ACH: Now and Next. Andrée E. Ortega, AAP, CTP VP, ACH Product Manager, Wells Fargo. April 19 & 20, 2018

Transcription

1 ACH: Now and Next Andrée E. Ortega, AAP, CTP VP, ACH Product Manager, Wells Fargo April 19 & 20, Wells Fargo Bank, N.A. All rights reserved. For public use.

2 Session overview 1 Faster Payments: Same Day ACH / Real Time Payments 2 Recent changes to the NACHA Rules 3 What s next? 1

3 Faster Payments

4 Faster payments definition Payments in which the transmission of the payment message and the availability of the final funds to the payee occur in real time or near-real time and on or as near to a 24-hour and 7-day (24/7) basis as possible. Source: Faster Payments Enhancing the peed and availability of retail payments, Committee on Payments and Market Infrastructure, Bank for International Settlement, November

5 INDIA IMPS Faster payments a global trend payments A global trend SWEDEN BiR Current 24/7 Retail RTP Systems Systems in Development / Public Consultation UNITED STATES RTPMEXICO SPEI COLOMBI A TBD CHILE TEF DENMARK NETS UK Faster Payments EU SEPA Instant NIGERIA NIP SOUTH AFRICA RTC BRAZIL SITRAF POLAND Express ELIXIR SINGAPORE Fast and Secure Transfers THAILAND TBD SOUTH KOREA HOFINET AUSTRALIA New Payments Platform Countries with 24/7 retail RTP systems that are live or in development Mexico SPEI (2004) Chile TEF (2008) Brazil SITRAF (2002) Sweden BiR (2012) Denmark Nets (2014) U.K. Faster Payments (2008) Poland Express ELIXIR (2012) Nigeria NIP (2011) South Africa RTC (2006) India IMPS (2010) South Korea HOFINET(2001) Singapore FAST (2014) Australia NPP (2017) United States RTP (2017 ) EU SEPA Instant (2017) Colombia TBD Thailand TBD Source: The Clearing House, 2016

6 Drivers for faster payments Advances in information technology including the spread of advanced mobile communication devices Altered end user expectations for speedier and more convenient payments Action by authorities including some central banks to improve payment system capabilities 5

7 Same Day ACH

8 NACHA Same Day ACH service Approved May 19, 2015 Mandatory for all receiving depository financial institutions Not all transactions will be eligible for Same Day ACH Will be implemented over 3 years September 2016 (Phase 1): Credits September 2017 (Phase 2): Debits March 2018 (Phase 3): 5:00 p.m. funds availability Source: 2018 NACHA Operating Rules & Guidelines 7

9 What transactions are eligible for Same Day ACH? Credits and debits Non-monetary transactions Returns Eligible On-Us transactions more than $25,000 Not eligible Transactions greater than $25,000 International transactions (IAT and domestic IAT) 8

10 A phased approach September 23, 2016 Phase 1 September 15, 2017 Phase 2 March 16, 2018 Phase 3 Same Day credits Wells Fargo same day processing deadlines at 8:00 a.m. and noon Central Time Funds available by the end of the processing day Same Day debits Wells Fargo same day processing deadlines at 8:00 a.m. and noon Central Time Funds available by the end of the processing day New credit funds availability time Wells Fargo same day processing deadlines at 8:00 a.m. and noon Central Time Funds available by 5 p.m. RDFI local time 9

11 The Clearing House (TCH) Real Time Payments Service

12 RTP distinctive features Credit Push Only Payment Status Payment Certainty Immediate Availability of Funds Customers send payments directly from their existing accounts complete transparency, no pending payments Request for Payment Immediate notification of successful transfer to end users, providing certainty for both senders and receivers Fulfillment Messaging Receivers have certainty that payments will not be reversed or revoked Complete AR/AP Messaging Receivers have funds available in real-time 24/7/365 Global Ready To support funds request, e-invoicing or e-billing Ability to provide confirmation by the receiver that they have received funds, combined with fulfillment information Ability to link multiple messages associated with the same transaction through a common reference. Allows development of Value added services based on extensible data ISO is a global standard that supports the needs of multinational customers and will enable cross-border payments in the near future 11

