|Our innovative Image Exchange dramatically shortens the collection cycle by enabling the electronic exchange of images. This results in reductions of non-earning assets, fraud exposure, and processing costs and delays. Settlement occurs daily through the Federal Reserve Bank's National Net Settlement System with credit and debit entries for forward collections, returns and adjustments.
COCHA is the exclusive administrator of this revolutionary use of technology for the 10th Federal Reserve District. Checks are truncated at the bank of first deposit and the images are exchanged electronically. Each image includes an audit trail for tracking adjustments and returns. Images and data can be filtered for fraud or other purposes.
COCHA enables the exchange of images and MICR through Endpoint Exchange for the purpose of settlement nationwide. The following summarizes program methodology:
The Client Image Exchange Server
This is a client server resident at the site of an exchanging institution. Its main function is to queue and report information for sending and receiving. As an institution captures and balances work, eligible transit items are sent to this client server via a local area network connection. Inclearing and return items are received here for processing. Incoming adjustments and outgoing adjustment requests are initiated here. Requests for the forwarding of original items are initiated here. Communications to and from other participating institutions are initiated and received here.
The Central Image Exchange Server
This server receives and processes all requests from the Client Image Exchange Servers. This server tracks all activity it processes and posts final settlement totals for all participating institutions utilizing a Fed Net Settlement. This server maintains a database of historical information relating to the payment of each item presented. This server tracks return, memo, and adjustment requests and prevents the duplication of entry. This server archives the images of all items for 90 days. It houses the settlement database for two years. Standard as well as custom reports are generated here and e-mailed to points of contact at participating institutions and clearing houses.
The Central Image Archive Server
For institutions electing to maintain a long-term archive, this server will archive digital images processed on their behalf beyond the 90-day settlement window. Institutions may elect to archive additional volume not processed by the Central Image Exchange Server. This additional archive may include images of documents as well as checks and other internal items. The system will support third party archive alternatives.
Participating institutions decide how they would like to present items to the Client Image Exchange Server. Depending on their Item Processing Platform, items eligible for deposit can be presented through a customized interface to an Item Processing System (IPS) or batch file transfer. As soon as the Client Image Exchange Server receives the items from the bank IPS, it places them in a "send" queue and immediately begins transmitting to the Central Image Exchange Server. The transmission process prioritizes MICR-Line, sending it first when available. When the MICR or image information reaches the Central Image Exchange Server, it is distributed to the paying institutions client server.
All items received from Client Servers are archived at the Central Server level. The archive is updated with return status if applicable. As items are received at the local client server, they are aggregated until a presentment deadline, when they are presented to the Bank IPS for posting to the host system.
For each settlement deadline, the Central Server tabulates the current position for each participating institution. Settlement entries are sent to the Federal Reserve via Fed Net Settlement for the following:
Debit - Total Amount of Items Presented.
Debit - Total Amount of Items Returned.
Debit - Total of Adjustment Debits.
Credit - Total Amount of Items Deposited.
Credit - Total Amount of Return Items Deposited.
Credit - Total Amount of Adjustment Credits.
All transactions will be posted as a net total to the Federal Reserve Account:
As each payer institution processes their respective incoming files they will exercise one or more of the following options:
Pay the item and process the image.
Initiate a Return Memo of the item.
Initiate a Request for the original item.
Initiate an Adjustment Request for an item.
Initiate a Request for Image for an item.
The Return item will be routed to the Central Server for processing. The Central Server will update the Image Exchange Archive to reflect the return of the item, and then send the updated database entry with the image to the depositing institution. That institution Client Server will place the item in the "return" queue for processing.
A request for original will initiate a request to the depositing bank. The Central Server will update the archive database with the request information. When the depositing institution complies with the request, the database will be updated accordingly.
Requests for adjustment will be routed through the Central Server and initiate an update to the archive for the adjustment amount. The adjustment and image will be forwarded to the depositing bank. The Client Server will place this item and request in the "adjustment" queue for processing.
Request for an image occurs when the paying institution is attempting to make a pay or return decision after the MICR post to host, but prior to image receipt or as the result of an un-readable image. The request has priority over other tasks and receives immediate response from the Central Server. The image will be retrieved from the central archive or from the depositing Client Server and immediately be forwarded to the paying institution. In the unlikely event an image cannot be retrieved, the paying bank may opt to request adjustment for the item for that reason.
Any institution may access any queue at any time to ascertain the current aggregate total pending settlement for the next processing deadline. Historical settlement totals will also be available for a user-defined period of time. All Central Server archived databases will contain an audit trail of activity at the item level. Activity records will be reported at item, institution, and global levels. A record of all activity for each institution will be contained in a billing report for each billing period.
Additional features of the Exchange System will include access to third party components. The Central Server will maintain an ability to interface to ATM or debit card switches for balance and stop payment information. This information could then be used in conjunction with fraud filters to provide nearly immediate return notification. Institutions may elect to implement remote image capture capabilities with select commercial clients. This activity can be routed through the Client Server for early presentment.
The communication infrastructure is scalable from small depositing and paying institutions to very large participant institutions. As telecommunication costs continue to decline while the number of image-enabled institutions continues to increase, the business case comparing infrastructure cost to the internal savings generated from image exchange becomes more and more favorable.
The exchange utilizes the latest technology for the secure transmission of data. Utilizing Public Key Infrastructure and a Virtual Private Network, the exchange will be protected from outside entry and provide a complete audit trail of all internal access. No institution will have the ability to access information relative to items it did not deposit, pay or return. Security settings will control access by terminal, operator, time of day, institution or any combination thereof, negating any concerns for the integrity of data exchanged.
Participating institutions may opt to archive data with the Central Archive Server. A subscription to the archive service allows for the permanent transfer of stored exchange images. Instead of being released at the end of the 90-day storage period, they will be retained in a separate, redundant storage facility. Standard product will allow the most recent 180 days of activity to be immediately accessible to subscribers with the remaining archive held on tape for delayed access. The amount of fast access and delayed access archive will be user definable and affect the subscription rate.
Subscribers will have the ability to archive exchange checks, non-exchange activity, internal items and internal documents on the system. Complex file folder and document functionality will be available at additional cost. Virtual Private Network, Web, and direct dial access to the archive will be available. Subscribers will also have customer access options as well. The inherent security protection will prevent unauthorized access to non-user files or items.
Support of third party archive services will also be available to users of the exchange process.