TCH, CBA File Comment Letters in Support of NACHA’s Same Day ACH Proposal

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Sean Oblack
(202) 649-4629

Late last Friday, The Clearing House (TCH) and the Consumer Bankers Association filed a comment letter in support of NACHA’s proposal to enhance the ACH network by establishing ubiquitous, same day ACH processing and settlement capability.  In the letter, the associations expressed their appreciation for NACHA’s thoughtful efforts to craft a proposal that is workable for all financial institutions and that will benefit all stakeholders.  In particular, same day ACH will be advantageous to consumers who want to move funds the same day to other individuals or between their own accounts, or to pay bills the day they are due. Businesses that need faster crediting and funds availability will also derive value from this new ACH network capability.  The proposal also includes a framework that promotes ubiquitous same day functionality by enabling financial institutions on both sides of ACH transactions to be compensated for implementation costs and to receive a fair return on their investment. 

“This comprehensive proposal established the incentives necessary to help ensure financial institutions of all sizes have the ability to better meet consumer and business needs by taking advantage of same day ACH capabilities,” said Dave Fortney, Senior Vice President for Product Development and Management at The Clearing House.  “The proposal responsibly seeks to establish a phased-in approach and provides the functionality and flexibility necessary to accommodate customers no matter what time zone they are in.  Adoption of same day ACH settlements will complement TCH’s real-time payment system initiative.  Together with existing ACH capabilities, same day ACH and real-time payments will provide new, distinct payment options for customers.” 

“The proposal lays out a well-balanced plan to begin the process of bringing the US payment system into the 21st century,” said David Pommerehn, Vice President and Senior Counsel for the Consumer Bankers Association.  “Establishing a sound system for same-day ACH clearing and settlement is an essential step in moving payments faster.  We believe the proposal will ultimately provide a wide range of benefits for consumers and businesses alike.”

This proposal appropriately balances the needs of Originating Depository Financial Institutions (ODFIs) and Receiving Depository Financial Institutions (RDFIs) by taking into account the benefits and costs of same day ACH.   In particular, the proposal recognizes that customers originating payments, which would derive the most value from faster ACH clearing and settlement, would be most likely to pay ODFIs for same day ACH services, while customers receiving payments, which do not control the timing or speed of ACH transactions, would not be likely to pay RDFIs for a same day service.  Yet the cost of implementation would fall primarily on RDFIs. Hence the proposal includes a per-entry interbank fee paid by an ODFI to the respective RDFI of a same day transaction.  The associations strongly support an interbank fee as the most practical means of providing a viable business case for RDFIs and balancing the benefits of same day ACH across the network.  

Additionally, the associations highlighted their support for the two additional settlement windows included in the proposal to provide greater functionality and flexibility, particularly for financial institutions on the west coast. 

About The Clearing House 

Established in 1853, The Clearing House is the oldest banking association and payments company in the United States.  It is owned by the world’s largest commercial banks, which collectively hold more than half of all U.S. deposits and which employ over one million people in the United States, and more than two million people worldwide.  The Clearing House Association L.L.C. is a nonpartisan advocacy organization that represents the interests of its owner banks by promoting and developing policies to support a safe, sound and competitive banking system that serves customers and communities.  Its affiliate, The Clearing House Payments Company L.L.C., which is regulated as a systemically important financial market utility, owns and operates payments technology infrastructure that provides safe and efficient payment, clearing and settlement services to financial institutions, and leads innovation and thought leadership activities for the next generation of payments.  It clears almost $2 trillion each day, representing nearly half of all automated clearing-house, funds transfer and check-image payments made in the United States.  See The Clearing House’s web page at www.theclearinghouse.org.

About the Consumer Bankers Association (CBA)

Founded in 1919, the Consumer Bankers Association (CBA) is the trade association for today's leaders in retail banking - banking services geared toward consumers and small businesses. The nation's largest financial institutions, as well as many regional banks, are CBA corporate members, collectively holding well over half of the industry's total assets. CBA’s mission is to preserve and promote the retail banking industry as it strives to fulfill the financial needs of the American consumer and small business.

 

The Consumer Bankers Association is the recognized voice on retail banking issues in the nation’s capital. Founded in 1919, CBA provides leadership, education, research and federal representation on retail banking issues. For more information, please contact Tom Crosson, tcrosson@consumerbankers.com, (703) 869-1246 or visit www.consumerbankers.com.