They make the adoption of faster payments a necessity for business. And payments don’t happen in a vacuum. There’s always a reason for a transaction. For a long time, payments have been treated as transactions. Isolated events from whatever activity they were supporting, the pace of payments, and the information that accompanies it and the ability to know how quickly you’ve been paid and for what, means that payments are part of the instant gratification experience, whether it relates to customers, suppliers, or employees. For payees, payments become less about the transaction: Where is my payment, what do these funds relate to, are there any reductions, and what do I have to do to accept or reply to the payment? The movement of dollars is integrated to the end to end experience that it is supporting. Businesses are recognizing the value of paying and being paid faster. Some of the benefits for your business include from a paying faster perspective, gaining more direct control over when and how you pay your suppliers or disburse funds lake rebates or payouts to consumers. Ensuring business continuity is in place for every employee payments, like emergency payroll or disaster relief and this business continuity is one of the public service messages to make sure that at a minimum, you’re enabling one faster payment method in the event that you have an emergent payment situation. But in addition to making payments faster, being paid more quickly is also just as important. The ability to accept and provide payment options that meet expectations are fast and painless payments of your customers, encourages on time or early payment. And getting cash more quickly in order to jumpstart on applying and posting payments sooner, and in many instances having stronger data accompanying that payment, not to mention the fact that some faster payment types are irrevocable and you no longer need to worry about returns. There are some key considerations in determining the best way forward for your business.
These include who you are paying as a business, consumer, and employee and how does that individual want to be paid? How quickly do you need to pay? Speed varies by faster payment methods, some are hours, some are seconds. What information do you have to have about that payee? It’s a starting point for understanding which of the faster payment method is easiest to transition to, and then what kind of payment do you need to make? And I think all these questions are really critical and drives to the point that one payment strategy does not fit all, and it may not make sense for you to expedite payment to an individual that really doesn’t care about getting the payment more quickly or you can satisfy the business need with more traditional methods and so I think it is incumbent upon all of us to recognize the time and place for faster payments and how that adoption can help drive better customer or employee satisfaction as well as benefit the bottom line. So now that we’ve talked a lot about the reasons faster payments are important, let’s kind of start to review some of the faster payment options that are available today. The first that we wanted to discuss is real time payments where payees receive payments in seconds with payment information included. They get instant confirmation of the payments, funds are immediately available and they’re irrevocable. Real time payments clear 24 by 7, 365, all the time. Payment processing and settlement is also continuous. The Clearinghouse is a private sector payments processing company owned by 24 of the largest U.S. banks. It operates shifts, which is a wire transfer capability, the electronic payments network which is near and dear to ACH and then it also has SB PICO which is a check image aspect of their business. It has developed real time payments in the U.S. Countries all over the world have implemented or are developing real time payment systems. The U.S. has been somewhat of a laggard when it comes to advancements in payments but the benefits that apply are lessons learned from other countries on their advancements and adoptions are helping to bring the best experience for companies and consumers into the U.S. And so a few of the ways that I want to discuss how you can use this, you know, first and foremost is invoice payments which the certainty around the timing of invoices as well as how you can manage and apply, for example, any deductions that may take place is one of the critical aspects available in real time payments. Insurance claim payments, where companies want to be able to pay individuals quickly. In particular, in the event that they’ve had a disaster type situation are incredibly important. Emergency payroll and I’ve had a number of companies requiring emergency payroll solutions, you know, it’s obviously a much more cost effective solution than leveraging wires but this is just, again, real time payments becomes another one of the options that you have available to them. I lastly want to talk about payments tied to contractual commitments. You know, so real time, irrevocable payments can be triggered by fulfillments of contracts or confirmation can trigger an execution. As real time payments become more ubiquitous and potentially the limits also advance, we can see different use cases emerging that we can be leveraging