Electronic Payments

Benefits

Issuing child support payments electronically offers these benefits:

• Eliminates the cost to employers of printing paper checks and supporting documents,
• Eliminates the cost to employers of postage and delays due to lost or misdirected mail,
• Reduces check handling and processing costs,
• Reduces data entry errors, and
• Speeds child support payments to custodial parents.

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EFT/EDI

All state child support agencies (except South Carolina) offer payment by Electronic Funds Transfer (EFT)/Electronic Data Interchange (EDI), the primary method of sending payments electronically. The EDI portion of the transmission includes identifying information so that the payment can be properly credited to the payor's case. The initial effort required to begin using EFT/EDI is well worth it. Employers and state agencies who switch to electronic payments will enjoy lower costs, fewer errors, and faster processing.

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Start-Up for Employers

There are three steps employers can take to use EFT/EDI for quicker, easier child support withholding.

Step 1: Determine whether your payroll/accounting system supports electronic payments for child support. If it does not, there are three possible sources of help:

• In-house information technology (IT) staff may be able to make programming changes so that you can produce electronic payments for child support, including the EDI (electronic data interchange) DED child support addendum record that states need in order to identify the payments.

• 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 a software package that will enable you to produce the file formats necessary for electronic payments. Contact your bank and ask for someone in "Cash Management", "Treasury Management" or "Treasury Services."

Step 2: Contact the appropriate state child support enforcement agency.

• This is not always the child support agency where you are located. It is the agency in the state that collects the child support from your employee, i.e., where you send the funds.
• Find out the EFT/EDI start-up procedures from the state to which you send funds. Do not attempt to transmit child support withholdings electronically without this information.

Step 3: Conduct the EFT/EDI start-up procedures for each state to which you send child support income withholdings. These procedures will typically include:

• An exchange of basic banking information, bank routing codes, bank account numbers, Federal Employer Identification Number (FEIN) and Federal Information Processing Standards (FIPS) code information with the state child support enforcement agency.
• A reconciliation between state records and employer records of Social Security numbers and case identification numbers so that each employee's withholdings are properly credited.
• A transmission of an initial test file, or pre-note, to ensure that the automated clearing house (ACH) records are formatted and transmitted properly.

The attached matrix provides contact information for EFT/EDI.

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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 Electronic Data Interchange (EDI) record of case information when sending an electronic payment.

NACHA established the Task Force on Electronic Child Support Payments in 2002 to assist the Federal Office of Child Support Enforcement's promotion of electronic payments for child support. The Task Force developed a publication for employers to use when implementing electronic payments. This publication, User Guide for Electronic Child Support Payments, is available on NACHA's web site at http://ecsp.nacha.org/.

Private employers may also learn more about remitting child support payments electronically by linking to the Department of Treasury's Financial Management Service web site at www.fms.treas.gov/csp.