CUNA Comment Letter

Transaction Origin Identification Proposal

July 24, 2007

Maribel Bondoc
Manager Network Rules
NACHA – The Electronic Payments Association
13665 Dulles Technology Drive
Suite 300
Herndon, Virginia 20171

Re:     Transaction Origin Identification Proposal

Dear Ms. Bondoc,

The Credit Union National Association (CUNA) is pleased to respond to the National Automated Clearing House Association’s (NACHA) Transaction Origin Identification Proposal. By way of background, CUNA is the largest credit union trade association, representing approximately 90% of our nation’s nearly 8,500 state and federal credit unions, which serve nearly 87 million members.

Summary of CUNA’s Position:

Discussion of CUNA’s Views

Generally, we support NACHA’s proposal to readily identify Originators of ACH transactions. This is the second initiative of NACHA’s overall comprehensive risk management strategy, which addresses risk throughout the life-cycle of ACH payments. If adopted, Receiving Depository Financial Institutions (RDFIs) would be able to better identify the payor/payee of a particular transaction, thus reducing inquiries from receivers/members surrounding an unrecognizable ACH transaction. Additionally, identifying Originators of ACH transactions would enhance the RDFIs’ customer service capabilities by reducing the time it would take to resolve customer service inquiries.

Currently, the Originator is required to use the “Company Name” field in the Company Batch Header Record for descriptive purposes of further identifying the source of the entry. This requirement is vague, which often leads to telephone numbers or descriptive statements being entered into the field. This inconsistency makes it difficult for an RDFI to identify the Originator when asked by its Receivers/members. Requiring this field to contain the name by which the Originator is known to and readily recognized by the Receiver, such as the Originator’s “Doing Business As” or “Trading As” name, would reduce confusion to the RDFIs and Receivers.

We also support NACHA’s proposal to add a new provision in its Operating Rules that would require the Originator to include a customer service telephone number within the ACH Record for use by the RDFI. We agree that the customer service telephone number must be maintained and answered during the Originator’s normal business hours for Receiver inquiries regarding the ACH transaction. Providing Originator contact information would reduce the RDFI customer service burden by enabling RDFIs to bypass the Originating Depository Financial Institutions (ODFIs) and follow up on Receivers’/members’ inquiries directly with the Originators or provide the Originator’s contact information directly to their members. We believe additional guidance may be necessary, however, for large Originators who may have more than one applicable customer service telephone number.

However, we believe that a more appropriate and consistent place for the Originator’s customer service telephone number would be in the Company Batch Header Record (Batch Header) rather than the Company Batch Control Record (Batch Control) as proposed. The Batch Header currently contains all identifying Originator information and adding the Originator’s customer service telephone number would maintain uniformity. Additionally, frontline staff would more easily access the customer service telephone number if it were in the Batch Header, making it easier to respond to member inquiries.

We also believe that programming changes to the Batch Header would be less burdensome than changes to the Batch Control as programming is currently in place to implement a change in the Batch Header. Additionally, the Batch Control is used for file integrity and balancing purposes and does not currently hold specific transaction data.

NACHA is proposing to revise the ACH record to require identification of a Third-Party Sender involved in the initiation of an entry. Currently, the NACHA rules do not require Third-Party Sender information in the payment record.

In NACHA’s proposal, the Batch Control Record would be revised to replace a currently reserved field and portions of the current Message Authentication Code Field with a new field, “Transaction Origin” in positions 65-79 and would apply to all SEC codes/batches. This field would hold the name of the Third-Party Sender. If more than one Third-Party Sender is involved in the initiation of the ACH entry, this field would contain the name of the Third-Party Sender that has a direct contractual relationship with the ODFI.

Requiring the identification of Third-Party Senders involved in the origination of a transaction would help in NACHA’s risk monitoring efforts, but we believe this would require significant program changes for certain credit unions that have no Third-Party Senders.

We are also concerned about the effectiveness of requiring the name of only the Third-Party Sender that has a direct contractual relationship with the ODFI. Not including all Third-Parties involved in a transaction in the ACH record creates inconsistency in risk management monitoring.

Conclusion

CUNA supports NACHA’s proposal to readily identify Originators of ACH transactions and include an Originator’s customer service telephone number in the ACH record. We are concerned, however, about the proposed location of the customer service telephone number and request that the Originator’s customer service number be included in the Company Batch Header Record. Also, requiring the identification of Third-Party Senders as proposed would require significant changes. If you have any questions, please contact me at (202) 638-5777.

Sincerely,

Lilly Thomas
Assistant General Counsel