both from a business and a consumer perspective. And payment certainty helps you manage cash flow more precisely and especially in a rising interest rate environment. Managing that cash flow can be very critical to the business and your bottom line and create, if you will, somewhat of a value added service organizationally in terms of return on the investment dollars that you have from the cash flow perspective, but the payment confirmation also lets you and your payees know that the payment has taken place. This transparency reduces inquiries around payment status and I’ll tell you, I had a call today with a vendor about some payments and they could certainly use this as part of their cash application process. But then, lastly, immediate funds availability means that payees can use the funds right away and so it is a win win across you and your trading partner from an application of cash but also availability of funds perspective. And so with any new payment opportunity, controls and governance are critical to the safety and soundness of the payment process. Limits are one of the ways that the industry is mitigating fraud and currently, and as I mentioned with real time payments, it’s set at $25,000. The request for payment, which is the ability to exchange a series of messages along with the transmittal of funds will become a game changer, in particular, in terms of how we can communicate along with the payment, and because of that, banks are really focusing on what products that we can wrap around requests for payment in the future. The next payment type that I want to discuss is push to card, which is a near real time payment option that settles in minutes, which means that the payment is irrevocable and final and available for use instantaneously or for the most part, instantaneously. Push to Card was developed by the MasterCard and Visa networks and uses their merchant processing gateway. You may have also heard it called Visa Original Credit Transaction, also known as OCT, or MasterCard Send, which are the brand names that both Visa and MasterCard use. Push to Card allows a business to issue a credit directly to a debit card which will immediately be available for use in that payee’s checking account and with Push to Card, you don’t need to collect or store your customers’ or suppliers bank account number or routing information. You only need to obtain their debit card number and its expiration date in order to be able to process the transaction, and in this environment where many of us don’t know our routing and account numbers but obviously carry debit cards with us, it becomes a much more ubiquitous method of being able to process payment. Some of the particular use cases that come to light are disaster relief funds, insurance payouts, paying contractors or workers on the spot. These are some of the examples of payments that you can send to Push to Card, you know, in the big economy that we have, with the Uber drivers and freelancers, this becomes a really great way to pay them directly into their account in a cost effective manner, and instead of your customers needing to wait a month for a product rebate check and potentially try to send that to a mailbox that may not even exist in the result of a disaster, you can get that feeling of instant gratification and availability. Push to Card is a good option for situations where you need to get funds to consumers right away and again, as I mentioned, we all have that debit card available to us, so it’s a super convenient way to receive payments and allows for the immediate use of funds. Push to Card has a lot of benefits. From a real time and anytime type of perspective, your business can originate disbursements in real time with guaranteed funds or near real time availability to consumers. It’s a safe, fast, and reliable method for disbursing payments to your consumers’ debit card. It uses an established, ubiquitous network, the Visa and MasterCard Merchant system so from the start, this method can quickly reach a lot of individuals. Payees don’t need to download an app or sign up for a new payment method to participate in the program. It’s also incredibly efficient. Push to Card eliminates the need to wait and watch for checks or ACH files to clear. It eliminates escheatment challenges that your business might face and with real time reconciliation upon transaction processing, it is a very efficient way to do the cash application and reconciliation of the payments being made. It’s also a way to save your business money. The transaction costs may be less than initiating a costly wire, but you can also hold onto your funds until the last minute to help you manage with cash flow and then as with all of these faster payment methods, it’s incredibly convenient. You can pay your consumer easily and with speed. We’re starting to see a need for payments to small businesses and this is one of the options that might work depending on how the solution and quite frankly, the market evolves. Many small businesses are able to adapt their payment processes to leverage person to person payment rails, and that’s why we anticipate Push to Card to be available to small businesses in the future. And I’d like to turn the discussion over to Eric who will walk us through Zelle, one of the newest payment methods available.

