CUNA Regulatory Comment Call

November 16, 2001


Long-term Direction of ACH Policy & Practice


The NACHA Board of Director’s Next Generation ACH Task Force is requesting comments on the attached draft report detailing their preliminary recommendations for future changes to the ACH system. Please click here for a copy of that draft report [PDF file]. Please send CUNA your comments by November 23, 2001. The short turnaround time is necessary because NACHA distributed this comment request this week.

If you would like to respond directly to NACHA and copy CUNA you may do so using their comment sheet at Comments sent directly to NACHA should be sent to William Colbert, Network Services Manager, NACHA, 13665 Dulles technology Drive, Suite #300, Herndon, VA 20171, fax: (703) 787-0996 or email: no later than Friday, November 30, 2001.


In November 2000, NACHA’s Board of Directors began a strategic initiative to determine what changes need to be made to the ACH Network to meet the future payment needs of financial institutions and their customers. The last strategic effort that focused on the ACH Network was completed in 1997 by the Board of Director’s ACH Vision 2000 Task Force.

The current task force believes that the ACH Network remain a low-cost, highly reliable and secure, batch-processing, universal payment system that supports financial institutions and their corporate customers. The Task Force does not believe that the ACH Network should evolve into a real-time, online network similar to the debit and credit card payment systems.

The draft report has identified the following ten major recommendations along with the following proposed implementation steps:

1. Obtaining Accurate ACH Posting Information: It is sometimes difficult for an Originator to obtain an accurate routing and account number from a Receiver for posting of an ACH transaction. This difficulty is caused by either human error from transcribing a document onto the Internet or over the telephone or because the information on the MICR line of a check is inappropriate for ACH processing. A Rules Work Group could be formed to address this issue and investigate a rule that would require RDFIs to accept accurately obtained MICR information.

2. Integration of Financial Institution Check and ACH Systems: The current infrastructure within financial institutions predominantly directs different types of payment mechanisms into silos for check, ACH, wire transfer, ATM, credit card, debit card, etc. The current marketplace for ACH creates a need for financial institutions to integrate such systems, particularly their ACH and check payment applications, so that the end user’s desire to overlap these systems is transparent. For instance, it is important that stop payment systems be integrated so that a stop payment order can be acted upon in case the item is converted to an ACH payment. Two current Rules Work Groups are studying this issue as it relates to corporate check conversion/truncation. In addition, a task force could be formed to further address this issue with ODFIs and RDFIs.

3. Increasing Processing Capacity of the Network/Faster Processing Schedules: The Network’s processing capacity must be able to handle major growth. The current ACH Operator and DFI processing schedules should be expanded to support the viability of new ACH applications. ODFIs and RDFIs need to be encouraged to plan for increased volume. A Rules Work Group could be formed to examine RDFIs more frequent pick-up of files. This Rules Work Group would work closely with the ACH Operator.

4. Increase Financial Benefit To All Parties: Financial institutions need to re-evaluate/reconsider the opportunities to offer their customers new value-added services resulting from new ACH applications. A Task Force could be formed to address the many aspects of this recommendation including ODFIs, RDFIs, and ACH Operators investigating value-added services, NACHA investigating new services to improve quality to recommend to Operators and DFIs, and NACHA and RPA educational opportunities.

5. Address Fraud Risk From Some Types of Payments: As new applications and increased payment volume are added to the Network, there is the risk that the Network will experience increased levels of fraud, e.g., fraud schemes will shift from one payment method to another. An ACH Operator task force could discuss offering new risk management tools. A Rules Work Group could consider rules for Operators reporting ODFI/Originator return rates to NACHA so fraud can be addressed quickly and address third-party direct access provisions.

6. Develop Tools to Assist with Obtaining Authorizations and Addressing Authentication Issues: The authorization/authentication process for recurring and non-recurring ACH payments can be a cumbersome process. For instance, this is particularly true when a Receiver changes financial institutions and, in turn, needs to shift direct payments to the new financial institution. In addition, new ways to address authentication concerns need to be evaluated, such as the use of commercial automated enrollment and a Universal Payment Identification Code. An ACH Operator task force could discuss UPIC and options to help consumers shift debits to new financial institutions. A Rules Work Group is investigating commercial automated enrollment.

7. Improve Rules Compliance: The quality and reputation of the Network rely on compliance with and enforcement of the Rules. The current battery of enforcement options needs to be re-evaluated and refined as new products and new volume are handled over the ACH Network. A Rules Work Group is currently in place to study enhancements to the National System of Fines. ODFIs should concentrate on risk management, "Know Your Customer".

8. Keeping Up with the Pace of Change: All ACH parties need to proactively consider what is needed in the marketplace and take part in the necessary education and transitional planning for the future of the ACH Network. NACHA should encourage all parties through education and new publications. NACHA’s Government Relations Advisory Group will continue to monitor regulatory developments.

9. Integration of Corporate Payment Systems: Most corporations currently do not have their ACH systems and accounting systems integrated. Similar to financial institution infrastructure issues, integrating these systems at the corporate level would make ACH processing more efficient. A task force could be formed to determine how to encourage corporations to integrate their systems.

10. Format Limitations/Flexibility: Consideration needs to be given as to whether the current ACH formats have limitations that are impeding the growth and future uses of the Network. Such considerations include: (1) the current size and number of addenda records that accompany payment formats, (2) the potential for a universal format to be used for ACH or all payments, and (3) the feasibility of using XML for ACH records or remittance information carried within ACH records. A Rules Work Group could be formed to research possible changes to the NACHA Operating Rules in regards to file formats.


  1. Do you support a rule that would require RDFIs to accept MICR information that is taken accurately from the bottom of their checks? Do you support the creation of a workgroup to address this possibility? Please explain.

  2. Do you support the recommendation that RDFIs integrate check and ACH systems? Should a working group explore this initiative?

  3. Do you support the recommendation that RDFIs should pick up files more than once a day to ensure that their members’ ACH entries are posted in a timely manner? According to NACHA, hourly payroll cutoffs and ACH processing schedules make it necessary for RDFIs to retrieve files from their ACH Operators more frequently.

  4. Do you support changes to the NACHA Operating Rules in regards to file formats such as: a change in addenda records; a universal format to be used for ACH or all payments, and the usage of XML for ACH records or remittance information?

  5. Do you have any other comments on the draft report or its recommendation or implementation steps?

Eric Richard • General Counsel • (202) 508-6742 •

Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 •

Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 •

Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 •