By: Nicole Darracq, CA DCSS
The California Department of Child Support Services (CA DCSS) International Payments Project (IPP) team has achieved a major milestone in the complex process of getting all international child support payments to be sent electronically.
Before 2017, international payments were made by paper check either directly to the recipient or to the appropriate government agency, depending on the country involved. This was simple in that it placed the responsibility of all conversion and transaction fees on the recipient, but it was also slow and not ideally secure. By 2017, several European countries informed CA DCSS that they would no longer accept paper checks in U.S. dollars. Customers in Mexico also reported difficulty in cashing child support checks issued by CA DCSS, due to stricter bank rules and increasing costs for processing.
The change presented several technical, currency and cost problems for the IPP team, which includes experts from CA DCSS Technology Services, Operations, the Intergovernmental Services Unit and the State Disbursement Unit, to solve. According to team leader Assistant Chief Counsel Kristen Donadee, wiring the money at roughly $50 per transaction was out of the question. Then there’s the “euros, pounds, francs, koruna, krone and more” problem – how and where would currency conversions take place? Before leaving America, in a central clearinghouse, or in each recipient country? And how would multiple payments to one country be handled?
The first step was to enable the option of International Automated Clearinghouse Transactions (IATs), the proper form for direct electronic transfer of funds sent out of the country. These transactions incur standard banking fees for CA DCSS, but the cost is significantly less than wiring funds. The funds all go to a clearinghouse in London, England, where the dollars are converted to the currency of the destination countries. The currency conversion fee, if there is one, is paid by the receiving country, and the amount received reflects the exchange rate in effect the day of the transaction.
An attempt to “roll-up” the payments to avoid multiple fees (see Inside DCSS, November 2017) created problems when the receiving countries tried to break out the correct amounts to pay in each case, so the CA DCSS team’s solution sends transactions at the case level and sends data to the recipient with the obligor name and case number. So far, the name gets through and the case numbers do not, but the milestone was achieved when after several trials, the two pilot countries received their payments correctly, with the names accurately assigned. Some countries only have three or four cases with California, and the name is sufficient to assign the payment, but others with larger caseloads are still awaiting a fix. Then there’s Switzerland, which has agencies in each “canton” within the one country much like the American states, proving incredibly complicated.
Two countries may not sound like much, but with the many, many complexities the team is working on solving, it’s a huge step forward. The team celebrated with Swiss fondue, Swiss chocolate and Slovakian appetizers as a “thank you” to reward their hard work.
California is saving enormous sums by not wiring the money – approximately $1.50 per transaction instead of $50 – and successful payments have been made with more countries coming online soon. Kudos to the IPP team for their persistence, flexibility and creativity!