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NAFCU provides NACHA with CU perspective on early funding availability
NAFCU Senior Counsel for Research and Policy Andrew Morris Friday responded to NACHA's request for comment (RFC) regarding the risks of early funding availability in the ACH network.
In the letter, Morris noted some credit union receiving depository financial institutions (RDFIs) may make funds available earlier than the effective entry date due to demand for faster funds availability and overall member benefit.
"While NAFCU acknowledges that providing funds earlier than the effective entry date may pose risks to an originating depository financial institution (ODFI) when an ACH was originated erroneously, risk allocation under the operating rules is generally appropriate and incentivizes ODFIs to maintain high quality origination practices," wrote Morris.
When an ACH is initiated by error or by fraud, Morris noted, the ODFI can attempt to recover funds through a reversal (when permissible), or by contracting the RDFI and requesting a return.
"However, a formal rule to reallocate risk, […] could burden credit union RDFIs with additional uncertainty," he reasoned.
Morris offered the association’s support for current NACHA rules, noting the rules have enabled credit unions to improve their members’ timely access to funds. Read the full letter.