ADMINISTRATIVE POLICY

Accessing UWide Banking Services

Responsible University Officer: Senior Vice President for Finance and Operations
Policy Owner: Chief Investment Officer
Policy Owner: Director of Treasury Operations
Policy Contact: Stacy Hebdon

POLICY STATEMENT

The Office of Investments and Banking (OIB) will provide, or make arrangements for, banking services to University departments. This includes a wide variety of services such as depository and disbursement, Electronic Funds Transfers (EFT), international transactions and currency, bankcards, and training in various aspects of money management.

No domestic or international bank account, banking or related financial services, will be negotiated, executed, opened, or maintained without the express knowledge, consent, and signature of the Treasurer through the Office of Investments and Banking (OIB).

REASON FOR POLICY

The President of the University has delegated all University domestic, and international, banking authority to the Treasurer of the University.

The University has well established, ongoing relationships with several banks and employs a sophisticated treasury management system in the administration of its funds. This system allows the University to control costs, optimize investments, and utilize current, up-to-date technologies. Changes, and improvements in banking regulations, international payment systems, electronic technology, and other purchasing and payment methods, have significantly reduced the need for numerous University authorized bank accounts.

Establishing unnecessary departmental bank accounts have an impact on the University's ability to efficiently manage all University funds and banking relationships. Departmental bank accounts increase the risk of loss, fraud, embezzlement and banking costs.

Adherence to this policy will:

  • Optimize the use of existing University authorized bank accounts and, current technology.
  • Control University banking costs.
  • Increase funds available for daily investments.
  • Increase income earned by University investments.
  • Satisfy audit requirements regarding the, verification of, accounting for and, accurate and timely reconciliation of University bank accounts.
  • Satisfy financial reporting requirements of Federal and State regulatory units.

PROCEDURES

FORMS/INSTRUCTIONS

APPENDICES

FREQUENTLY ASKED QUESTIONS

CONTACTS

Subject
Contact
Phone
Fax/Email
Primary Contact(s)
612-624-5858
Bank Accounts
Bank Services
Stacy Hebdon
CTP
Voice: 612-624-5858
Bankcards
Accounts Receivable Services
612-625-2392
pmtcard@umn.edu
FAX: 612-626-3969

