Payments System Improvements
Issue 9.17
- NACHA Rules Update
- WACHA 2015 Rules Training Offer
- FedFocus on Payment System Improvements
- Planning for 2015
NACHA Rules Updates
Prenotification Entries: Reduction in Waiting Period for Live Entries
EFFECTIVE 9/19/2014
Shortens the ODFI's Prenote response waiting time to three banking days.
Impact for ODFIs
- Understand the deadlines for receiving a Return Entry or NOC in response to a Prenote. If the ODFI receives one of these by the opening of business on the second banking day following the settlement date of the Prenotification (that is, a timely return of a NOC), the Originator should not be permitted to transmit subsequent entries to the Receiver’s account until it has remedied the reason for the return or made the correction requested by the NOC.
- Apply new waiting time to ODFI self-originations, such as in the cases of mortgages or car loans, allowing faster “live” entry transmission.
Impact for Originators
- Upon transmission of a Prenote, wait three banking days before originating “live” entries.
- Maintain the Originator’s obligation to act on return entries and NOCs before originating subsequent “live” entries after a Prenotification. If a return or NOC is transmitted to the Originator’s ODFI in a timely fashion (by the opening of business on the second banking day after the settlement date of the Prenote), the Originator must rectify that situation before originating new entries.
- If the Originator’s ODFI receives an untimely NOC in response to a Prenote (after the second banking day deadline), the Originator must make the requested correction within six banking days or prior to initiating a subsequent entry to the Receiver’s account, whichever is later.
Proof of Authorization for Non-Consumer Entries
EFFECTIVE 9/19/2014
Requires the ODFI to provide a non-consumer receiver’s authorization on select SEC codes.
Impact for ODFIs
- If requested in writing by an RDFI, provide proof of a Non-Consumer Receiver’s authorization for a CCD, CTX or Inbound IAT Entry. This must be done within 10 banking days of the request and may be completed in one of two ways:
- Provide an accurate record showing the Receiver’s authorization.
- Provide the Originator’s contact information that, at a minimum, includes that Originator’s name and either phone number or email address.
- Consider providing proof of authorization to RDFIs that request that information, in relation to a Non-Consumer account, prior to the Rule’s implementation.
Impact for RDFIs
- Send requests to ODFIs, in writing, if proof of authorization is needed for an entry to a Non-Consumer account.
Impact for Originators
- Be prepared to provide proof of authorization to RDFIs that contact the Originator about an unauthorized Non-Consumer account entry.
Impact for Receivers
- Be aware of the ability to work with an RDFI to resolve unauthorized entries to a Non-Consumer account.
2015 Rules Changes
NACHA Rule Changes Webinar
Nov. 12 | Dec. 10 | Dec. 17
Member $199 | Non-Member $398
2015 will be a year unlike any other in the ACH Network. Nine recently passed ballots will change the way return rates are measured and implement fees for those returns. Third Party issues are also a hot topic in the rule changes for 2015.
This session is a must in order to avoid unnecessary rules violations, customer dissatisfaction and financial losses due to non-compliance with the ACH rules.
We will take a look at all the NACHA Operating Rules changes and updates including the nine recently passed ballots to include:
- Reducing the existing Return Rate threshold for unauthorized debits from 1.0% to 0.5%
- Establishing an Administration Return Rate level for account data errors at 3.0%
- Establishing an overall debit return rate level of 15.0%
- Defining and establishing a methodology for a fee paid by the ODFI to the RDFI for returns for unauthorized debits
- Defining and establishing new standards for reinitiated entries
- Clarifying Third Party Sender issues
- Dishonored/Contested Reversal changes
- Notification of Change time period change
- And Much More!
FEDFocus on Payment System Improvements
The U.S. payment system is undergoing a remarkable period of change, driven by rapid adoption of technology and evolving end-user expectations. The Federal Reserve Banks believe that collaboration and engagement with the industry is the foundation of any enduring strategic improvements to the U.S. payment system. The FRB has spent the last year conducting an extensive program of research and input gathering designed to inform an initiative to improve the speed, efficiency and security of the U.S. payment system. The effort began last fall with release of the “Payment System Improvement – Public Consultation Paper” which solicited comments on gaps and opportunities in the payment system.
To address the gaps and opportunities in the current payment environment, the Federal Reserve Banks have proposed in the paper five desired outcomes to be achieved within 10 years.
1. Strategic industry engagement - Key improvements for the future state of the payment system have been collectively identified and embraced by payment participants, and material progress has been made in implementing them.
2. Ubiquitous real-time retail payments - A ubiquitous electronic solution(s) for making retail payments exists that does not require the sender to know the bank account number of the recipient. Confirmation of good funds will be made at the initiation of the payment1. The sender and receiver will receive timely notification that the payment has been made. Funds will be debited from the payer and made available in near-real-time to the payee.
3. Improved efficiency - Over the long run, greater electronification and process improvements have reduced
the average end-to-end (societal) costs of payment transactions and resulted in innovative payment services that deliver improved value to consumers, businesses and
governments.
4. Improvements in cross-border payments - Consumers and businesses have better choice in making convenient, cost-effective and timely cross-border payments from and to the United States.
5. Enhanced payments safety and security - The Federal Reserve Banks have collaborated, as appropriate, with the industry to promote the security of the payment system from end-to-end amid a rapidly evolving technology and threat environment. In addition, public confidence in the security of Federal Reserve Financial Services has remained high.
For more information on these opportunities and to subscribe to strategic direction updates from the Fed, visit FedPaymentsImprovement.org.
Plan ahead for 2015 with PAR/WACHA!
Budget season is upon us all. PAR/WACHA would like to remind you to plan ahead to attend these great events in 2015:
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WACHA’s Electronic Payments Conference and Compliance Pre-Conference, March 23-25th, 2015 at the Crowne Plaza Milwaukee Airport
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Payments University and Fraud Day, August 17-19th, 2015 at the Great Wolf Lodge in Wisconsin Dells.
Don’t forget to leave room in your budget for PAR’s Compliance Services. Examiners are in the practice of citing financial institutions that have not completed their annual audit. Do not put your financial institution at risk, PAR can help. For more information on PAR’s Compliance Services click here.