2023 Year in Review | Kotapay

FOR OVER 30 YEARS

$102

BILLION MOVED IN 2023

5

29 ACCREDITED ACH PROFESSIONALS

FULL TIME EMPLOYEES

WE PROCESS FOR MORE THAN

107,000 COMPANIES, IN ALL 50 STATES

Your Payments Experts

Kotapay is an electronic payment solutions provider based in Fargo, North Dakota, offering ACH and credit card processing solutions to companies in all 50 states and Puerto Rico. As a division of First International Bank & Trust (FIBT), Kotapay is uniquely situated to provide cutting edge payment solutions to companies while providing the safety, soundness and security that a financial institution brings.

Kotapay has been processing ACH transactions for over 30 years. Our software is a powerful transaction tool used to process over 60 million transactions a year. The first transaction received in 1993 was managed by the same person that oversees the transactions we process today. Years of experience, employee longevity, expertise and knowledge have helped drive our success and made us a trusted partner for thousands of companies.

64.2 MILLION

Backed by Banking

First International Bank & Trust is a full-service, family-owned community bank serving communities across North Dakota, South Dakota, Arizona, and Minnesota. Founded in 1910 as Farmer’s State Bank in Arnegard, ND, FIBT’s foundation was built on the bond between its employees and customers. Today, FIBT remains committed to that personal touch by remaining local, caring for customers, and staying involved in their communities.

Back Row: Jim Haug, SVP Director of Kotapay, Chad Schornack, VP Programming & Analytics, Trent Sorbe, Chief Payments Officer, Josh Buth, ACH Operations Manager, Todd Richardson, VP National Sales Manager,

Front Row: Addie Nohr, Marketing Manager, Leanne Jung, ACH Risk & Compliance Manager, Ember Verkuehlen, Client Support Manager, Cindy Simon, Cash Management Manager

30 Years of Dedication

At Kotapay, we pride ourselves on our ability to develop systems and products to exceed customer expectations. With in-house developers and a vision for the future, the importance of controlling and managing our proprietary system is critical. The ever-changing payments landscape requires a flexible mindset, creative thinking and employee dedication to satisfy the payment needs of our customers. As a Fintech company and a division of First International Bank & Trust, Kotapay is uniquely positioned within the payment industry and looks forward to the future with optimism.

Moving Forward

Along with a suite of products and services, Kotapay is dedicated to staying up-to-date with payments trends and how to best provide those to our clients. In 2023, the Kotapay website was refreshed to have a new look and feel. We are committed to continuing to update our programs and software used by our clients in the coming years.

2023 in Review

This year, Kotapay celebrated our 30th anniversary! We’ve come a long way since our humble beginnings in 1993 and today, we serve more than 107,000 companies nationwide with electronic payment processing solutions. Our premium ACH services, features, detailed reporting, and flexibility have set us apart from our competitors and allowed us to meet the needs of the ever-changing payments landscape.

We also welcomed Trent Sorbe to our Executive Team. Trent serves as FIBT’s Chief Payments Officer, where he leads the growth and expansion of our national digital payments initiatives. He is spearheading our expansion into new forms of digital payments to be offered both locally and nationwide, including the next generation of Banking as a Service (BaaS), which we are currently calling BaaS 2.0.

It was an exciting year for Kotapay –not only did we celebrate a milestone anniversary in the payroll industry, but we also fully-redesigned our website and launched our Platinum Customer Program so customers across the county can enjoy additional processing benefits by opening a bank account with FIBT.

Trent Sorbe Chief Payments Officer

Looking to the Future

Few would dispute that money is moving faster than ever. Hourly workers can be paid immediately after clocking out, or they may periodically request that a percentage of their accrued wages be deposited in real-time to their bank account or payroll card. Kotapay is hard at work to make sure we continue to empower our customers to meet the changing expectations of employers and employees. In 2024, our customers will see the advent of two new technologies:

• The first is the Windowless Payroll Model. While many advancements have been made around the speed of credits to employees, the funding of direct deposits has primarily followed the traditional model of debiting the client and floating the credit before the funds have cleared. New technologies and enhancements will allow for employers to hold payroll funds longer, eliminate float risk for the originator, and turn payroll funding into a real-time 24/7/365 model.

• The second technology is known as instant payments. In 2023, the Federal Reserve launched their FedNow instant payments service. FedNow, along with the RealTime Payments (RTP) network from The Clearing House are real-time funds transfer and settlement systems between banks.