13 RTP use case: just-in-time invoicing and payment Treasury Management Small Business Banking E-invoice Product Request for Payment (with link to invoice) Cash Management Workstation Large Supplier Real-time Receivables Logistics Integration Payment Receiver Confirm (link to shipping info) Online Banking Payments Mobile Banking Alert Small Business Buyer 12

14 RTP use case: bill payment reminder and payment Treasury Management Consumer Mobile Banking E-billing Electronic Bill (Request for Payment) Mobile Presentment You have a new bill Biller Real-time Receivables Payment Confirmation Pay Now or Schedule Payment Payment received for account # xxxx Consumer Bill Payer 13

15 Recent changes to the NACHA Rules

16 Third-Party Sender defined Article Eight, Section 8.106, Third-Party Sender a type of Third-Party Service Provider that acts as an intermediary in Transmitting Entries between an Originator and an ODFI, including through Direct Access, and acts on behalf of an Originator or another Third-Party Sender. A Third-Party Sender must have an Origination Agreement with the ODFI of the Entry. A Third-Party Sender is never the Originator for Entries it Transmits on behalf of another Organization. However, a Third-Party Sender of Entries may also be an Originator of other Entries in its own right. Source: 2018 NACHA Operating Rules & Guidelines 15

17 Third-Party Sender rule Approved August 18, 2016 Requires every Originating Depository Financial Institution (ODFI) to either register its Third-Party Sender (TPS) customer(s) with NACHA, or provide to NACHA a statement that it has no such customers Effective September 29, 2017 Implementation period ran through March 1,

18 What information is required for Third-Party Sender registration? Initial Registration Supplemental Registration ODFI s name and contact information Name and principal business location of the TPS ODFI s routing numbers used in ACH transactions originated for the TPS Company Identification(s) of the TPS DBA names, taxpayer ID(s), street address(es) and website address(es) of the TPS Name and contact information for TPS s contact person Names and titles of the TPS s principals Approximate number of Originators for which the TPS transmits entries Statement as to whether the TPS transmits debit entries, credit entries or both 17

19 What's next?

20 Same Day ACH expansion Add a third Same Day ACH processing window that expands access to later in the day Provide faster funds availability to receivers of both Same Day and non-same Day ACH credits Raise the per-transaction dollar limit on Same Day ACH transactions to $100,000 Source: 2018 NACHA Operating Rules & Guidelines 19

21 Weekend and holiday processing Explore the industry s interest in ACH processing on weekends and holidays Potential benefits and impacts from the availability of ACH processing on weekends and holidays Feasibility of exchanging ACH transactions on weekend and holidays 20

22 ACH message entries Exchange non-monetary messages between financial institutions 2017 request for information - DFI to DFI Messaging Request for comment due April 27, 2018 Financial Institutions would use new non-monetary ACH Message Entries with a new SEC Code of MSG Record of Authorization Source Document (converted check) copy Written Statement of Unauthorized Debit copy ODFI-requested returns Additional information related to an Originator Trace Request 21

23 Questions? 22

24 Additional resources and information NACHA link The information and opinions expressed in this document or for informational use only and are not intended to be comprehensive, nor do they constitute legal advice. Please seek legal or other professional advice before acting or relying on any of the content in this presentation. 23

25 Appendix 24

26 Same Day ACH business and consumer use cases B2C B2B C2B C2C Emergency payrolls Hourly workers Vendor payments Tax payments Consumers can make bill payments on their due dates Consumers can move money between accounts Insurance claims Refunds Payments to release goods or provide services Faster credit for late payments Person to Person payments 25

27 Same Day ACH versus Wire Transfer Feature ACH Wire Normal use Low value/high volume transactions High value/low volume transactions Processing Batch Individual transactions Transaction limit $25,000 $9,999,999, Network delivery Twice a day Real time Funds availability 5:00 pm RDFI local time Immediate Transaction cost Low dollars (plus transmission fee) Higher dollars Typical deadlines 10:00 a.m. Pacific Time 2:30 p.m. Pacific Time Remittance information CTX 9,999 addenda records (799,920 characters) Up to 9,000 characters (may require special processing) 26

