November 14, 2013

NACHA proposals target network quality

NACHA - The Electronic Payments Association is inviting input to two proposed rules that seek to rein in the level of ACH exceptions and provide economic incentives to help improve origination quality.

The two proposals are part of NACHA's risk management strategy. Their aim is 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 proposals address the following:

  • ACH network risk and enforcement: NACHA says this proposal would improve its ability to identify and enforce the ACH operating rules against "outlier" originators – those responsible for the highest, and most disproportionate, levels of exceptions.It also expands NACHA's authority to initiate enforcement proceedings against originators that introduce unauthorized transactions into the network and sets additional standards for the use of the network to collect debits returned for insufficient funds.
  • Improving ACH network quality: This would establish economic incentives for originating depository financial institutions, or ODFIs, and their originators to improve origination quality and provide partial cost-recovery to receiving depository financial institutions, or RDFIs, for handling exceptions. NACHA says ODFIs with the highest return rates would have the greatest incentives to work with their originators to reduce those rates.

Comments on both proposals are due Jan. 13. NAFCU is preparing Regulatory Alerts seeking members' input to the association's official comments.