DEFINITIONS

Bankcards
  • Debit Card - A card that debits an individual's bank account and reduces the account balance as purchases are made. A "Chextra" card is an example.
  • Credit Card - A card that increases a balance due on a credit limit as purchases are made. There are four types of credit cards accepted at the University: VISA, MasterCard, NOVUS Cards (Discover, Bravo, and Private Issue), and American Express.
CHIPS
A computer-based, large-dollar payment system that enables its New York clearing banks to handle a high volume of daily payment transactions quickly, accurately and efficiently. A large portion of these payments are in settlement of international transactions. CHIPS Transfer is only a message between two banks, followed by a net settlement of funds at the end of each day by each institution against the clearinghouse rather than against each other. The settlement is effected through the Federal Reserve Bank of New York.
Clearinghouse
An association formed voluntarily by banks to exchange checks, drafts, or other forms of indebtedness held by one member and owed to another. Its object is to settle balances between the banks of a city or region with a minimum of inconvenience and labor.
Correspondent
A financial organization that regularly performs services for another in a market inaccessible to the other. In banking there is usually a depository relationship that compensates for expenses and facilitates transactions.
Electronic Funds Transfer (EFT)
Any payment mechanism, that entails the transfer of value from the payor to the payee. Value is represented by credit balances on the bank's books reflecting customers' deposit balances. Value is transferred through bookkeeping entries that add value to the payee's account and subtract value from the payors' account. The EFT mechanism is merely a means of communicating the instruction to add value to one account and subtract value from another account. EFT methods are fast and carry a greater degree of certainty of final settlement. The principal forms of EFT are wire transfers, automated clearinghouse (ACH) transfers, Clearinghouse Interbank Payments System (CHIPS), and the Society for Worldwide Interbank Financial Telecommunications (SWIFT).
  • Wire Transfer - Refers to a same-day transfer of funds from an account at one bank to an account at another bank, initiated over the Fedwire system. The Fed guarantees to pass value as of the date of the Fedwire transfer is initiated provided the transfer meets all required criteria. Fedwire is a part of the Federal Reserve System Communication Systems.
  • ACH Transfer - Clearinghouse associations in many major cities have developed electronic methods of passing payments among members and other financial institutions in the region, and of exchanging payments among the ACHs themselves. ACH transfers may be either credit transfers (sending funds out) or debit transfers (pulling funds in). Either the payee or the payor may initiate them.
  • Differences between Wire and ACH
    • Wire Transfer is geared to a single transfer, while ACH Transfer is geared to handling multiple transfers in a batch mode.
    • Wire Transfer is geared to same-day settlement, while ACH Transfer is geared to future-date settlement.
    • Wire Transfer is expensive because of their customized one-at-a time nature, while ACH Transfer is inexpensive because of their structured data format and high-volume batch nature.
Merchant Account
An account set up by the Office of External Sales (OES). The account is credited with revenue generated from payment card purchases.
Products
Functions performed by a bank, savings institution, credit union, brokerage firm, or third party vendors, for which a fee may be charged to gain access to those functions.
Products include but are not limited to:
  • Certificates of Deposits
  • Check Writing
  • Checking Accounts
  • Credit Card Capabilities
  • Demand Deposits Accounts
  • International Currency
  • Incoming or Outgoing ACH Payments
  • Incoming or Outgoing Domestic Wires
  • Incoming or Outgoing EFT Payments
  • Incoming or Outgoing International Wires
  • Incoming or Outgoing Internet Payments
  • Internet Receivables
  • Investment Accounts
  • Lockbox Services
  • Money Market Accounts
  • Savings Accounts
  • Savings Bonds
  • Vault Services
Services
Products offered by a bank, savings institution, credit union, brokerage firm, or third party vendors that provide payment, depository, or investment capabilities.
Subject Payments
Cash and non-cash payments to inpatients, outpatients, human subjects, volunteers and donors for their participation and time commitment in a clinical trial or social science survey, etc.
SWIFT
A message system rather than a funds transfer system such as Fedwire. SWIFT does not actually move funds concurrently with the message. The messages are in standard formats structured by message type to facilitate understanding of the messages regardless of the sender's native language. The standard formats also provide a method for sending rapid, accurate, and secure messages inexpensively among members. Settlement of SWIFT transactions usually occurs through correspondent account of the sending and receiving banks or through mutual correspondents or central banks of the countries involved.
University Authorized General Receipts Account
A depository bank account set up by the University Treasurer to receive deposits on behalf of the University.
Zero Balance Accounts
University established Domestic bank accounts for which the sole purpose is to make subject payments. This payment option is rare and utilized when it has been proven that no other means of payment is feasible.

See also the following definitions in Administrative Policy: Accepting and Depositing Revenue.

  • Credit Card Transactions

RESPONSIBILITIES

Treasury Accounting
Process necessary University documents, reconcile official University bank accounts, support OIB’s banking and financial services functions.
Disbursement Services
Process domestic and international payment documents.
Non-Sponsored Accounts Receivable Department
Establish, maintain and terminate bankcard merchant accounts. Ensure, maintain and monitor compliance with Payment Card Industry Data Security Standards (PCIDSS).
Office of Investments and Banking (OIB)
Select vendors for domestic and international banking, bankcard (a.k.a. credit cards), and various banking and related financial services. Contract negotiation and execution for domestic and international services used in the administration of University of Minnesota funds. Establish domestic and international bank account administration and control. Exercise domestic and international banking services oversight.
University Departments
Request banking services. Review information related to various banking services. Perform required reconciliations.

RELATED INFORMATION

Related Policies:

Other Related Information:

HISTORY

Amended:
June 2008 - Policy updated due to new Enterprise Financial System. Establish Payment Card Accounts and Documenting and Depositing Sales procedures updated due to EFS. Bankcard Merchant Rates updated.
Amended:
March 2007 - Added examples of banking and related financial services to policy statement. Reason updated to say that Board of Regents and Presidents delegate banking authority to treasurer (formally said President only). Definitions corrected, and clarified.
Amended:
November 2006 - External Sales office now has responsibilities for establishing, monitoring and terminating bankcard accounts rather than the Office of Asset Management. Responsibilities and contacts sections updated to reflect this. Bankcard Merchant Application Form and Bankcard Internet Merchant Application form have been consolidated into one form.
Effective:
May 2004
Document Feedback
Date Revised
June 2008
Date Effective
May 2004