Eric: Thanks, Michelle. So hopefully, many of you have seen or heard one of our advertisements on TV, the web, or on radio by now. The Zelle network originally was established as a person to person, or P to P payment system, that allows people to move money using an alias, which is an email address or mobile number, in place of getting someone’s accounting number and routing number. So just as a brief history lesson here, the network was actually started in 2011 between Wells Fargo, Chase and Bank of America and it was known as Clear Exchange and under Clear Exchange, each bank had their own branded P to P experience. For example, Wells Fargo had theirs and it was SurePay. So fast forward a couple years from 2011 and Clear Exchange was acquired by Early Warning in 2015. Here’s the important part. In June of 2017, the network rebranded under one common user experience across all financial institutions and it’s known as Zelle. So as the popularity of using an alias to send a payment grew, another use case was born. Businesses began working with their banks, like Wells Fargo, to send payments to consumers using Zelle, and here’s how that process works. A person enrolls one time into the network. If their bank is part of the network, they’re going to use their bank’s app or website to enroll. If their bank is not part of the network, they’ll download and enroll the Zelle app. In either case, when enrolling the person supplies their mobile number or email address as the alias to be used for Zelle transactions. Once someone enrolls, there are no additional steps for the consumer to start receiving payments directly into their account. Zelle uses their email address or U.S. mobile number as the token in place of the account number or routing number. So using that token removes the hassle from the individual having to provide their depository account information, and then behind the scenes, Zelle maps that consumer’s token, that email address or cell phone number, to their depository bank and then their depository bank matches their token to their actual deposit account. So in order to send a disbursement, you as a disburser, send a payment instruction to your bank. It’s going to include things like the alias that you want to send money to, the total dollar amount that you want to send. There’s going to be room for memo information in there, but what it’s not going to include is the consumer’s bank information. We, the Zelle network, we take care of that. Once you send the payments, the payee receives notification that you sent it and the money’s deposited in their account. If the payee’s not yet enrolled, they’re going to receive a notification to enroll so they can receive their payment. Zelle makes sending money fast, easy, and safe for people enrolled in network as well as companies sending funds through the network and really, for your business to pay somebody today, it is as simple as getting their email address and U.S. mobile number. On slide 21, how can Zelle be used? I’m going to cover a couple of use case examples here. And the first one will be insurer claim payouts. In this example, somebody may have been through a traumatic event, like a house fire, and giving the consumer a check may add friction because now they have to go to the bank to deposit those funds, which could be a hassle, depending on the time of day. The bank might be closed or even the day of the week, the bank might be closed. Let’s say the adjustor instead of issuing a check wants to send an ACH. Well, the consumer may not have their account number and routing number immediately available because their checkbook might be in the house that just burned down. So being able to send a payment via Zelle using their email or phone number or mobile number removes that friction from the process. Other use cases include on demand services like paying contractors and freelancers. Reimbursements for health care, overpayments, travel and expense reimbursements for employees, contractors, or interns. Payroll for emergency payments, as well as an option for standard payments, and student refunds for university overpayments. And then one of the neatest use cases, at least in my opinion that’s not on this slide, is in the restaurant industry, and this one is near and dear to my heart because back in my college days, I used to be a sever and today, restaurants have moved away from nightly tipping because there’s not enough cash on hand since everyone is paying with credit cards and this has forced some restaurants to tip on a weekly basis as a sever not having money in your hand whenever you end your shift can drastically impact your day to day activities. So with Zelle disbursements, they’re able to move back to daily tipping using the staff’s email or mobile numbers and getting those tips deposited in their accounts within minutes. So why choose to integrate Zelle into your business strategy? So Zelle might be a newer name to some people on the phone but we’re not small and to help drive that point home, I’m going to cover a couple of basic stats here. In the last quarter of 2017 and the first quarter of 2018, we averaged more than 100,000 consumers enrolling per day. That’s a six month rolling average. In 2017, we processed more than 247 million payments worth $75 billion and today, we have more than 100 banks and credit unions that belong to the network which means that we cover more than 80% of all U.S. based online bank accounts and finally, we covered 97% of all U.S. debit cards. So one of the main reasons for this growth is we make it easy for the consumer and the business. We’ve simplified the payment process and the experience. You don’t need to obtain or maintain sensitive financial account information in order to send a payment and the best part is, these payments can be available to the consumer within minutes. And by replacing cash and checks from the system, we’re electronifying the process giving you clear visibility as to your overall cash position and as I just stated before, these payments can be made available to the consumer within minutes and the consumer receives instant notification that the payment is complete, which gives them that peace of mind that the payment’s closed, and then lastly, if your business is sending check payments to consumers either recurring or one off check payments because that’s what you’ve always done and it’s just easier to do that, understand that implementing disbursements with Zelle could be a lower cost opportunity for you as well as an easier alternative than simply mailing a check. And finally well, today, Zelle is available for person to person and business to consumer payments. There are a few other payment applications that are currently being investigated. All could have broad sweeping opportunities to the Zelle network overall, so what I can say is keep your eyes OPEN TO see what’s next. Michelle, back to you

