1. Copyright © 2012 Introduction to Direct Debit Service EG-ACH Direct Debit

2. Copyright © 2012 Egyptian Banks Company EG-ACH Introduction The Egyptian Automatic Clearing House (EG-ACH) is a nationwide Electronic Funds Transfer (EFT) network. EG-ACH processes batches of interbank Credit and Debit transactions. EG-ACH facilitates a wide range of Customer to Customer (C2C) payments such as salary distribution, supplier payment, governmental payments, pension distribution and many more. 2

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

4. Copyright © 2012 Egyptian Banks Company EG-ACH Direct Debit Service Payment scheme governed by EBC to facilitates payment collections. Permits billers to collect recurring amount due from their customers at their banks by initiating direct debit transaction. Banks are not responsible for any underlying contract between biller and their customers as it is solely an early collection method. Based on a written authorization given by customers to biller for the debit of their accounts; this written authorization named Direct Debit Mandate. 4

5. Copyright © 2012 Egyptian Banks Company Definitions and Interpretation Debtor (Customer or Payer) Creditor (Biller or Originator) Debtor bank (Customer bank) Creditor bank (Biller bank) 5

6. Copyright © 2012 Egyptian Banks Company Direct Debit Workflow 6 Creditor Bank Debtor Bank RTGS Billers Company Individual Credit or Debto r Fund Movemen t

7. Copyright © 2012 Egyptian Banks Company Definitions and Interpretation Mandate Processor: 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. Third Party Processor: Delivers direct debit transactions to EG-ACH on behalf of originator banks. 7

8. Copyright © 2012 Egyptian Banks Company What about the Direct Debit Mandate Direct Debit Mandate (DDM) should be approved by the Debtor Bank prior to direct debit transaction initiation. EBC has taken the responsibility of providing mandate centralized screening system Mandate Portal with following features: Host all direct debit mandates in an electronic form (e-mandate) Screen each direct debit transaction against the respective mandate Allowing the debtor bank to activate/deactivate particular mandate Mandate Portal: A central hub for mandate business workflow which facilitates collecting and routing the dematerialized Mandates between the different parties 8

9. Copyright © 2012 Egyptian Banks Company Direct Debit Mandate Types Irrevocable Mandate Irrevocable transactions Payment frequency as per contract terms and conditions Could be canceled based on mutual agreement between Debtor and Creditor Revocable Mandate Revocable transactions Payment frequency is required (Monthly, Quarterly, Semi-Annual, Annual) Could be canceled upon Debtor request 9

10. Copyright © 2012 Egyptian Banks Company Direct Debit Mandate Initiation 10 Mandate Portal Mandate Processo r Paye r Bille r Courier Debtor Bank Fill Mand ate Activ ate ACK. Send Deliver Physical Mandate Demate rialize Archi ve Packi ng

11. Copyright © 2012 Egyptian Banks Company Direct Debit Workflow & Screening 11 Creditor BankDebtor Bank RTGS Billers Corporate Individual Credit or Debto r Fund Movemen t Mandate Portal

12. Copyright © 2012 Egyptian Banks Company Direct Debit Participants 12 EBC Scheme Owner and Operator Mandate Portal Provider Third Party Processor Work on behalf the banks Send DD transactions Receive DD transactions Mandate Processor Collect mandates Dematerialize mandates Archive mandates DD transaction initiator Host creditor account Debtor Bank Host debtor account Activate Mandate Screening Send mandates to debtor bank Clearing and Settlement Creditor Bank

13. Copyright © 2012 Egyptian Banks Company Direct Debit Participants EBC The scheme owner; defines the rules for the use and certifies parties participating in the scheme (banks mandate processor and third party processors) The clearing house Mandate Portal The mandates are checked every time a direct debit is done Debtor Bank Will debit the account of the debtor when an accepted direct debit occurs Debtor A debtor is the party whose bank account is to be debited as instructed in a DDM, typically a customer of a biller. The debtor is able to revoke a direct debit transaction within 180 days after settlement date for bill payment only, revocation is not applicable for any installment payment. 13

14. Copyright © 2012 Egyptian Banks Company Direct Debit Participants (Cont.) Creditor Bank Will credit the account of the Creditor when a direct debit is accepted and settled by the clearing house The Creditor bank is liable towards the scheme owner for any revoked transaction. The Creditor bank has a direct debit contract with the biller Creditor A biller with a direct debit contract can send a direct debit file to the creditor bank The Creditor receives from Mandate Processor the mandates which are accepted by debtor bank The Creditor is liable towards the Creditor bank 14

15. Copyright © 2012 Egyptian Banks Company 15