By Mark Brousseau
With remote deposit capture continuing to enjoy strong growth, some attendees at this week’s NACHA Payments conference in Austin, Texas, were left wondering what has become of same-day Automated Clearing House (ACH) transactions – the hottest (and arguably most controversial) topic at NACHA Payments a few years back. The answer may be sobering for those who thought same-day ACH would be a clearly more appealing alternative to the same-day availability afforded by remote capture.
“The lack of same-day availability has always been a weakness of ACH,” notes Affirmative Technologies Chief Technology Officer George Bassous.
“Same-day ACH should be a magic bullet when it comes to turning back the rising volume of deposits made via Check 21 remote capture,” he says. “After all, Check 21 remote capture is a case of moving forward by taking two steps back: in order to get same-day availability, it requires the biller to continue dealing with checks.”
Bassous says there are a lot of advantages to same-day ACH. Chief among them, he said, is the ability to know much sooner whether a transaction is being returned. “Virtually any biller would be very interested in same-day ACH,” Bassous claimed.
So why hasn’t same-day ACH had better traction, much less driven back the growth of Check 21 remote capture transactions? “The issue is that the systems used by the ACH banks – particularly large ones – are so tied into old technology that when something new like same-day ACH comes along, they can’t do anything about it. This is the same issue that Secure Vault Payments is having. The situation with same-day ACH is a classic case of ‘chicken and the egg,’” Bassous explained.
Bassous doesn’t buy the argument that some banks won’t offer same-day ACH because they are afraid of cannibalizing their lucrative wire transfer volumes: “I haven’t heard that from banks and I think cards would be the bigger threat there.”
The bottom line is that many banks are not set-up for same-day ACH.
What do you think?
Showing posts with label same-day ACH. Show all posts
Showing posts with label same-day ACH. Show all posts
Wednesday, April 6, 2011
Saturday, July 10, 2010
Same-day ACH settlement highlights need for better dispute management tools
By Ed Pearce (epearce@egisticsinc.com)
Last week's announcement by the Federal Reserve Board of posting rules for a new same-day automated clearing house (ACH) service brought the topic front and center. Everyone from industry analysts and bloggers to trade publications and associations have expounded the pros and cons of same-day settlement. But virtually unmentioned in the all the hubbub is the potential for more ACH disputes as a result of accelerated settlement -- a scenario most banks are ill-prepared to manage.
Starting next month, the Federal Reserve Banks will be offering a same-day settlement service for certain ACH debit payments through its FedACH service. FedACH customers may opt-in to the service by completing a participation agreement. The service will be limited to transactions arising from consumer checks converted to ACH and consumer debit transfers initiated over the Internet and phone. Same-day forward debit transfers will post to a financial institution's Federal Reserve account at 5 p.m. eastern time, while same-day return debit transfers will post at 5:30 p.m.
As a result of the faster settlement, banks undoubtedly will see more consumers coming into their branches complaining of unauthorized transactions. The limitations of traditional in-house ACH systems and the strict time constraints and complex processing requirements imposed by NACHA rules and Regulation E already have led to sharp increases in operations expenses and higher charge-offs associated with ACH disputes. A new influx of consumer disputes will require financial institutions to implement a more centralized, more streamlined approach to dispute management.
Several features will be critical:
• Real-time distributed data access to any authorized user, anywhere
• Intuitive search capabilities
• The ability to annotate comments to disputed transactions
• The ability to export data
• Expanded search capabilities
• Filtering capabilities to block and restrict access to certain transactions
• Unlimited data storage
It may be some time before same-day ACH settlement achieves critical mass. But the next generation of consumers will demand it. This means that banks must begin adapting their ACH infrastructure today or risk even higher operations costs, as well as falling behind the competition. And this includes deploying sophisticated solutions to manage the inevitable spike in ACH disputes.
Last week's announcement by the Federal Reserve Board of posting rules for a new same-day automated clearing house (ACH) service brought the topic front and center. Everyone from industry analysts and bloggers to trade publications and associations have expounded the pros and cons of same-day settlement. But virtually unmentioned in the all the hubbub is the potential for more ACH disputes as a result of accelerated settlement -- a scenario most banks are ill-prepared to manage.
Starting next month, the Federal Reserve Banks will be offering a same-day settlement service for certain ACH debit payments through its FedACH service. FedACH customers may opt-in to the service by completing a participation agreement. The service will be limited to transactions arising from consumer checks converted to ACH and consumer debit transfers initiated over the Internet and phone. Same-day forward debit transfers will post to a financial institution's Federal Reserve account at 5 p.m. eastern time, while same-day return debit transfers will post at 5:30 p.m.
As a result of the faster settlement, banks undoubtedly will see more consumers coming into their branches complaining of unauthorized transactions. The limitations of traditional in-house ACH systems and the strict time constraints and complex processing requirements imposed by NACHA rules and Regulation E already have led to sharp increases in operations expenses and higher charge-offs associated with ACH disputes. A new influx of consumer disputes will require financial institutions to implement a more centralized, more streamlined approach to dispute management.
Several features will be critical:
• Real-time distributed data access to any authorized user, anywhere
• Intuitive search capabilities
• The ability to annotate comments to disputed transactions
• The ability to export data
• Expanded search capabilities
• Filtering capabilities to block and restrict access to certain transactions
• Unlimited data storage
It may be some time before same-day ACH settlement achieves critical mass. But the next generation of consumers will demand it. This means that banks must begin adapting their ACH infrastructure today or risk even higher operations costs, as well as falling behind the competition. And this includes deploying sophisticated solutions to manage the inevitable spike in ACH disputes.
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