Introduction to Automated Clearing House EGACH EGACH Direct

Introduction to Automated Clearing House (EG-ACH) EG-ACH Direct Credit and Direct Debit Copyright © 2012

EG-ACH Introduction o The Egyptian Automatic Clearing House (EG-ACH) is a nationwide Electronic Funds Transfer (EFT) network. o EG-ACH processes batches of interbank Credit and Debit transactions. o EG-ACH facilitates a wide range of Customer to Customer (C 2 C) payments such as salary distribution, supplier payment, governmental payments, pension distribution and many more. 2 Copyright © 2012 Egyptian Banks Company

CBE - Payment and Settlement Systems o In its effort to develop payment systems in Egypt, q CBE has established Real Time Gross Settlement (RTGS) system for large value payments, q CBE has assigned EBC with the development of the Automated Clearing House (ACH) system for Bulk small value payments. Central Bank of Egypt Banks RTGS CCH EGP ACH 123 Mobile CCH Banks USD, EURO EBC Role CBE Role Copyright © 2012 Egyptian Banks Company 3

RTGS vs. ACH RTGS ACH o High value, low volume o High volume, Low value o Time critical o Non-urgent o Individual PI processing o Batch PI processing o Bi-lateral settlement o Multi-lateral settlement o Real time o Session/ Window concept o Direct credit only o Direct credit & direct debit o Irrevocable after settlement o Cancellation or rejection prior to settlement at RTGS 4 Copyright © 2012 Egyptian Banks Company

EG-ACH Direct Credit Copyright © 2012

Direct Credit Workflow Originator Bank Beneficiary Bank Originators Ø Corporates RTGS Ø Individual Fund Movement Beneficiaries Ø Corporates Ø Suppliers Ø Individual 6 Copyright © 2012 Egyptian Banks Company

Direct Credit Usage o Customer-initiated transactions (e. g. , money transfer) o Corporate-to-corporate payments (supplier payments, etc…) o Payrolls-private and government o Pensions-private and government o Government supplier payment o Dividends 7 Copyright © 2012 Egyptian Banks Company

EG-ACH Direct Debit Copyright © 2012

EG-ACH Direct Debit Service o Payment scheme governed by EBC to facilitates payment collections. o Permits billers to collect recurring amount due from their customers at their banks by initiating direct debit transaction. o Banks are not responsible for any underlying contract between biller and their customers as it is solely an early collection method. o Based on a written authorization given by customers to biller for the debit of their accounts; this written authorization named Direct Debit Mandate. 9 Copyright © 2012 Egyptian Banks Company

Direct Debit Usage o Utility payments o Credit card bill payment o Corporate-to-corporate payments o Insurance payments o Mortgage and installment loan payments 10 Copyright © 2012 Egyptian Banks Company

Definitions and Interpretation o Debtor (Customer or Payer) o Creditor (Biller or Originator) o Debtor bank (Customer bank) o Creditor bank (Biller bank) 11 Copyright © 2012 Egyptian Banks Company

Direct Debit Workflow Creditor Bank Debtor Bank Creditor Ø Billers RTGS Debtor Ø Company Ø Individual Fund Movement 12 Copyright © 2012 Egyptian Banks Company

Definitions and Interpretation o Mandate Processor: q Receives the signed mandate from the debtor, dematerializes the mandate, archives a scanned copy of the mandate and forwards the electronic mandate information to EBC and send the physical mandate to the debtor bank. o Third Party Processor: q Delivers direct debit transactions to EG-ACH on behalf of originator banks. 13 Copyright © 2012 Egyptian Banks Company

What about the Direct Debit Mandate o Direct Debit Mandate (DDM) should be approved by the Debtor Bank prior to direct debit transaction initiation. o EBC has taken the responsibility of providing mandate centralized screening system “Mandate Portal” with following features: q Host all direct debit mandates in an electronic form (e-mandate) q Screen each direct debit transaction against the respective mandate q Allowing the debtor bank to activate/deactivate particular mandate o Mandate Portal: q A central hub for mandate business workflow which facilitates collecting and routing the dematerialized Mandates between the different parties 14 Copyright © 2012 Egyptian Banks Company

Direct Debit Mandate Types o Irrevocable Mandate q Irrevocable transactions q Payment frequency as per contract terms and conditions q Could be canceled based on mutual agreement between Debtor and Creditor o Revocable Mandate q Revocable transactions q Payment frequency is required (Monthly, Quarterly, Semi-Annual, Annual) q Could be canceled upon Debtor request 15 Copyright © 2012 Egyptian Banks Company

Direct Debit Mandate Initiation Mandate Processor Fill Mandate . K AC Debtor Bank Packing Biller Send Copyright © 2012 Egyptian Banks Company Mandate Portal Activate Archive Payer Dematerialize Courier Deliver Physical Mandate 16

Direct Debit Workflow & Screening Creditor Bank Debtor Bank Mandate Portal Creditor Ø Billers Debtor Ø Corporate RTGS Ø Individual Fund Movement 17 Copyright © 2012 Egyptian Banks Company

Direct Debit Participants EBC Third Party Processor Mandate Processor Creditor Bank Debtor Bank Scheme Owner and Operator Work on behalf the banks Collect mandates Host creditor account Host debtor account Mandate Portal Provider Send DD transactions Dematerialize mandates DD transaction initiator Activate Mandate Screening Receive DD transactions Archive mandates Clearing and Settlement Send mandates to debtor bank 18 Copyright © 2012 Egyptian Banks Company

Creditor (Biller) Review & Fill Missing Data Print Mandate Review & Fill Missing Data Final Status Report Dematerialize Mandate View Accepted /Rejected Mandates Send Physical Mandate to Bank Final Status Report Creditor Bank Print Mandate Processor Detailed Mandate Cycle Final Status Report Cancel Mandate Fill & Sign Mandate Portal Debtor (Payer) Debtor Bank Compare Physical against Electronic Validate & Check Business Rules Register Final Status Sync with EG-ACH 19 Copyright © 2012 Egyptian Banks Company

20 Copyright © 2012 Egyptian Banks Company