ACHs Road to the Future What is Changing

ACH's Road to the Future: What is Changing in the ACH that will Drive Your Payments Strategy? Michael Herd Joe Hussey SVP, ACH Network Administration Managing Director Nacha J. P. Morgan Douglas Baxter Director, Financial Operations Paychex, Inc.

The ACH Network is Thriving

• The ACH Network Continues to enhance offerings to meet corporate needs • Is the building block to corporates’ payments future • Integrates with existing ERP systems

The ACH Network: Continuous Growth & Evolution

Annual Percentage Increase of ACH Network Transaction Volume

Changes are taking place in the payments industry. How do they impact your business model? Industry Trends • Payments are moving faster • Fraud attempts are increasing • Businesses continue to move B 2 B payments from paper to electronic

Payments continue to move faster…

400+ Million Same Day ACH Payments in Less Than 3 Years

Jan. –July 2019 Same Day ACH Volume & Value

2018 Same Day ACH Volume by Type

Most Common Same Day ACH Credit Use Cases

Most Common Same Day ACH Debit Use Cases

Paychex, Inc. – Same Day ACH Corporate Overview • Early Adopters • • Yo. Y Growth • • Paychex, Inc. released SDA Debit functionality using Direct Deposit on the industry launch date September 15 th, 2017 Fiscal 2019 Volumes increased 34%, processing over 760 K transactions for approximately $985 M Influencers • Active participant in the Federal Reserve’s Faster Payments Taskforce and NACHA’s Government Relations Advisory Group Same Day ACH Benefits for Employers • Extended Deadlines • Corporate Strategy • • More accurate payrolls as employers have more time to submit wage detail or make changes Allows employers flexibility to run late or emergency payrolls and to compensate for missed deadlines Speed of Delivery • • Quicker reversals to remedy payment errors to employees Easier payment of final wages for terminated employees

Same Day ACH Enhancements

Upcoming Same Day ACH Enhancements

Upcoming Same Day ACH Enhancements

Vigilance to Prevent Fraud is Imperative Have fraud prevention, detection, and recovery processes and tools in place • • Business Email Compromise (BEC) Vendor and Payroll Impersonation Fraud

Solid Internal Controls Guard Against Scams

Businesses continue to move B 2 B payments from paper to electronic ACH B 2 B Payments to Surpass B 2 B Checks by 2020 ACH B 2 B payments are skyrocketing according to a survey of Credit Research Foundation members, who are senior leaders at Fortune 1500 companies responsible for trade credit, accounts receivable and customer financial services.

B 2 B is B-I-G. . . 2 Q 2019

Resources to Help Businesses Use ACH Quick Start Tool • Helps businesses learn how to pay or get paid by other businesses electronically via ACH • Pay supplier invoices, bills and other business expenses via ACH • Get paid via ACH for the goods and services you sell ― instead of by check • ACH is safe, reliable and will save your business time and money

Reinventing the Corporate Payments Experience Payment processes can be improved by bringing advanced technologies and financial industry standards together, to create an evolving suite of products and services. Challenges addressed: • Supplier/Vendor onboarding • Cash Application complexity due to non-standard remittance • Lack of standardization of new treasury service technology

Nacha’s Directory Services Allow a registered user to efficiently and securely exchange payment-related information with other registered users without single proprietary connections or contracts. Benefits: • Increased electronic payment adoption • Reduced cost of paper checks • Reduced exceptions and frictionless payment processing • Support of data-rich payment transactions

Nacha’s Remittance Validator • Cloud-based service where payers can validate remittance formatting for different receiver requirements improving straight-through processing • Future versions will format remittance for payers based on specific receiver requirements

How Nacha Can Enhance the Corporate Experience