Michelle: All right, great, Eric. Thanks so much for walking us through the Zelle payment approach and applicability. As a former sever myself, I probably would have liked this a lot better than walking around with all the cash that I spent a lot more quickly than I think if it was in my account. But now that we reviewed the types of faster payments, I want to reach out to the audience and get some of your perspectives. How do you see faster payments working with your business to pay consumers, employees, suppliers, all of the above, none of the above? Please select the appropriate option on your screen to respond. Great. So it seems that at least we’ve convinced you to some extent that leveraging this for multiple types of your trading partners and employees is likely most applicable for your particular business and so, you know, there are still some of you out there that really are not sure how this fits but hopefully, we’ll help you understand that and I think it’s a great segue to turn it over to Shaun who will start to share his story. ‘Cause it’s always better to hear from somebody who’s actually using this in real life. So having a better understanding of the Zelle payment network that we just walked through, let’s look at how Repwest Insurance Company is using faster payments for business. Shaun is going to share a little background on Repwest and then take us through the business need and how Zelle is changing the customer experience and benefitting the business. So Shaun, thanks so much for sharing your story with us today.

Shaun: Thanks for having me, Michelle. Let me start with some background on Repwest. Repwest is the property and casualty insurance company for U Haul International. We are a U Haul sister company and focus primarily on insuring the items whether they are in a U Haul truck, trailer, or storage unit. We operate very closely with U Haul on a daily basis. As the investments manager, I have broad role within Repwest. I’m a one man finance team within the accounting and finance department. My role includes the day to day accounting, including financial reporting for our approximately $350 million in investments, all treasury functions for our company, including communications with our banks and cash management, new project implementation related to investments in treasury and I’m also responsible for reporting the status of our investment to the Board of Directors. With so many U Haul trucks on the road on a daily basis, accidents are bound to happen. Whether or not the U Haul lessee takes out one of our insurance products, we review all claims that are reported into our call center. The vast majority of our claims involve U Haul accidents, whether it’s backing into a wall or maybe a loading dock or even a minor fender bender. Take a car accident, for example, the claimant sometimes files a claim through their own insurance company but most of the time they’ll file the claim straight through Repwest. Traditionally, we review the facts of the accident and figure out whether there will be coverage provided for that accident. If we provide coverage for the accident, we will review estimates and issue payments to either the claimant or the auto body shop. We started thinking about how faster payments could help us and our customers in that process. One the big measures for insurance companies are how long claims stay open. Best practice in the insurance industry is to investigate coverage and determine if a payment is needed as soon as possible. Sometimes this can happen within a matter of days, but we will always try to make a decision on a claim within 30 days. We are always looking for ways to trim down the amount of days that a claim stays open. Plus, we wanted to get money to people faster and improve customer satisfaction so that people have a great experience with U Haul. For example, there are times where people get in an accident and their cargo will get damaged. Because they are U Haul customers and they took out the insurance coverage, we may decide to cover the damage to the cargo. By finding a faster way to pay the claimant rather than mailing a check, they will get their money faster and this will increase our overall satisfaction. In the customer’s mind, the clock is always ticking. They’ve experienced a negative event which may not have been their fault but it created a bad experience for them. A check takes time to process and then it goes by snail mail and hopefully arrives within a week of the date the check is cut. Shortening that timeframe is what could allow us to improve customer experience. As a consumer, I have personal experience with PayPal and Venmo and I knew there was a way to submit a payment other than check or ACH. That’s what brought me to the idea of faster payments for our customers. Let me walk you through our process for adopting Zelle payments. First, we weighed what faster payments would be best for our needs and we landed on Zelle. As an insurance company, we’re focused on reducing the company’s overall risks. With same day ACH, we envisioned scenarios where adjustors would be on the phone and a claimant would give their account information and the routing number. From the liability standpoint, we could not envision this being a reality for us. We really needed to limit the risk associated with the information we collected and still be able to pay a claimant quickly. Taking an email address completely eliminated our all the fear of mishandling sensitive data and using that email address as a token allows us to pay our customers quickly and securely. We found that Zelle satisfied our three goals: Faster payments to claimants for a better experience, closing claims sooner, and lowering overall costs of our payment. Next, we brought our key stakeholders. Accounting is the primary stakeholder when adding