NACHA Invites Comments on Proposed Rules to Improve ACH Network Quality

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The proposed rules are intended to protect the safety, security and integrity of the ACH Network and the consumers, governments, businesses and financial institutions that move their money via ACH.

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As administrator of the ACH Network, NACHA is using existing processes and initiating this rulemaking proceeding to improve ACH payments and complement the efforts of regulators around high-risk origination.

NACHA - The Electronic Payments Association today publically issued two proposed rules that are complementary approaches to improving ACH Network quality by reducing the incidence of exceptions. As components of NACHA’s Risk Management Strategy, the proposed rules are intended to protect the safety, security and integrity of the ACH Network and the consumers, governments, businesses and financial institutions that move their money via ACH.

“The NACHA Operating Rules provide for the safe, secure, and efficient exchange of electronic payments,” said Janet O. Estep, president and CEO of NACHA. “These amendments provide new ways to reduce incidents of returned transactions and exceptions, thus increasing overall ACH Network quality. Through rulemaking efforts such as these, we look to continually improve our processes and strengthen ACH payments.”

One proposal - the “ACH Network Risk and Enforcement” proposal - would improve NACHA’s ability to identify and enforce the Rules against “outlier” Originators that are responsible for the highest, and most disproportionate, levels of exceptions. The rule would also expand NACHA’s authority to initiate enforcement proceedings against Originators that introduce unauthorized transactions into the ACH Network. Further, the proposal would establish additional standards for the use of the ACH Network to collect debits returned for insufficient funds.

The second proposal - “Improving ACH Network Quality” - would establish economic incentives for Originating Depository Financial Institutions (ODFIs) and their Originators to improve origination quality, and provide partial cost-recovery to Receiving Depository Financial Institutions (RDFIs) for handling exceptions. By establishing economic incentives for specific types of exceptions, ODFIs would have direct incentives to implement processes and tools with their Originators to reduce the number of such returns and exceptions. ODFIs with the highest return rates would have the greatest incentives to work with their Originators to reduce those rates. By reducing exceptions in the ACH Network, the proposed rule would provide a cost-reduction benefit to RDFIs and improve their customers’ experience with ACH payments.

“As administrator of the ACH Network, NACHA is using existing processes and initiating this rulemaking proceeding to improve ACH payments and complement the efforts of regulators around high-risk origination,” said Estep. “These current rule proposals support our holistic and interconnected approach to ensure continued confidence in ACH payments and the ACH Network.”

All NACHA Requests for Comments are open for public comment, and NACHA encourages responses from ACH Network participants, including financial institutions, service providers, business users, government entities, associations, and other interested parties. The comment period will last 60 days and end on January 13, 2014.

For more information about the proposed rules and how to submit comments, please visit http://www.nacha.org.

NACHA — The Electronic Payments Association
NACHA manages the development, administration, and governance of the ACH Network, the backbone for the electronic movement of money and data. The ACH Network provides a safe, secure, and reliable network for direct account-to-account consumer, business, and government payments. Annually, it facilitates billions of Direct Deposit via ACH and Direct Payment via ACH transactions. Used by all types of financial institutions, the ACH Network is governed by the fair and equitable NACHA Operating Rules, which guide risk management and create payment certainty for all participants. As a not-for-profit association, NACHA represents more than 10,000 financial institutions via 17 regional payments associations and direct membership. Through its industry councils and forums, NACHA brings together payments system stakeholders to foster dialogue and innovation to strengthen the ACH Network. To learn more, please visit http://www.nacha.org, http://www.electronicpayments.org, http://www.payitgreen.org, and http://direct.nacha.org.

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Kendra Beasley
NACHA - The Electronic Payments Association
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