IFX for Business Banking White Paper

With the release of IFX Version 1.2.0, the Interactive Financial Exchange (IFX) incorporates and builds upon robust messages necessary for the utilization of IFX within the Business Banking processes of an organization. The IFX messages enable financial institution customers to originate payments, receive confirmation of the payment, stop payments, cancel payments, receive balance and transaction information, and various other functions as required during an organization's regular business day.

Payment Origination
IFX enhanced the Single Payment Message to support business-to-business payment transactions. This includes global payments, payments with parent and subsidiary payer relationships, payments that can be split among multiple payees and split across multiple invoices per payee. It also incorporates the flexibility to support the four-party concept of Invoice Receiver, Payer, Payee, and Invoice Sender.

It provides payment flexibility to support "on-behalf" scenarios where: 1) the parent organization (Payer) consolidates all payments of its subsidiaries (Invoice Receivers) and makes payments on their behalf, and 2) the parent organization (Payee) receives payments on-behalf of its subsidiaries (Invoice Senders) and distributes remittances.

Three business-to-business payment cases are:

• Single Payer, single Payee, single remittance
  Example: One debit to pay one Vendor who receives payment for invoices that the Vendor has presented to the payer
• Single Payer, single Payee, multiple remittances
  Example: One debit to pay one A/P Vendor who receives payment on behalf of subsidiary 1, subsidiary 2, …subsidiary n.
• Single Payer, multiple Payees, multiple remittances
  Example: One debit for payroll processor to pay multiple employees

Control Notification
IFX supports the ability to send a message that provides check sum totals for various characteristics, including total number of transactions, total value of all transactions and other business process control needs.

Payment Acknowledgment
IFX 1.2 introduces a new set of messages to allow the validation and reporting of acknowledgment messages containing both summary information (total number of payments and dollars accepted, rejected, and changed) along with detail information for each payment file or group of payments transmitted.

Intermediary Bank
Intermediary bank routing and settlement information has also been added to the single payment message. This provides the flexibility to override settlement instructions already set up with the customer profile, which is a specific business-to-business payment requirement.

Central Bank Reporting
Legal reporting information is mandatory for international business-to-business cross border payment to provide legal reporting to the foreign central bank. The legal report would be passed from the Payer to the financial institution (FI) or Customer Payment Provider (CPP) and the FI or CPP would pass it to the foreign central bank.

Recurring Payment
IFX has added a message called Recurring Payment Instance Add that a client to manually trigger the spawning of a payment instance from a Recurring Payment Model that has its frequency value defined as "Manually". This message is particularly useful when payments to a specific payee need to occur on an irregular frequency basis or when a client desires direct control of the spawning to manually override certain elements of each payment instance.

Remittance Advice
Multiple ways of delivering remittance advices are also supported. These are:

• Payer CPP passes remittance advice with payment order to Payee CPP
• Payer CPP delivers remittance advice directly to Payee
• Payer presents remittance advice directly to Payee

Balance and Transaction Reporting
Enhancements were made by IFX to the Deposit Account Statement Inquiry messages to encompass the essential information needed to support balance and transaction reporting as required in a corporate environment. The message supports both previous day and current day reporting as currently provided by financial institutions. IFX also supports in this business message the ability to report account balances based on a parent/child relationship.

Pay Service Wrapper
It is common business practice in the Business Banking Model to group together many payment requests and send them in one service transmission. For example, a control total record might be generated and sent along with the pay service transmission, or sent separately from the pay service transmission. It is necessary to facilitate both cases where the banking partner (CPP) requires the control message to travel with the payments or separately due to authorization and segregation reasons.

Utilizing the existing Pay Service structure as the payment service wrapper to group payments together, IFX can send multiple payment messages and control messages in one transmission. The Pay Service can also be used to send only the control messages separately from the payment transactions.

Business Banking Processes under Development
The IFX Business Banking Work Group is currently working on messages for the IFX Release 1.3 due to publish in April 2002 to support the following business processes: Direct Debits, Lockbox service, and Positive Pay services. Future enhancements include Foreign Exchange deals and confirmations and Letter of Credit processes.

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