a new payment process. Given my role in the company, I was responsible for this and it made sense from an overall accounting perspective. I.T. needed to be closely involved to ensure that there weren’t any technical or integration issues. I.T. is sometimes hesitant to implement a new solution given limited resources and competing projects. But they came onboard after a few discussions on the business case for change and understanding the upfront effort would provide long term benefits for them. Now that we’re up and running, the process has been automated and our I.T. team doesn’t have any hands on involvement anymore. Finally, we thought through the needs of our claims adjustors who would be responsible for the transition to claim payments using the Zelle network. Adjustors handle the communication and work with the claimant so we needed to consider the experience from both the customer and the adjustor perspective making sure it would be easy to implement and that Zelle would be encouraged as our primary form of payment instead of checks going forward. I’m sure most of you know the hassles of check payment, to print and mail a check and then hope the customer receives it and cashes it quickly. The whole process takes time. And in our business, people are oftentimes moving, so the address we have on file is often incorrect and the payee may not end up ever receiving the check. Clearly, that adds time and costs for our company which can include voiding and reissuing a check and contacting the claimant to know where to send the new check. By issuing payments using the Zelle solution, we can send them money and be done with it. It can trim our payment process down from a week or more. It’s more efficient, too, for our adjustors and our accounts payable team. It’s been pretty easy to get the customer’s cell phone or E mail address. First, we typically collect this information when someone rents a U Haul so the information we need is tied to the customer at the point of initiation. On the back end, the adjustor intakes the claims detail and asks for the information again to confirm we’ve got the right information and ensure the payment is getting to the right person. Many times we’re dealing with phone claims. Usually people are calling in to explain what their damages are. There’s ongoing communication and it’s easy for us to obtain the information in that instance, too. What we say is we’re ready to issue payment. We can either send you a check that can take up to two weeks, or we can send it to you digitally and you can receive it in a matter of days. Because the customer already understands the concept of a digital payment, it’s just a simple question, how would you like to be paid? The Zelle payment process eliminates a lot of concerns. We get the claimant’s email, send the payment, and we’ve delivered on our promise. Claim closed. Payments have gone from weeks to a matter of a day or slightly longer depending on if the claimant is sign up to receive Zelle payments. Like I said earlier, we measure success in two ways, the standing insurance measure of how long a claim stays open and our overall customer satisfaction. Because customer satisfaction is so important to our company and creating a differentiation for our customers, let’s talk about that first. An important point of feedback is the claims adjustor, who is the person on the frontline with our customers. The vast majority of the feedback we received from customers is that they loved it. In the claims business, you’re dealing with people who are upset or angry, having just gone through an event or a loss. Getting the money into their hands faster makes things a little easier in a difficult personal situation. This payment solution is a way to make people happier. And there’s an internal satisfaction impact, too. Our claims adjustors are happy because they have less follow up work fielding calls about a lost check or request for when a payment will be received or when it was sent. So from a satisfaction perspective, it’s a win win. The second measure I mentioned is the industry standard because we’re able to pay faster. We’re definitely shortening that cycle. While each claim is different, the fact that we don’t have to wait to reconcile automatically reduces that timeframe. I also wanted to mention there’s another factor that we use to measure success of the initiative, itself. We’re looking at our percentage of claims being paid by Zelle and analyzing the savings over our previous check or ACH method. The cost of the B to P payment is significantly less expensive and the payments get there a lot faster. We want the percentage of Zelle payments to get as close to 100% as possible and we make sure that management is supporting and driving that goal. In looking at the chart on this slide, you’ll see a steady increase month over month over the first eight months since implementation of Zelle payments. Rather than looking at the total number of Zelle payments on a monthly basis, the primary number we look at when evaluating the success of this program is the percentage of total Zelle payments and total payments. Due to working in the moving industry, we have a highly seasonal business and so looking at total Zelle payments month over month is not truly accurate, and that’s why we look at the percentage of total payments. This will be an iterative process. We can look at adoption numbers as a company, but also on an individual basis to see which adjustors are using or not using the system. We take advantage of these numbers, sharing them with management so they are aware of who is adopting the process and that they have the numbers to hold their teams accountable to goal. And as other groups or divisions of the company start using the Zelle network for payments, we’ll be able to track and manage its growth.

