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ACH News
NACHA
Marks 30th Anniversary
Take Steps to Protect Your Checking Account Information, NACHA Advises
NACHA Rules for E-Checks by Telephone Became Effective September 14, 2001
Consumer
Opinion Favorable on Point-of-Purchase
Federal
Reserve Publishes Revisions to Regulation E Staff Commentary
NACHA Releases ACH statistics for the year 2000
Use of
Direct Deposit Programs Hits Records
NACHA Marks 30th Anniversary
Herndon, Virginia, March 22, 2004 – NACHA- The Electronic
Payments Association turns 30 this year.
“Thirty years ago the Automated Clearing House Network
was in its infancy,” said Leonard J. Heckwolf, Senior Vice President of Bank One’s
Consumer Payment Solutions and Chairman of the NACHA Board. “Today, the ACH Network
is used by about 20,000 financial institutions, 4.5 million businesses and 135 million
Americans for Direct Deposit of pay and Social Security benefits, Direct Payment of bills,
business-to-business payments, e-checks, and many other types of electronic payments.”
NACHA was formed in 1974 by the California ACH Association
(now WesPay), the Georgia ACH Association, the New England ACH Association and the Upper
Midwest ACH Association to establish national, uniform operating rules for the exchange of
Automated Clearing House (ACH) payments among local ACH associations. By 1978 it was
possible for two financial institutions located anywhere in the United States to exchange
ACH payments under a common set of rules and procedures.
It was not until 1988, 14 years after NACHA was formed,
that ACH payments exceeded 1 billion annually. By 2001 the volume of ACH payments grew by
more than 1 billion in a single year.
Today, NACHA’s mission is to promote the development
of electronic solutions that improve the payments system for the benefit of its members
and their customers. NACHA represents more than 12,000 financial institutions through
direct memberships and a network of regional payments associations, and 650 organizations
through its industry councils. In addition to the NACHA Operating Rules for the ACH
Network, NACHA develops rules and business practices for Internet commerce, electronic
bill and invoice presentment and payment (EBPP, EIPP), e-checks, financial electronic data
interchange (EDI), international electronic payments, and electronic benefits transfer
(EBT).
The NACHA Operating Rules standardize payment formats for
the ACH Network, and define the rights, obligations and warranties of parties involved in
ACH payments. Operating rules provide a uniform business and legal framework for the
exchange of payments, which enhances participants’ confidence in the safety and
reliability of the payments system.
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Herndon, Virginia, January 16, 2003 - The Federal Trade
Commission's National Consumer Protection Week, being held February 2-8, 2003, is an
excellent time for consumers to take steps to protect their checking account information,
according to NACHA - The Electronic Payments Association.
Checking account information is vulnerable to theft and use by another person to make
purchases, either by printing fake checks with the stolen account information, or using
the account information on the Internet or over the telephone. Thieves even attempt to use
stolen checking account numbers to pay off fraudulently obtained credit cards.
Elliott C. McEntee, President and Chief Executive Officer of NACHA,
said, "It is fine to use your checking account information on the Web or over the
phone to pay bills or to pay companies you know and trust. But you should safeguard your
checking account information, just as you would your address, phone number, Social
Security number, and other account numbers."
NACHA has compiled a list of steps consumers can take to prevent checking account number
theft:
- Safeguard your checking account information, just as you would
any other sensitive personal information.
- Never give your checking account information to telemarketers
or to callers claiming to need to confirm or verify your checking account information.
- Don't carry your checkbook around with you unnecessarily.
- Don't leave bill payments or other checks in your mailbox.
- Always review your monthly account statement, or go to your
financial institution's web site to view your account activity more frequently. Report any
unauthorized transaction or suspicious activity to your financial institution immediately.
- Report lost or stolen checks and checkbooks immediately to
your financial institution.
- Tear or shred any old checks or account statements before
throwing them away.
- Consider using electronic alternatives to paying by check when
making purchases or paying bills. This substantially reduces, or even eliminates, the
number of people that see the personal and account information that is printed on your
checks, and provides better protection under Federal regulations.
- If you believe your checking account information has been
stolen, contact your financial institution immediately.
