Coming sooner (testing in February 2002, full rollout expected in April 2002) is
another EPN initiative designed to please treasury managers. It would replace
bank account numbers in payment-related communication with universal ID numbers
that would deter fraud and make it easier for treasury managers to change bank
accounts.
The EPN number, which would look like an account number and fit in the ACH
standard field for account numbers, would mask the real number but provide a
unique destination for the funds, Thomas says. The numbers would attach to the
payer or payee and would not change when either changed bank accounts or even
banks. It could be used only for the more secure ACH credit transactions, at
least initially.
If it works, such a system could get treasurers' attention. In the past,
Hollingsworth, who also chairs the Association for Financial Professionals'
payments advisory group, paid no attention to where his banks processed ACH
transactions. But he notes that fraud protection is a hot topic among treasury
pros these days; if EPN could provide better fraud protection with its
non-account numbering system, he'd listen to their story.
Today, corporate payers are reluctant to provide
their bank account numbers for ACH debiting because of the danger of fraudulent
debits, Thomas says. In fact, more and more companies are putting debit blocks
on their accounts, he notes, to prevent all ACH debits. Having a universal ID
number in an EPN database could enable treasurers to change bank accounts and
only have to report the information once?EUR?to the EPN data base?EUR?instead of
sending new account information to a long list of ACH payment partners, Heitema
points out.
To be sure, EPN has a daunting challenge ahead: Until 2001, the Fed controlled
85% of the market. And the Fed already seems to be trying to fight back.
We're pushing hard to find operational savings, says Rich Oliver, senior vice
president of the Federal Reserve Bank of Atlanta and head of the Federal Reserve
System's retail payments office.
Still, Elliott McEntee, president and CEO of NACHA: The Electronic Payments
Association, in Herndon, Va., believes that no matter how the Fed's market share
is affected prices on processing will fall dramatically. ?We think it's a very
positive step, says McEntee, an ex-Fed Board of Governors Associate Director.
It stimulates more competition, which should be good for everyone. Prices
already are coming down, and the providers are looking for value-added services
they can offer.
Since last month, EPN has been offering discounts to the nation's largest cash
management banks, which generate most of the 6.9 billion ACH transactions
completed annually. Although slowed by the Sept. 11 terrorist attacks, EPN has
recently regained its aggressive marketing approach.
Cheaper processing is only one incentive EPN is dangling in front of large ACH
originators. EPN is a for-profit enterprise formerly limited to banks in the New
York City area. Now banks like Mellon, PNC, First Union and Wachovia have signed
up with EPN, become equity partners and get seats on the EPN board.
With the addition this year of five large banks?EUR?First Union, BBT, Mellon,
Wachovia and PNC?EUR?which all committed to give their ACH processing to EPN, EPN
will see its market share vault to 18% to 20% from 4% to 5%, Thomas reports.
Transactions should grow to over 1 billion in 2001 from 450 million in 2000, he
estimates.

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