Electronic Payments
Benefits
Sending child support payments electronically offers these benefits:
- Eliminates check handling and processing costs to Federal agencies and states
- Eliminates delays due to lost or misdirected mail
- Reduces data entry errors
- Speeds child support payments to custodial parents
- Supports the President’s initiative on E-government.
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EFT/EDI
EFT/EDI refers to the process of sending (child support) payments electronically through the ACH (Automated Clearing House) banking network. EFT stands for Electronic Funds Transfer, which refers to the sending of money electronically. EDI stands for Electronic Data Interchange, which refers to sending the case information that states need in order to post the payment and credit the noncustodial parent.
All Federal agencies can send their child support withholdings electronically instead of by paper check. This is done through the U.S. Treasury to the ACH banking network, which coordinates EFT/EDI ACH transactions. ACH is the network that has successfully delivered direct deposit payments for employees and government benefit recipients for more than 25 years.
All but two states can receive child support payments electronically. The states of California and South Carolina are able to receive electronically in a few counties but are working on centralized implementation. The initial effort required to begin using EFT/EDI is well worth it. The EFT/EDI formats are standard across all states, so Federal agencies switching to electronic payments will realize lower costs, fewer errors and faster processing.
States are required to receive child support payments in two formats: CCD+ and the CTX 820 Remittance format.
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Start-Up for Federal Agencies
There are three steps Federal agencies should take to use EFT/EDI for quicker, easier child support withholding.
Step 1: Contact the appropriate state child support enforcement agency for initiating case reconciliation. Click here to find the EFT/EDI contact person for each state.
Step 2: Case reconciliation is a critical step that takes place prior to implementation of EFT/EDI. During case reconciliation the Federal agency provides the state child support enforcement (CSE) agency with a listing of all its existing child support cases within the Federal agency's current database. All existing child support cases should be provided in order to allow the state CSE agency to update cases which may not have been corrected at the time of the state's conversion to a State Disbursement Unit. This database listing is provided in a spreadsheet format either by mail, fax or secured email. This spreadsheet format includes the name of the noncustodial parent (Federal employee), the employee's Social Security number, the child support case identification number, addressee (payee) information, and the amount of child support being paid. This listing is sent to the appropriate state CSE agency. Upon receipt by the CSE agency, the data is reviewed for correctness and accuracy. Changes/revisions are provided on the spreadsheet and returned to the Federal agencies. The Federal agencies enter the corrected information into the appropriate payroll database in order that the record will be correct for sending child support payments electronically. All child support information is confidential.
Step 3: The following steps should take place before a Federal payroll agency begins sending electronic payments to SDUs:
- An exchange of basic information with the state CSE agency, including bank routing codes, bank account numbers, Federal Employer Identification Number (FEIN) and Federal Information Processing Standards (FIPS) code information.
- A transmission of an initial test file, or pre-note, to ensure that the Automated Clearing House (ACH) records are formatted and transmitted properly.
It is important that Federal agencies keep in mind that direct deposit is only EFT and does not have the complete EDI case information that states need to credit the noncustodial parent for the payment.
The attached matrices provide contact information for State personnel who work at the State Disbursement Unit (SDU) sites (centralized sites for receipt of all payments) and State personnel at the SDUs who work in the area of EFT/EDI.
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Other Available Resources
Financial Management Services (FMS)
Federal agencies may learn more about remitting child support payments electronically by linking to the Department of Treasury's Financial Management Service web site at http://www.fms.treas.gov/csp.
National Automated Clearinghouse Association (NACHA)
The National Automated Clearinghouse Association (NACHA), the trade association that promotes electronic payments, helped establish the DED [Deduction] Child Support Addendum Record as the EDI (electronic data interchange) record of case information when sending an electronic payment.
NACHA has a "User Guide For Electronic Child Support Payments," which is designed for employers converting from paper checks to electronic payments for child support. You may access their web site at http://ecsp.nacha.org/.
