Embracing Open Source
The recent upgrade of EFTPS embraces an open source approach to payments technology, according to Stevens. "We've taken the underlying Web services that support that site and published them in an open spec for financial institutions to use," he reports. "This will allow financial institutions to integrate the functionality into their own online banking Web services. It [also] allows financial institutions to present to their clients -- business or individual account holders -- a value-added service, an alternative to the over-the-counter tax payment service they offer today."
FMS wants to make it as easy as possible for banks to adopt the solution. "The goal of publishing the interface is to provide an open source, XML-based standard [with a] minimal cost to the financial institution," Stevens says. "The integration effort for the financial institution is strictly limited to the connectivity to our Web services and building the presentation layer the bank wants to build on their own online banking site. The level of effort required for financial institutions depends on the subset of the transactions they wish to offer to their clients."
Additionally, Stevens says, FMS hopes to "take advantage of the fact that financial institutions as a whole have gotten so good at building a Web presence for their customers." Through its partnerships with banks, FMS can broaden its outreach to customers. From a big-picture perspective, he adds, "We feel like [this] was a step toward innovation in the financial services industry. A few places in the government are starting to explore this type of opportunity. We are really using this as a step [toward] a next generation of Web functionality." At press time FMS was working with a number of financial institutions that reportedly were evaluating the new interface for EFTPS, in hopes of confirming a potential bank partner "to conduct a pilot program to develop a case study to share with additional financial institutions, and then roll [it] out to" other institutions.
'Easy Operational Cost Savings' for Banks
So far the banks that are most interested in taking advantage of the updated EFTPS offering are "those with a high volume of paper coupons," Stevens relates. Currently, he notes, "They can't charge for those services. It costs financial institutions $2 to $8 an item to handle and get them to the Treasury Department. For large regional and national banks, their costs are in the hundreds of thousands, if not millions, of dollars a year to process. With the news of what's going on in the industry today, this is an easy operational cost savings and cost trade-off." So far in the first quarter of 2009, Stevens reveals, two Top 20 banks (that could not be identified for this article) are among the financial institutions that have chosen to promote EFTPS while simultaneously no longer accepting paper FTD coupons at their branches.
Regarding the proof of concept in production with Intuit, Stevens says, "We launched that effort to insure the technology was sound. It's achieving its original goal."
The pilot enabled QuickBooks Payroll users to schedule or cancel a payment and check their payment history directly through the QuickBooks software, receiving confirmation of their payment in real time. FMS has processed $750 million in tax payments through that channel, "with literally no marketing effort or outreach," Stevens notes. "QuickBooks has seen explosive growth. Fiscal year 2009 transaction volume is more than doubled from fiscal year 2008. We're really excited about what we've seen -- we're thrilled."
Looking ahead, "Our main goal is to continue to see the growth of this channel, in terms of the number of partners and number of transactions that are processed through it," Stevens says. "Our ultimate end state, what I'd like to see, is to come as close as possible to achieving our goal of being an all-electronic Treasury, to provide a means to fairly easily and cheaply move away from the over-the-counter channel, to provide a service for our business customers, and really move away from paper."