Over 80% of all funds that flow into Indiana University are received electronically. Receiving Electronic Payments (Fedwire or ACH) is advantageous to Indiana University for a number of reasons. The data and dollars associated with funds received electronically can be fed directly into University receivable, financial and banking systems. Additionally, they are paperless and do not have any Float associated with them which means they can be used immediately to fund university disbursements or to purchase investments.

Funds received electronically fall under numerous Federal Regulations, NACHA operating guidelines and the rules/contracts regarding the acceptance of Payment Cards. They present unique challenges in integrating the receipt of funds into departmental accounts receivable systems and the University’s general ledger and banking systems. This policy will provide the necessary guidance to ensure that the University takes advantage of the opportunities electronic payments present while meeting the regulatory requirements, operational challenges, internal control and security responsibilities associated with accepting payments electronically.

Campus entities who wish to take payments via Payment Cards and /or process payments Via Point of Purchase terminals must be approved by the campus Vice Chancellor for Business or their designee. Once approved, the request should be forwarded to the Office of the Treasurer, Investment and Cash Management for final approval and implementation. University Administration units should submit their requests for approval to the appropriate Vice President and then forward to the Office of the Treasurer, Investment and Cash Management. All other units should submit their requests directly to the Office of the Treasurer, Investment and Cash Management.

Entities must accept only Payment Cards authorized by the Office of the Treasurer, Investment and Cash Management and agree to operate in accordance with the contract(s) the University holds with its Service Provider(s) and Card Issuers. This is to ensure that all transactions are in compliance with all Payment Card processing contracts, Federal Regulations, NACHA rules and Indiana University policies regarding security and privacy that pertain to electronic transactions.

All Processing Equipment is to be obtained via the Office of the Treasurer. Any exceptions to this policy must be approved in advance of any equipment purchase by the Office of the Treasurer. Minimal requirements will vary by technology employed and will be determined by the Office of the Treasurer.

All payments received must be directed into a University Approved Bank Account. The type and nature of the electronic transaction (e.g., ACH, Credit Card, Point of Purchase, etc.) will dictate which bank within the University’s banking network account the transaction will be deposited in.

Accounting entries to record the receipt of the payment should be made on the same day the funds are received and MUST be made within two days of receipt in accordance with Policy I-440.

Approved Bank Account: Any account (checking, savings, depository, money market, etc.) opened by the Office of the Treasurer, Investment and Cash Management at a Financial Institution which has any one of the following:

1. Uses the name Trustees of Indiana University, Indiana University, Indiana University Purdue University at Indianapolis or any abbreviation thereof, or;
2. Uses the University’s tax identification number, or;
3. Receives the deposit of or disburses University funds.

Note: Only the Indiana University, Office of the Treasurer can open or close bank accounts. See Policy VI-52.

Card Issuers: Discover, Diners Club and American Express are examples of Card Issuers.

Debit/ATM Cards: A type of Payment Card that deducts purchases directly from an individual’s bank or savings account.

Electronic Payments: Payments covered under this policy include, but are not limited to:

Payments received via an ACH credit. Examples of payments that are typically received via an ACH credit are:

• Contract and Grant awards
• Financial Aid funds
• Web-initiated payments (e.g., tuition and student loan payments)
• State Appropriations
• Lockbox payments
• Pre-authorized debit programs

Payments received via Fedwire

Payments received via Point of Purchase terminals

Federal Regulations: Electronic payments fall under numerous banking and disclosure regulations. Examples include Reg E, Reg J, Electronic Funds Transfer act (1978) and USA Patriot Act.

Fedwire: This is a funds transfer system administered by the Federal Reserve. It is a real-time method of transferring funds between parties.

Financial Instituion: A bank, credit union, brokerage house or financial services provider.

Float: Float is the interval between the time an item is deposited and the time the funds are available for use. For example, when a check is deposited, it may be 1-3 days before the funds the check represents are available to cover checks written or transferred to an investment.

NACHA: National Automated Clearing House Association. NACHA is the regulatory body for the ACH payment network.

Payment Card: Credit Cards (e.g. VISA, MasterCard and Discover), American Express, Diners Club, Debit and Smart cards.

Point of Purchase (POP) Check Conversion: A transaction in which a check is converted to an ACH payment. Instead of the check being presented against the customer’s account, the payment is processed electronically and will appear on the customer’s bank statement as an electronic debit. Typically the debit to the bank account will occur within two days of the initial transaction. These transactions are also referred in the broader context of Point of Sale transactions.

Processing Equipment: Credit card readers/ printers, point of purchase terminals/printers. Additionally, cash registers that process Payment Cards and/or POP may require special configurations to process via the Indiana University systems, so it is very important that the Office of the Treasurer be contacted prior to making any commitment to purchase cash registers.

Service Provider: The entity or entities selected by the Office of the Treasurer, Investment and Cash Management who process Payment Card, Fedwire, ACH and Point of Purchase transactions.

Smart Cards: A type of Payment Card that stores information and value on a computer chip embedded in the card.

I-440, Depositing of Funds

UITS policies relating to security and privacy

FMS policies regarding the recording of financial transactions