Why Dispute Automation Using PCM Matters to Small Financial Institutions
Written by David Peterson
This is the third in a series of articles on how Payment Case Manager (PCM) securely automates payments disputes. If you have not already read the first two articles, you can read them here and here. Let’s turn our attention to how PCM positively affects small banks and credit unions.
How are small financial institutions (FIs) different than large FIs regarding ACH disputes? There is an obvious disparity in the number of cases. If an FI is not originating ACH, it is possible that they may not ever receive even one ACH dispute. But nearly all FIs have consumer accounts, and most individuals have ACH transactions posting to their accounts. If a customer or member receives ACH debits, it is likely that, at some point, one of those debits will be disputed.
For example: a community bank or credit union is notified by a customer or member that there is a disputed ACH debit on their account. This small institution may not have the breadth of ACH expertise as a larger FI. They may not have a standard form suitable to document the ACH dispute. The ACH transaction identifies who the Originating Depository FI (ODFI) is but there is no national directory that identifies phone numbers to direct a dispute document via fax. Consider this list of challenges a small Receiving Depository FI (RDFI) faces. They have:
- - No automation to create cases from their help desk or import cases from ACH files.
- - No idea what the correct fax number is for the target ODFI.
- • This leads to mis-routed faxes or numerous phone calls to ascertain the correct fax number.
- -No insight as to whether an ODFI received their fax.
- • They receive no confirmation that the ODFI received their fax. This leads to more phone calls to the ODFI to ensure the case was successfully delivered.
- • Worse, an RDFI might assume that their fax was not received by the ODFI. They then resend the same case via fax. If the ODFI receives a resent fax, there is no way to know if that is a new case or a duplicate of a previously received fax. This leads to more manual effort and wasted time and money for the ODFI.
- - No insight as to the status of the case.
- • The 10 calendar-day timeframe is ticking away, what is the status of the dispute?
- - No ability to take received case documentation and export it into their help desk system.
- • The information that is being requested could be a Word document, a PDF, a picture like PNG or JPEG, or even an audio recording such as WAV or MP3 (Consider that TELs are telephone-authorized ACH debits. A recording of a customer authorizing a debit to their account cannot be faxed.).
The above challenges create frustration and confusion at community banks and credit unions and, in some cases, may limit their motivation to attempt to remediate a dispute on behalf of account holders. Moreover, these frustrations create additional work for the large FIs that are likely the target of disputes as phone calls and duplicate faxes create unnecessary effort to address. The PCM solution was engineered to address this by creating different membership classes to account for the variation in size and scope of the FI participant.
Here are the PCM membership classifications, along with a brief explanation of each:
• Sponsored Member – Most of the U.S.-based FIs would fall into this category. They don’t process enough exceptions to need the full functionality of a premium member but would benefit from PCM’s inherent automation. They can have multiple users per FI. These institutions would be sponsored in via a third-party organization (such as a bankers’ bank or corporate credit union).
- • Basic Members – Essentially the same functionality as Sponsored Members, but who have signed up for PCM directly.
- • Guest Member – These are the smallest FIs, likely banks under $100 million in assets and the hundreds of very small credit unions. These organizations only manage a small handful of cases each year yet getting access to the ODFIs to electronically submit exceptions is not just easier for them but critically important for the overall system. Guest FIs can use a limited version of PCM to submit cases to any member FI at no charge. There is only one Guest Member access allowed per FI.
- • Premium Member – Specifically targeting the 25 largest FIs and other ODFIs that have an emphasis on debit origination to consumers.
Each and every U.S. financial institution will have access to PCM in a manner that is cost-effective and appropriate to their need for remediating payment disputes
Why PCM works for Smaller (Basic) FIs:
- - PCM supports 10 current ACH dispute types.
- - Any U.S.-based FI can get a free guest login to electronically create a case to any PCM member FI.
- - Affordable pricing allows smaller FIs to access membership-only features but who create only a limited number of cases per month.
- - PCM’s graphical UX helps users easily see the current status of each case.
- • Eliminates the need for follow up phone calls to ODFIs.
- - Action narrative within PCM explains to the user exactly what needs to be done to move the case to completion.
- - Email notifications alert the FI when cases are pending action or completed.
- - An Integrated fax service will automatically fax cases to non-PCM member institutions. The fax service monitors inbound faxes and matches up received documentation to the original PCM case.
The operations personnel at most community banks and credit unions wear many hats. They are not able to specialize in just one payment system like ACH—instead they must be generalists, and their tasks daily span the gamut of many payment applications and the related issues of each. Senior management of an FI may not realize how much time can be wasted by an FI that needs to create and deliver an ACH dispute by personnel that are unfamiliar with the process. Consider that the cost of spending 30 minutes on the creation and delivery of a payment dispute could cost the FI $15 to $40 just in people costs. If the ability to create and send a dispute with PCM takes less than 5 minutes and the total cost comes in under $5, there is no logical reason for any FI to not take advantage of this solution. As the institution grows and the need to address more disputes, the cost savings are magnified.
PCM is that rare solution that equally appeals to the largest FIs in the U.S. as well as the smallest banks and credit unions. It allows for tailored feature sets and pricing, making it cost affordable for both Premium and Basic Members. If you want to get additional information on signing up for PCM membership, start with your bankers’ bank or corporate credit union. Or, you can contact us here.
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