Automated Clearing House (ACH) is an electronic network for financial transactions in the United States. ACH processes large volumes of credit and debit transactions in batches, which are used for all kinds of funds transfer transactions, including direct deposit of paychecks and monthly debits for routine payments.
Rules and regulations that govern the ACH network are established by NACHA—The Electronic Payment Association for commercial sector payments and the U.S. Treasury for Federal payments.
The Federal Reserve Banks and the Electronic Payments Network (EPN) are collectively the nation's ACH operators and rely on each other for the processing of some transactions when either party to the transaction is not their customer. These interoperator transactions are settled by the Federal Reserve.
- ICBA supports changes to the ACH that ensure efficiency, competition, and sound risk management, while offering fair and open access to all community banks regardless of size and operational capability to meet the existing and evolving global payment needs of their customers.
- ICBA supports the Federal Reserve System and EPN in its dual role as a payment systems regulator and provider of services. ICBA welcomes the new areas of strategic focus for Federal Reserve Financial Services that include collaborating with the entire payments supply chain, incorporating innovators and end users, to shape the end-user payment experience. ICBA will actively inject the community bank perspective in these and related areas of focus.
- ICBA supports NACHA and The Electronic Payments Network, as the private-sector rulemaker for the ACH.
- ICBA encourages the Federal Reserve Board and NACHA to uniformly enforce rules and timely refine rules to address new products and technologies, operational enhancements and other issues as they arise.
- ICBA promotes active community banker involvement in payment rulemaking and standards-setting, operations and governance at the national and regional level.
- ICBA strongly supports same-day ACH and encourages community banks and their correspondent banks and processing providers to take action. Specifically, ICBA recommends community banks:
- Adopt same-day ACH services;
- Encourage correspondent banks and processing providers to adopt and support same-day ACH services;
- Collaborate to identify specific uses and geographies for collective participation among banks where same-day ACH provides value; and
- Encourage regional payments associations to aggressively advocate for same-day ACH.
Community banks’ payment systems access must not be limited through the imposition of anti-competitive and discriminatory pricing or policies, membership requirements, standards, operating rules or technological barriers. The concentration of market power should not be used to force changes that would materially and adversely impact the competitive nature of our nation’s payments system.
Given that private sector rules govern the ACH, payment card networks and check clearing houses, it is vital for community banks to participate in the rulemaking, operations and governance of these organizations, particularly at the regional level, through regional payment’s associations. At the national level, ICBA actively represents the community bank perspective before NACHA --The Electronic Payments Association as new ACH rules and innovative products are vetted and implemented.
Staff Contact: Cary Whaley