McEntee also noted, "Consumers have better protection
with electronic payments than they do when using paper checks. There are federal
regulations that provide consumers with substantial protection against unauthorized
electronic debits to their checking accounts. There are no comparable federal regulations
for checks."
Important Web Sites:
Federal Trade Commission's National Consumer Protection Week -
http://www.consumer.gov/ncpw/
National Consumers League Alliance Against Fraud in Telemarketing and Electronic Commerce
- http://fraud.org/aaft/aaftset.htm
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Consumers will be able to make e-check payments over the
telephone under new rules from NACHA – The Electronic Payments Association that
became effective on September 14, 2001. The new rules permit merchants, billers and
government agencies to offer e-checks by telephone as a payment option.
"An e-check authorized over the telephone is an easy
and convenient option for consumers to make payments," said Elliott C. McEntee,
President and CEO of NACHA. "A consumer paying a bill or making a purchase
would have an alternative to mailing a check."
An e-check is an electronic debit to a checking account
that is initiated on the Internet, at the point-of-sale, over the telephone, or even by a
bill payment sent through the mail. An e-check is processed using the Automated
Clearing House (ACH) Network, and typically takes 1-2 business days to be posted to a
checking account.
Under the new rules, a consumer can verbally authorize an
e-check payment by telephone. The authorization is either tape-recorded or a written
confirmation notice is sent to the consumer.
E-checks by telephone are covered by the Federal Reserve's
Regulation E, which defines specific consumer protections from error and fraud.
There are no similar protections for paper check payments. NACHA's rules for
e-checks by telephone follow the Federal Trade Commission's telemarketing sales rule, and
provide an additional consumer protection by specifically prohibiting companies that
cold-call consumers from using e-checks for any resulting sales.
Since July 1999, NACHA has been conducting a pilot program
to test e-checks by telephone. From its inception through July 2001, the latest
month for which statistics are available, the pilot has originated more than 10.5 million
e-checks.
The NACHA Operating Rules standardize payment formats
for the ACH Network, and define the rights, obligations and warranties of parties involved
in ACH payments. Operating rules provide a uniform business and legal framework for
the exchange of payments, which enhances participants' confidence in the safety and
reliability of the payments system.
The ACH Network serves 20,000 financial institutions, 3.5
million businesses, and 100 million individuals. The ACH Network is commonly used
for Direct Deposit of payroll and government benefits such as Social Security, Direct
Payment of consumer bills, business-to-business payments, federal tax payments, and,
increasingly, e-checks and e-commerce payments. In 2000 there were 6.9 billion ACH
payments made worth more than $20 trillion.
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- More than one in four consumers, who write checks for goods
and services, are aware of the ACH application Point-of-Purchase (POP), according to a
survey conducted by NACHA, The Electronic Payments Association.
- POP allows an Originator (merchant or biller) to use the ACH
Network to initiate a one-time ACH debit entry to a consumer account for the
in-person purchase of goods or services. A check/sharedraft is used as a source
document to capture the consumer's account information for the origination of the
entry.
-
- Seventy percent of those surveyed had actually experienced the
application in person. Of those, a majority had a favorable opinion towards the
application for one of two reasons:
- the possibility of lower costs being passed on from the
merchant
to the consumer due to the fact that ACH transactions are less expensive to process than
paper; and
- that fewer people handle the item because it is electronic,
decreasing
the chance for fraud.
- Other advantages acknowledged were quicker checkout lines,
instant confirmation of the transaction and more specific information on monthly
statements.
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- The Federal Reserve Board has published significant revisions
to the Regulation E (Electronic Fund Transfers) Official Staff Commentary. The
revisions provide guidance on electronic check conversion transactions when a consumer
authorizes the use of a check to capture information for initiating an electronic debit
from the consumer’s account. Guidance is also provided on electronic
authorizations permitting recurring debits from a consumer’s account and other
issues. The commentary is intended to help financial institutions comply with
Regulation E when they offer electronic fund transfer services to consumers.
- Under the final rule, where a consumer authorizes a one-time
EFT from the consumer’s account using information from a check to initiate the
transfer, Regulation E covers the transaction. The result is the same whether the
check is blank, partially completed, or fully completed and signed; whether the check is
presented at the point of sale or mailed to a merchant or lockbox and later converted to
an EFT; or whether the check is retained by a consumer, the merchant or the
merchant’s financial institution.