This allows for immediate funds transfers and immediate availability for senders and receivers. FedNow is the latest entrant in the instant payments space and will likely have the largest impact.

Real time payments through both FedNow and The Clearing House will be available in 2024 for Kotapay customers. While the use cases for instant payments in payroll are still fluid, faster payments are here to stay, and the Kotapay team is excited to help support our clients and their customers.

Managing Risk

In 2023 alone, we helped prevent $4.6 million in fraudulent transactions on behalf of our customers.

Processing electronic transactions comes with risk. Kotapay knows this and has strong processes in place to mitigate the risk of fraud. Through our application process, we gather necessary documentation to confirm the identity of our customers while complying with regulations. Our underwriting process determines risk tolerances and defines file parameters. Processors’ files and transactions are reviewed periodically while being monitored in real-time, making payment processing safe and secure for all parties.

Every transaction submitted to Kotapay is scanned through our fraud detection system which identifies potentially fraudulent or unusual transactions. These flagged transactions are then reviewed by our Fraud Analysis Department prior to being sent through the ACH Network.

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We had a fraudulent company slip through our own internal verification procedures. We processed their first payroll and submitted the ACH file to Kotapay for processing. The next morning, we received an email, followed by a call from the Kotapay security team notifying us of suspected fraud caught by their proprietary fraud detection systems and the transaction was on hold, pending further verification of our client. They advised us to contact our client and provided us with a series of questions to ask. To our surprise, the client laughed and boasted about being a fraud. Kotapay saved us nearly $20,000 in cash, in addition to the time, effort, and expenses we would have incurred trying to recover our loss, which we would have likely never recovered.

DAVID BIRD BFG HR MANAGEMENT

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Data Protection

At Kotapay, we protect our customers’ transaction data through multiple levels of security, internal controls, and auditing. We are PCI Level 1 Compliant, the highest standard achievable according to the Payment Card Industry Data Security Standards (PCIDSS). The strict controls we have in place for credit card processing apply for credit card customer data, as well as ACH data and the personal information of our customers. In addition to the PCI audit, Kotapay is also under the oversight and regulations of a financial institution which add additional levels of security.

Kotapay Products & Services

ACH PROCESSING

Direct Deposit of Payroll

Accounts Receivable

Accounts Payable

Same Day & Next Day Processing

Federal, State and Local Tax Payments

Benefit Payments

CREDIT CARD PROCESSING

Accept payments through software or terminal

WIRE DRAWDOWN (ALSO KNOWN AS REVERSE WIRE)

Good funds solution that applies thresholds to activate wire drawdown automatically

PAY NOW PAYMENT PORTAL

Custom-built payment page for your website to accept ACH or credit card payments

KOTACONNECT® PAYMENT GATEWAY

Use our web-based software to create and manage ACH & credit card transactions

PAYROLL CARDS

Provide a direct deposit solution for unbanked employees

FOR BENEFIT OF (FBO) ACCOUNTS

Allows you to manage funds on behalf of your clients

COMING SOON

REAL TIME PAYMENTS VIA FEDNOW AND THE CLEARING HOUSE

WINDOWLESS PAYROLL

IMPROVED ONLINE CUSTOMER EXPERIENCE

Enhanced Customer Experience

Kotapay partners with leading software companies to provide integrated services and preferred pricing for their customers. Utilization of our Application Programming Interface (API) allows for integration between Kotapay and our software partners. With this integration, our partners can offer an enhanced customer experience by utilizing single sign-on and automated reporting. Kotapay customers have experienced increased satisfaction by utilizing the seamless integration between Kotapay and their software due to the increased efficiency and ease of use, saving time and money.

You can also earn additional revenue through Kotapay’s merchant services partner program. Kotapay and Basys Processing provide exceptional credit card processing services, support, and terminal options along with competitive pricing.

By offering credit card merchant services to your customers, a percentage of the earnings from their monthly sales will be paid to you, the referral partner. The process is simple and there is no need for you to learn all the details of credit card processing.

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The Tax & Accounting business of Thomson Reuters has partnered with Kotapay for many years, and we appreciate how the Kotapay services complement our payroll applications and drive efficiencies for our customers’ banking needs. As a Kotapay partner, we enjoy the integration with our products, aligned values, attention to security and fraud risk, along with outstanding support for our shared customers.