Michelle: Thanks so much, Shaun, for sharing experience around faster payments. It’s always great to hear a real world perspective and I think as a one man finance shop, you certainly did a great job innovating within your organization and I appreciate getting your insights into the value that B to P payments provides to Repwest and even to your customers. What advice would you have for companies that are considering using faster payments?

Shaun: I think one big thing is to make sure that you’re clear on how the payment type will be rolled out across your organization and how it fits within your customer experience goals or faster payments plan. You’ll always see some hesitation when it comes to change, but if you have engaged management and are clear on the goals, expectations, and process, it makes it easier for your stakeholders and teams to understand and support the initiative. Like I said before, managers are responsible for ensuring adjustors push for our goal of having 100% eligible claim payments processing through our B to P solution and they’re all working to support that goal.

Michelle: That’s great, Shaun, and I know when working with many customers and their companies that having leadership support the initiative can really make or break the success of what you’re trying to accomplish. So what’s next for Repwest with respect to faster payment plans?

Shaun: Yeah, thanks for the question. We’ve been looking at the many different ways to roll out this process in other areas. One, in particular, is U Haul customers can break down their truck or have an emergency on the roadside. The customer may get stuck in a remote place without a credit card. It may or may not be our fault but we try to improve our overall customer satisfaction. We’re looking for ways where we can implement Zelle to get the money faster to our customers. We want to improve the remaining part of their road trip so that we can improve overall customer satisfaction. Interestingly, we initially envision these payments coming on our catastrophic claim. To Repwest, a catastrophic claim differs from, say, homeowners’ insurance. We’re dealing mostly with a catastrophic claim at a storage site, anything from a hurricane or tornado to a fire that triggers the water sprinkler system and causes flooding. Our adjustors would go out to the facility and see if the claimant’s items were destroyed and we would cut a check for the full limit of the damage, if necessary. But then it would take two weeks for the check to arrive by mail. We envision sending this as a digital payment so customers have the funds quickly to replenish their belongings. We implemented Zelle with Wells Fargo in September of 2017. The majority of our catastrophic claims occur in the summertime so, hopefully, we won’t see any of those claims but we do, we’re ready to pay with our B to P Zelle option for those claims, too. Another thing we have in mind is that ideally we would make all of our payments via Zelle. Recurring vendor payments would be a perfect scenario where we don’t have to keep requesting a check every month. We could just send the payments straight to a vendor and not have to worry about them receiving it. All in all, we’d like to see Zelle support all of our business to business payments as well.

Michelle: That’s really great, and I think it speaks to the ease of faster payments and I love how your initial use case is extending to other areas of your business. And I also love that, you know, moving company claims might not be the sexiest area of the business but innovating around that space can certainly differentiate and drive a lot of value into the bottom line. We see a lot of businesses, payers, and payees that want easier payments just like they experience as consumers, and you know, this really brings us to the final faster payment option to discuss, same day ACH, and right now, it’s one of the only faster payment methods available for B to B payment, and now most of you will be familiar with same day ACH, the speedier version of the traditional one and two day version of ACH that’s been around for a long time, and the main point of why we’re here today is that it is not always need to replace your existing ACH strategy.
NACHA operates same day ACH like a traditional ACH credit or debit where you initiate a transaction to your payee’s bank account using the ACH network and the payee’s bank account number and the routing information. The only difference is that same day ACH credits settle in just hours where regular ACH transaction can settle in one or two days. Same day ACH payment must be credited by 5:00 p.m. of the receiving institution fund, so you have the ability to have that same day availability of funds. Same day ACH is the only faster payment method that can be used for B to B payments at this time with the exception of wires and real time payments and while you can use same day ACH for some existing supplier invoice payments there are limits that don’t allow for payments over $25,000 compared to what you heard earlier about real time payments and more commonly, ACH replaces painful check processing or costly wires in the case of emergent payments but candidly, we’re also seeing a lot of adoptions for business as usual for organizations that just want to be known for being speedy and easy to do business with and so while this is replacing certain payments, we’re actually seeing a large influx of growth in overall ACH because people are making more frequent, faster payments for lower dollar volume to create that perception of speed. Same day ACH is an easy way to replace last minute checks and costly wires. We see businesses using same day ACH for account to account transfers, emergency payroll, termination payouts. We also have many customers setting up same day ACH as part of a business continuity plan and a tremendous amount of our adoption is coming from FinTech or technology companies, and so the common theme for all the payment types that we’ve discussed today is that need for speed. If you already send ACH transactions implementing and adding same day ACH capabilities is very simple. There’s no new technology to put in place. You don’t have to collect anything new from your payees. In particular, if you already paid them via ACH and because your system of record can integrate with ACH, you don’t need new technology to implement same day ACH. It’s an incredibly cost effective choice and a great opportunity for business payments and all of the same rules of reversals returns apply to the same day ACH and so it may be a better suited payment option for some of those payment scenarios where irrevocability becomes a toggle point. I think you also need to remember that the concept of remittance data and how it will help with this payment strategy that if you need to send the addenda details for B to B payments, same day ACH has that ability. Some of the other faster payment methods limit the amount of information you can include which may make it a less optimal method for you. As I mentioned earlier, today’s payments eligible for same day ACH have an upper limit of $25,000. We’re hearing that this limit is likely to increase as well as the adoption of additional processing windows and if that’s the case, I think we will see further increased adoptions and use cases on the horizon. And so I want to give you the perspective of the different types of faster payments that are available and who and how you can use with those particular payments and the timing of how they go forward and what information, and I would view this somewhat as your kind of cheat sheet coming away from this webinar today and ensuring that you understand all the different options that are available, the particular use cases that may apply and then what you may need to initiate these types of payments, and this really lays out all the different options that we talked about today and some of the key factors to consider with each of them. And so we looked at faster payment types and how you could use them and so let’s take a quick look at what your business can do to prepare for and take advantage of faster payments. I’d like to suggest a good place to start is to look at the use cases for your business need. What types of payments could benefit from the switch to faster payments? Can this apply to your customers, your employees, you know, as we asked earlier in the polling question. We’ve seen many use cases. A lot sound kind of similar like insurance payments, applying to multiple of these faster payment options. Which faster payment method is right for your business is truly about understanding your payee preferences and how you want to interact with your payees. It’s about giving people choice around what payment method is easiest for them and you may ultimately end up adopting more than one faster payment option in order to extend those choices to your customers or your employees. So Shaun, do you have any thoughts on how our customers prepare for and take advantage of faster payments?