-
- The final rule also provides that Regulation E covers
computer-initiated payments, unless the agreement with the consumer expressly states that
all payments will be made by check, draft or similar paper instrument.
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- The effective date is March 15 2001; however, to allow time
for any necessary operation changes, the mandatory compliance date is January 1, 2002. The
Board’s announcement and the final rule can be found at www.federalreserve.gov/boarddocs/press/boardacts/2001/20010313.
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- Automated clearing house (ACH) payments totaled almost 6.9
billion in 2000, according to statistics released today by NACHA – The Electronic
Payments Association at its PAYMENTS 2001 conference.
-
- "In 2000 the ACH Network continued the robust growth
that occurred every year during the 1990s. Annual commercial ACH volume is 580
percent higher than 10 years ago," said Janet C. Boyst, Chair of NACHA's Board of
Directors and Senior Vice President and Group Executive at Wachovia Bank. "As
established ACH products such as Direct Deposit and Direct Payment continue to grow, ACH
providers are offering new products for retail payments, bill and invoice payments,
e-commerce payments, and international payments. As new methods of conducting
commerce evolve, the ACH Network is well-positioned to continue to serve the needs of
businesses, individuals and the government to move money."
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- ACH payments for 2000 totaled 6.88 billion, up 12.4 percent
from the 6.12 billion payments reported for 1999. The dollar amount of the
transactions grew from $19.0 trillion in 1999 to $20.3 trillion in 2000, a 6.5 percent
increase. ACH payments include Direct Deposit of payroll, Social Security benefits
and tax refunds, Direct Payments of mortgages, car loans, insurance, utility and other
bills, business-to-business payments, federal tax payments, electronic checks, and,
increasingly, e-commerce payments.
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- NEW ORLEANS--(BUSINESS WIRE)--May 10, 2001--It's not often
that a business can increase security, save money, raise productivity and make employees
happy in one fell swoop. Direct deposit of payroll checks achieves all of these
objectives. In other words, you don't have to take that check to the bank.
-
- May 14-18 has been declared ``Direct Deposit and Direct
Payment Week'' by Louisiana Gov. Mike Foster and other elected officials across the
country in order to promote awareness of the benefits of these programs to employers and
workers alike.
-
- Direct deposits can include payroll, expenses, pension and
annuity payments, interest payments, retirement and mutual fund distributions, Social
Security and other government transfers, tax refunds and stock dividends.
-
- Frady points out key advantages to workers and employers of
all sizes:
- Employers can save up to $1.25 per paycheck, offsetting any
lost ``float,'' according to NACHA studies. The U.S. government reports that it saves 41
cents with every direct deposit.
- Direct deposit combats check fraud, estimated to cost
businesses more than $10 billion annually.
- Use of direct deposit hit record levels in 2000, increasing
7.75% in one year to 3.3 billion transactions, totaling almost $3 trillion, NACHA
reported.
- Some 100 million Americans relied on direct deposit to receive
payments or government benefits in 2000, according to NACHA. More than half of U.S.
workers use direct deposit for paychecks, and 97% of those say they are ``very satisfied''
with the service. Also, 55% of all consumers use some form of direct deposit, including
75% of Social Security recipients.
- Direct deposit increases productivity by eliminating the
estimated 16 to 30 hours per year that each employee needs to cash or deposit paychecks.
- Employees value direct deposit as a benefit, trailing only
insurance in importance, according to a study released in April by the National Payment
Corp. of Tampa, Fla.
- In the National Payment Corp. survey, workers ranked direct
deposit even with 401(k) programs and behind only health, life and dental insurance. Their
leading reasons for valuing direct deposit were the convenience of avoiding trips to the
bank, the ability to access funds and accrue interest immediately, the knowledge that the
check was deposited and the elimination of loss or theft. Of workers whose employers did
not offer direct deposit, 71% said they would use it if it were offered. Source: Yahoo
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Sources:
Direct Deposit and Direct Payment Coalition, www.directdeposit.org or www.directpayment.org
Board of Governors of the Federal Reserve System, www.federalreserve.gov
Mid-America Payment Exchange, www.mpx.org
NACHA, www.nacha.org
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