The Remittance Coalition has released a new publication on the new extended remittance formats available for wire transfers.
The Fedwire Funds Service Customer Transfer Plus (CTP) message and its CHIPS counterpart allow corporate originators of wire transfer payments to include about 9,000 characters of extended remittance information. The new publication discusses the new formats, their benefits, and how corporates can begin using them.
“The possibility of being able to send large quantities of remittance information along with a payment could really make a difference when corporations aim to streamline their payment processes,” said Magnus Carlsson, AFP’s manager, treasury and payments.
Claudia S. Swendseid, senior vice president, Federal Reserve Bank of Minneapolis and a member of the Remittance Coalition, told AFP that changing the wire transfer format to carry ERI was the direct result of research among corporate financial staff. “They told us that it’s not unusual to receive a wire payment without enough information to know what the wire is intended to pay for,” she said. “Consequently, staff needs to do research, which is expensive, before they can apply the wire to the right open account. So the biggest benefit of wire transfer ERI is to enable more straight-through processing of a payment and associated remittance information and in the process reduce costs and speed up account receivable reconciliation.”
Corporates can use one of three different message formats to send wires with ERI:
- Structured, which allows ERI to be sent in predefined fields that can be validated by the originating bank and wire transfer operators
- Unstructured, which allows ERI to be sent in free text or in a format that conforms to a known industry standard
- Related, which allows corporates to include information that directs the beneficiary to retrieve the remittance data if it does not travel with the wire payment message.
Corporates will want to contact their banks to find out if the channel they are currently using supports ERI. They will also want to contact their vendors and trading partners to see if they can accept ERI. Corporates should review their own internal processes to determine if any changes need to be made.
“The new Remittance Coalition publication on wire transfer ERI briefly explains what ERI for wire transfers is, why it will be beneficial to corporations to use, how to work with the corporation’s bank to implement it, and where to go for more detailed information,” said Swendseid. “The publication was reviewed by the Coalition corporate members and by the AFP’s Treasury Advisory Group.”
However, even though corporates have been pushing for ERI, adoption has been slow, Swendseid explained. “Frankly, any type of adoption of a payment format change requires software changes on the part of bank service providers and vendors, which can be costly and requires time to schedule and implement,” she said. “I’m confident that over time there will be more adoption of wire ERI as the processing infrastructure is changed to accommodate it and more corporations learn about it through publications like this one.”
For more information, download Extended Remittance Information Wire Transfer Formatshere.