Shaun: When you’re evaluating payment options, it’s important to think about the ease and scalability across your targeted payees. What information is easiest and least risky for you to collect and maintain? For us, the path of least resistance was collect email addresses and phone numbers at the point of sale and then to ask claimants for their email address while we were capturing their claims details for confirmation. For another company, the debit card details may already be on file and secured safely, or ACH may be standard for your business and moving same day ACH could work best for the nature of your payments.

Eric: Hey, guys, I’m going to jump in. Shaun pointed out easy applies to the payment experience, itself, and to the path of implementation. So what information do you have on file? How do you verify that information, et cetera. How easy is it to convert the individual you’re paying today to the new payment method you’re considering? And then how easy is it to implement within your current process? I think most importantly, how easy is it for your payees to switch?

Michelle: I think Repwest has done a great job of illustrating the benefits beyond the payment, itself, such as the ability to close claims faster and increase customer satisfaction and that’s a lot of what we’re hearing around the business case for change, it’s the ancillary benefits to making the payment more quickly and so it’s also important to compare the benefits of each faster payment type, if there’s more than one that could work for your business, and so Eric, what advice do you have for those businesses looking to fast track their faster payment plan?

Eric: Good question. So I’ll respond specifically in terms of Zelle and central to Zelle is the token, the consumer’s email address or cell phone number. It’s the one thing we need in order for the Zelle network to work. So businesses thinking about Zelle should identify if they have current cell phone numbers or current email addresses captured for those people that they want to pay and if they’re not confident that the data they have on file is accurate, then I think it makes sense to start the process of obtaining or validating that data with their targeted payees. That should be the first step.

