Refunds More Hassle Than They’re Worth Utility Payment Conference

Agenda Refund Processing Challenges Solution High-level Overview Refund Processing Components Summary and Questions

3 Refund Check Processing Challenges They’re so small!! Issuing refunds is an “orphan” process AP vendor master clutter Lack of information for AP or AR to handle customer inquiries High return rates from time lapse of initial transaction Escheat process intensive for small-dollar items and compliance by state

4 Refund Processing Overview United States Postal Service Escheatment Services Client Refund Recipient 8 Refund payment file submission Generate checks Deliver checks or Return Cash check Return checks Customer Service support Due Diligence Jurisdiction Reporting Payments Secure, Web-enabled Refund Processor / Tracker Refund Audits Workflow Exceptions Show Refund Status Stop-Void-Get Check Image Input Manual refunds Handle refund changes Positive Payee / Acct Recon 2

5 Refund Solution – Key Functionality Desired Flexible refund data exchange from CIS to Provider – may be from multiple sources Funding for refund disbursements must be secure as must the disbursements themselves Comprehensive disbursement support (ACH, Check, etc.) and account management One stop information for customer service to handle calls Document the returns Maintenance on a single refund items Jurisdictional compliant escheatment

6 Receiving the Refund Files Refund files created on a regular basis and sent to Provider Frequency: Variable based on client requirements – daily/monthly/etc. Send data daily, disburse weekly Send data from multiple systems, disburse together File layout: Virtually any to work with Client billing systems Contains all data required for making disbursement Can contain additional Client specific data – (e.g. customer number, account number, etc.) Refund data can be validated Challenge: Creating refund data files from CIS to Refund Provider

7 Funding Overview Funding request is workflow’ed to a designated Client Associate Detail of all Refunds to be paid Refunds can be added/deleted Refund “Reason Codes” can be added to improve customer service Funding request nets funds still remaining from stops/voids Client reviews Refund detail and clicks “Approve” button Client sends funds to a client-dedicated disbursement account set up “as agent for Client” Challenge: Need to minimize bank account administration, but want approval ability and “last look”

8 Sample Refund Funding Request Refund requests is net of previous refunds “Detail” shows all the payments in this file

9 Refund Funding Request – Detail All transactions in payment file are shown List can be sorted by column

10 Check Issuance Sample Check  Could be customized  Could include inserts  Reason codes converted to text Provider issues checks once funds are received from Client Provider Performs all cash management services:  Stops/Voids  Reconciliation services  Positive Payee  Providing Check images

11 Provide Customer Service for Refunds Secure access to designated users Ad-hoc query to find a single refund or a group of Refunds meeting search criteria – also combination searches Status tracking of Refund – stopped, cashed, voided, issued, etc Manual entry of a single Refund, with work-flowed approval Easy void or stop-pay requests View check dates and Refund check images Attach other documentation Audit trail of any changes made Comments from all users recorded Flexible and customizable to Client terms and data Challenge: Develop a single platform to hold all refund data, check images, associated documents, history and comments. Platform must also have powerful inquiry and reporting tools

12 Inquiry Request Inquiry by refund data, ranges of data, or combinations of data

Inquiry Results All refunds matching criteria are displayed “View” launches individual transactions

14 View a Single Refund Request and Check Image Transaction detail is shown Areas in gray cannot be changed Images of checks and other documents available

15 View a Paid Refund Check Image Client NY, NY Member Name and Address

View Transaction History Every action recorded – including ‘view’ User, date, and action all recorded History and images stored and online indefinitely

Manual Refund Entry Ability for Client associates to ‘create’ a single transaction Client decides on ‘required’ data

18 Return Mail Process Items returned from USPS with a forwarding address  Scan the image of check and envelope  Optional work flow of returns to Client for financial review  Mail new check to recipient at new address  Optional: Updates provided back to Client customer database Items returned from USPS with no forwarding address  Flag work item to remain outstanding under the client’s escheat stale date rules and policies  Option: Route work item to Client for further investigation Challenge: Developing a returned mail process to deal with changes in member address or status and for documentation required in later escheatment due diligence

19 Operational Reports Standard reports are available to approved users Custom reports provided during implementation

20 Escheatment Checks automatically voided Due diligence, as required by jurisdictions Reporting to jurisdictions Funding of escheated items to jurisdictions Responsible for changes in Escheatment laws for all jurisdictions Challenge: Most clients don’t want to build and maintain the escheatment process required to comply with all state regulations, and then, keep up with changes

21 Refund Processing Overview United States Postal Service Escheatment Services Client Refund Recipient 8 Refund payment file submission Generate checks Deliver checks or Return Cash check Return checks Customer Service support Due Diligence Jurisdiction Reporting Payments Secure, Web-enabled Refund Processor / Tracker Refund Audits Workflow Exceptions Show Refund Status Stop-Void-Get Check Image Input Manual refunds Handle refund changes Positive Payee / Acct Recon 2

Summary of Benefits to Client Reduce administrative labor costs in AR and AP relative to Refunds Eliminate system development and maintenance costs between AR & AP Improve member service by automating return and inquiry processes Reduce risks associated with the Refund process – complete visibility to transactions and history Large volume production capacity, backup, redundancy Central control over processes and visibility to all transactions Workflow to monitor and approve specific transactions (e.g. high dollar) Eliminate administrative effort and costs associated with Escheatment Reduced costs and risk associated with disbursements

This presentation is intended to provide a general overview of our services and is not an offering or commitment to provide any credit facilities or services. ©2009 The Bank of New York Mellon Corporation. All rights reserved. Thank You If you have questions or need additional information, contact: Dan Reiff, BNY Mellon Working Capital Sales (979)