28 Getting started with Same Day ACH as an originator with Wells Fargo What has to happen? Opt-in with your ODFI for the premium service Use same day effective date in Batch Header records Meet origination deadlines 8:00 am Central Time Noon Central Time What you don t need to do Change your ACH files Re-test your ACH files Update agreements 27

29 Preparing for Same Day ACH as a receiver Key Considerations Review when incoming ACH information is currently received to determine if timing needs to change to capture Same Day ACH Provide vendors/trading partners with account restrictions related to Same Day ACH Receiving account is a Controlled Disbursement account so ACH debits should not be sent on a same day basis and underfund the account If funds are needed immediately (i.e. to close a deal, release goods, etc.) a wire transfer should be sent instead of a same day ACH credit Review receivables updating procedures to ensure funds are shown as having been received on the actual effective date (especially if discounts are given/late fees assessed) Determine if you want to offer consumers the option to pay their bills on a same day basis, most likely a TEL or WEB initiated entry 28

30 Same Day ACH Final considerations As a receiver Must update records to reflect customer s payment as having been received as of date no later than Settlement date Rules allow a reasonable amount of time to update records Do you want to offer options for same day to your consumer customers As an originator Must inform/remind receiver of same day transaction RDFIs will not be required to return transactions on the same day they are received - current Return Rules apply Returns will be permitted to be processed through the two new same day windows Are there IT concerns, such as assigning of effective date, using same day for some but not all batches, timing, etc. 29

31 Third-Party Sender initial registration ODFIs required to provide initial, basic registration information within 30 days of originating the first ACH entry for their customer When an ODFI becomes aware of an unregistered TPS, the Rule provides a 10 day grace period to register that customer ODFIs required to update registration information within 45 days following any change to the information previously provided, including whether the TPS relationship has ended In order for TPS s to be aware of these requirements, ODFI s will need to notify their TPS customers of the rule and how it applies to them 30

32 Third-Party Sender initial registration Registration requirement applies to: TPS that are ODFI s direct customers TPS that are direct customers of the first TPS, otherwise known as nested TPS Obligates TPS to provide their ODFIs, upon request, with any registration information needed Requires TPS s to disclose to their ODFIs any other TPS s for which they transmit ACH entries 31

33 Third-Party Sender supplemental registration Upon receiving written request from NACHA, an ODFI will be required to provide the supplemental registration information within 10 banking days NACHA will be authorized to request this information regarding risk events, which the Rule defines as: cases in which it (NACHA) believes that a Third- Party Sender in the ACH Network poses an escalated risk of (i) financial loss to one or more Participating DFIs, Receivers or Originators, (ii) violation of the Rules or applicable Legal Requirements, or (iii) excessive Returns. 32

34 Third-Party Sender registration participants Originating Depository Financial Institutions May incur direct costs to assemble and report required information and update registration information on a periodic basis Should already have record of existing TPS customers May require enhancements to their customer onboarding and monitoring processes ODFIs with no TPS customers must provide NACHA with: ODFI s name name, title, telephone number, address, and street address for a contact person at the ODFI statement acknowledging that the ODFI has no TPS s Audit requirements 33

35 Third-Party Sender registration participants Third-Party Senders May incur direct costs to assemble and provide required information to their ODFIs Upon ODFI s request, TPS s must provide any information the ODFI reasonably deems necessary to identify each Originator for which the TPS transmits entries Must be provided to the ODFI within two banking days of receipt of the ODFI s request May differ from ODFI to ODFI Must disclose to the ODFI any other TPS for which it transmits entries to the ODFI, prior to transmitting entries for the other TPS Audit requirements 34

36 Third-Party Sender registration participants Originators, ACH Operators, and RDFI s Not expected to incur any direct costs associated with Third-Party Sender Registration 35

37 Third-Party Sender rule enforcement NACHA could initiate a Rules enforcement proceeding if it believes that an ODFI has failed to register a Third- Party Sender customer NACHA recognizes that there might be situations in which a NACHA risk investigation identifies an entity as a Third-Party Sender, but its ODFI is not aware that the entity is a Third-Party Sender that should be registered NACHA s risk investigation staff will advise the ODFI, in writing, that it must register the Third-Party Sender within the 10 banking day grace period Failure of the ODFI to register the Third-Party Sender could then result in the initiation of a Rules enforcement proceeding 36