Michelle: Yeah, that’s a great point that can apply to other faster payments, too. Gathering the information that’s needed so you’re ready to implement, and in weighing options, keep in mind that your bank can be a great resource for information. Not only about details about the payment types but the implementation process, best practices for implementing or even working with you on what your ultimate strategy looks to be, and so I want to start to wrap up with a poll and understand, did we do a good job of convincing you that faster payments and how likely that you are to adopt a faster payment strategy within the next two years. So please select the option on your results or your screen and we’ll share the results. And so it generally looks like we did a decent job convincing you and that some of you, you know, are still on fence that you may or may not want to participate in it. But you know, obviously, you know, we’re having a lot of one on one conversations with customers to look ahead to faster payments and a lot of organizations are waiting to see how it lays out because they don’t want to implement multiple types of options. So I just encourage you to reach out to your Treasury Management consultant so that we can start that conversation with you and so as you heard today, the payment landscape is rapidly changing and faster payments are a key contributor to their change, and I think it will only continue to transform and get faster, and the ability to change your payment experience and what payments can do for your business and bring a sense of urgency to understanding how best to integrate them into your business plan really becomes key and core to your success organizationally. And so it is somewhat ironic that faster payments take time. They’re not necessarily easy to implement and they require a deliberate, thoughtful approach to ensure success. It’s really important to carefully plan your faster payment strategy and make sure that you are thinking of all the aspects that you need, the business, the payee challenges and do the research to choose the correct, faster payment for your business and how you can align within your organization and I.T. resources to execute on that strategy. So faster payments are here now. Adoption is rapid. Demand is very strong. It’s time to focus on how you can execute and the good news is that you know more than you think. If you start with the goals and the challenges that your company faces today, you know, faster payments are a solution to the business problem that you may be identifying today, and really, I encourage you to take advantage of the expertise and experience your banks have to offer and that we can ensure that faster payments help you deliver a better overall experience. If you’d like more information on today’s topic, I invite you to visit the payments and liquidity section of our treasury website. You can click on the icon or contact, as I mentioned, your Treasury Management consultant, and if you remain on line, you had receive 1.2 CTP credit or one CPE credits and we email those to you shortly along with the replay of the event. I know we’re short on time and I do want to get the opportunity to open up to the audience for any questions that you may have for our speakers and we’ll get to as many questions as we can in the time remaining. Operator, please provide the instructions for asking a question.

Operator: Yes, ma’am. Ladies and gentlemen, at this time, if you’d like to ask a question, please press star and then the number one on your telephone keypad. Once again, that is star and then the number one. Your first question comes from the line of Tommy McIntyre.

Hi. I was wondering with the Zelle payment if you can enter several vendors in bulk, or if it’s individual entries?

Michelle: Eric, do you want to address that question?

Eric: Sure. It really depends on the bank’s capabilities. Most banks do allow bulk sending. So if you have a file of a thousand consumers that you want to pay, you can send it over all at once and we receive it and process it in real time.

Okay. Thank you.

Eric: Sure.

Operator: Your next question comes from the line of Assad Jalal.

Yes. Thank you for the presentation. My question is more targeted toward the integration of faster payments. Especially when we when we’re faced with a problem of having so many different softwares and they don’t necessarily talk to each other. How easy it is to how user friendly is it to integrate this within a current system, I guess?

Michelle: That’s actually a great question and one that we talk about often, and I do believe that integration is a challenge that our businesses face whenever we’re looking to implement any new business type of strategy, and it’s largely predicated on the back end ERP systems and their ability to send and receive data. I mentioned earlier in the session about APIs and they’re seen as one of the advancements in being able to create an issue with the real time payments, but there are system constraints that are out there. In particular, if you use a particularly customized ERP system or one that is not mainstream, you could be presented with some integration challenges. I do understand like integrating any other payment method, you know, you really need to go through the requirements, what your system can provide and can you send enough information so just like any other new business initiative that you have, engaging your I.T. professionals as we spoke about and ensuring that you can meet the requirements to receive the benefits is a key and critical component to your overall implementation strategy. Are there any more questions?

Thank you.

Michelle: Of course.

Operator: Yes, ma’am. Your next question comes from the line of Juliet.

Yes, hi. I was wondering about the cost of each payment on the Zelle network as compared to an ACH payment.

Michelle: Thanks, Juliette. That’s a great question. Obviously, each of these payment options has their own costs associated with them. There’s meant to be comparables with the cost to initiate. This is where I would encourage you to talk to your Treasury Management consultant so they can give you a great perspective for your business, the cost that you could experience with each of the different options. And I do apologize because it looks like we are out of time for questions and I want to be respectful of the time of both of our presenters and all of you who participated. I do appreciate the questions that were asked. I’d certainly like to thank our speakers in the audience for your participation and attention today. I look forward to hearing about the innovative thinking that comes from our discussion today. If you do have additional questions, please don’t hesitate to reach out because I want to make sure you get out of this webinar what you came here. Thanks to all presenters again, and I hope everyone has a great day.

Operator: This is Catherine. I’m now closing the webinar dial in line. Ms. Ziolkowski, do I have your permission to do so?

Michelle: Yes, thank you so much.

Operator: Thank you.

Faster payments satisfy the expectations for immediacy your customers, suppliers, and employees have and bring value well beyond the transaction. The pace of innovation is speeding up, and faster payments are here.  Is your business ready to move ahead?

For more information, contact your Wells Fargo treasury management representative or fill out the Contact Us form on this site.

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