Tips for Employers Converting to Electronic Payments
How to convert from paper checks to EFT payments
Sending child support payments electronically will save an employer time and money
- Eliminates the cost of printing and handling paper checks and supporting documents
- Eliminates the cost of postage and postal delays due to lost or misdirected mail
- Reduces data entry errors
- Speeds child support payments to children and families
There are several ways to send a child support payment electronically:
- By using your own payroll software to send ACH credit payments (similar to direct deposit) through the Federal Reserve's banking system with electronic funds transfer/electronic data interchange (EFT/EDI), using the standard child support addendum segment
- Through a state's web-based payment service (now available in AR, AZ, CA, CO, CT, FL, GA, IA, ID, IL, IN, KS, KY, LA, MA, MD, MI, MN, MO, MT, NC, ND, NE, NH, NJ, NY, OH, OK, OR, PA, RI, TN, TX, UT, VA, WA, WI and WV—contact your state child support enforcement agency for details)
- By using a payroll service provider that is already sending child support payments electronically
- By using your bank's online bill-paying service
EFT/EDI Quick And Easy Child Support Payments
*****3-Step Process For Employers*****
Listed below are three steps employers can take to use EFT/EDI for remitting child support payments more quickly and easily.
Step 1: Determine whether your payroll/accounting system supports electronic payments for child support. If it does not:
- In-house information technology (IT) staff may be able to make programming changes in order to produce electronic payments for child support (including the EDI DED (Deduction) Child Support Addendum Segment that states need in order to identify the payment).
- Your payroll/accounting software developer may have an enhancement that supports electronic payments for child support. Contact your user's group or software representative.
- Your bank may have an online billing platform that produces the file formats necessary for electronic payments. Contact someone in "Cash management" or "Treasury services" at your bank to discuss sending child support payments electronically (ACH credit payments).
Step 2: Contact the appropriate state child support enforcement agency.
- This may not always be the child support enforcement agency that originally issued the income withholding. Usually you should contact the state disbursement unit (SDU) to which you send child support payments.
- Find out the EFT/EDI start-up procedures for the state to which you intend to send the e-payment. States need to know which payments you will be sending electronically.
Step 3: Conduct the EFT/EDI start-up procedures for each state to which you send child support income withholdings. These typically include:
- An exchange of basic banking information (bank routing transit number, bank account number) with the child support agency's state disbursement unit (SDU).
- A reconciliation between state records and employer records of names, Social Security numbers and case identification numbers so that each employee's withholding will be properly credited. Please do not transmit child support withholdings electronically without first performing case reconciliation with the SDU.
- A transmission of an initial test file or zero dollar transaction to ensure that the automated clearinghouse (ACH) records are formatted and transmitted properly.
- States are required to accept child support payments in two formats: CCD+ and CTX 820 Remittance format. Make sure you are using one of these two standard NACHA-approved formats.
Where To Go For More Information
There are standard record specifications for child support payments that all states are required to use. NACHA (The Electronic Payments Association) publishes the User Guide for Electronic Child Support Payments to provide State Disbursement Units (SDUs), employers and their financial institutions with current formats, definitions and implementation recommendations to remit child support payments and payment information electronically through the Automated Clearing House (ACH) Network using current conventions and standards.
The following grid displays the format for the DED Child Support Addendum Segment for electronic child support payments (in the CCD+ format).
|Element||Comments||Content||Attribute 1*||Attribute 2*||Attribute 3*|
|DED05||Noncustodial Parent Social Security Number||XXXXXXXXX||M||AN||9/9|
|DED06||Medical Support Indicator||X||M||AN||1/1|
|DED07||Noncustodial Parent Name||XXXXXXXXXX||O||AN||1/10|
|DED09||Employment Termination Indicator||X||O||AN||1/1|
- Column 1, Field Requirement: The first column of the attributes is the field reuirement for that data element. An M denotes a mandatory element; an O denotes an optional element.
Column 2, Data type: The second column of the attributes specifieis the field data type.
- AN denotes a string type data element which may consist of a sequence of letters, digits, spaces, and/or special characters (with the exception of the asterisk and backslash). The contents must be left-justified. Trailing spaces should be suppressed unless they are necessary to satisfy a minimum length requirement.
- DT denotes a date type element formatted as YYMMDD. YY is the last two digits of the year (00-99). MM is the numeric value of the month (1-12), and DD is the numeric value of the day (1-31). [Note: this format is not Y2K compliant, as per NACHA's decision.]
- ID denotes an identifier data element from a pre-defined list of values (e.g., CS = child support from income withholding by an employer).
- N2 denotes a numeric type data element with two decimal places to the right of a fixed, implied decimal point. The decimal point is not transmitted. It is intended that this number will always be positive for the child support application banking convention. Thus the amount $135.47 would appear as *13547*.
- Column 3, Length: The third column of the attributes signifies the minimum/maximum use of an element. This specifies the minimum and maximum length of a particular field. For example, 1/6 indicates that this data element must be at least one character but not more than six characters in length.