Fed to Offer Financial
EDI Service

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To help financial institutions prepare for EFT 99--the mandate requiring most federal payments to be delivered electronically by 1999--the Federal Reserve System is planning to offer its own financial electronic data interchange (EDI) service in fall 1998.

Financial EDI is the electronic transfer of payments and payment-related information, such as a remittance advice, through the ACH network. Data accompanying the electronic payment is placed in an addenda record attached to the ACH item. "EDI-capable" financial institutions have the ability to translate this information and pass it along to their corporate customers in a human-readable format.

If you have corporate customers that provide services to the federal government, being EDI-capable is very important. When the government pays its vendors electronically, information will be included in the addenda record that will help these companies reconcile their account statements. Companies will look to their financial institutions to pass along this data with the ACH payment.

In addition, the Social Security Administration is starting to include payment-related information in ACH payments sent to representative payees, such as nursing homes and mental hospitals, to help them reconcile their statements. These organizations also will be counting on you to interpret this information.

Our new software will interface with FedLine and enable you to translate the data in ACH addenda records. This will give more financial institutions access to financial EDI-translation software. Also, we will be helping bankers comply with the NACHA rule that requires most financial institutions to process EDI payments by September 1998.

If your financial institution is interested in becoming EDI-capable, contact your account executive.