© 2015, epcor®. all rights reserved. 1 2015 northern ohio afp conference ach rules update...

© 2015, EPCOR®. All Rights Reserved.

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2015 Northern Ohio AFP Conference

ACH Rules Update

September 21, 2015Cleveland, Ohio

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This material is not intended to provide any warranties or legal advice, and is intended for education purposes only.

NACHA owns the copyright for the NACHA Operating Rules & Guidelines.

The Accredited ACH Professional (AAP) is a service mark of NACHA.



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What’s Happening in ACH?

Enforcement & Quality RulesSame-Day ACH RulesNew Rules Just ApprovedThird-Party Registration Request for

Comment

ACH Network Risk & Enforcement

© EPCOR 2015. All Rights Reserved.

Return Rates Percentages – September 18, 2015 Unauthorized Debit Threshold – 0.5%

R05/R07/R10/R29/R51 No change to investigation or enforcement process

Admin Returns/Overall Returns Process Inquiry process – evaluate origination activity Rules Enforcement Panel will determine next steps


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Return Rate Levels:

Administrative Return Rate Level – 3% R02/R03/R04

Overall Debit Return Rate Level – 15% Excluding RCK

Rules do not require an ODFI to “track” these levels but you may want to if you feel you could

have an Originator that may exceed it



© EPCOR 2015 All Rights Reserved.

Reinitiation of Entries – September 18, 2015 Clarify valid reinitiation circumstances

What is a reinitiated entry and what is not Formatting requirements

Identical Company Name/Company ID / Amount

Required Company Entry Description – RETRY PYMT



Reinitiation of Entries – September 18, 2015

Return upon customer requestR10 and WSUD



Third-Party Sender Issues – January 1, 2015 Direct Obligation to monitor, assess and enforce

limitations on their customer’s ACH origination activity

Provide proof of annual ACH audit to NACHA

NACHA’s Enforcement Authority – January 1, 2015 Bring an enforcement action based on the origination

of unauthorized entries Validated by Rules Enforcement Panel first

Improving ACH Network Quality


Unauthorized Entry Fee – October 3, 2016 ODFI required to pay a fee to RDFI for

unauthorized returns R05/R07/R10/R29/R51 IAT is excluded

Methodology for Setting Fees Based on cost data collected from RDFIs

Amount is set and reviewed every three years

Improving ACH Network Quality


Unauthorized Entry Fee – October 3, 2016 Collection and Disbursement of Fees

ODFIs agree to pay fee ODFIs and RDFIs authorized debits and credits to

their accounts ACH Operators will collect and distribute fees

Same Day ACH History


2010 – FRB announces Fed SameDay ACH program Opt in / debits only / limited SEC codes Few participants

2012 – NACHA Expedited Processing & Settlement Proposal and Ballot Ubiquitous Rules based approach Ballot was defeated

2013 – FRB expands Same Day ACH Opt in / debits and credits / almost all SEC codes Slight increase in participation

2015 – NACHA Same-Day ACH Ballot Approved May 18, 2015


Same Day ACH Benefits

Primary Use Cases Same Day Payroll

Hourly workers / Emergency Payroll / Terminated Employee B2B

Faster settlement of invoices and remittance information Expedited Bill Payment

Make on time bill payments / eliminate late payments Account to Account Transfers

Faster credit for consumers moving funds between accounts they own at other financial institutions

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Same-Day ACH – Phased Implementation

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ACH CreditsOnly

10:30 am & 3 pm ET Transmissions

1 & 5 PM ETSettlement

ACH Credits& Debits


1 & 5 PM ETSettlement

ACH Credits& Debits


1 & 5 PM ET Settlement

Credit Funds Availability – 5 pm RDFI Local Time

SEP 23 2016 SEP 15 2017 MAR 16 2018

No IATs or Transactions Over $25,000

Credit Funds Availability – End of RDFI Processing Day


Same Day ACH Rules

Implementation Dates Phase 1 – September 23, 2016 Phase 2 – September 15, 2017 Phase 3 – March 16, 2018 Implementation dates are contingent on Federal Reserve

support for the Rule change Path to support by FRB through a 60-day public comment

period Comments sought on changing FRB current same day ACH

offering from optional to mandatory and the potential longer term effects on the Network

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Effective Dates Contingent on the Federal Reserve

If written confirmation

received:

Then:

by: 9/23/2015 The Rule Phases will become effective as shown in the ballot

between: 9/23/15 and 11/13/15

Each Rule Phase will become effective 6 months later than dates in ballot

Between: 11/13/15 and 5/18/16

Each Rule Phase will become effective 12 months later than dates in ballot

If written confirmation not received by May, 18, 2016, the Rule will not go into effect.


Same Day ACH Rules

Identifying Same Day ACH Payments Effective Entry Date Field in Batch Header Record

Today’s date in Effective Entry Date Field, deposited at one of the two deposit windows

Optional standard for ODFIs desiring an additional indicator to be used by Originators to signify intent

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Example:

ODFI receives an Originator ACH file with a current day Effective Entry Date. The ODFI

could validate the Originator’s intent for same-day settlement by verifying the content of the

Company Descriptive Date field.

SDHHMMSame-day/Hours/Minutes


Same Day ACH Rules

Identifying Same Day ACH Payments Operators will settle entries with invalid or stale-date

in the Effective Entry Date field at the first opportunity, which may be as early as the same-day These entries would be subject to the Interbank Fee


Same Day ACH Rules

Returns May be initiated and sent the same day – but not required Debit returns still have a 2 banking day return window Non same day returns will settle at next available settlement

opportunity, which could be same day Not subject to the eligibility limits as on the forward side Interbank fee does not apply

Non-Monetary Transactions NOC / Prenote / Remittance Only

Eligible in Phase 1 Interbank fee does not apply


Same Day ACH Rules

Balanced Approach for ODFIs/RDFIs ODFI – opportunity for development of same day

products and services RDFI – Interbank Fee

Paid by ODFIs to RDFIs Recover costs to implement and support Same Day ACH

over a reasonable time period Estimated at 5.2 Cents


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What Do You Need to Do?

Determine Your Appetite for Same Day ACH Study the use case scenarios Weigh benefits and costs Talk to your financial institution to determine if Same

Day ACH will be an optionUnderstand the Impact of Receipt of Same

Day ACH Transactions Credits in 2016 Debits in 2015 Cash Management Later in the Day

Settlement at 1 & 5 pm ET by phase 1

© 2015 EPCOR. All rights reserved.

ACH Rules Ballots Approved 9/4/2015

September 18, 2015 Implementation RDFI Obligation to Recredit Receiver - Improperly Reinitiated

EntriesJanuary 1, 2016 Implementation

Recrediting of Receiver - Removal of the 15 calendar day timeframe

Clarify ODFI Statement Requirements for CIE & WEB Credits Clarify Commercially Reasonable Encryption Standards Add Definition of Zero-Dollar Entry Expand Permissible Criteria for ODFI Requests for Return Clarify RDFI Warranties for NOC

March 18, 2016 Implementation Disclosure Requirements for POS Entries

© 2015 EPCOR. All rights reserved.

Request for Comment – Third-Party Registration

Proposed Changes to Rules Require ODFIs to Register Third-Party Senders

with NACHA Required Information to be Provided

• ODFI name and contact information• Name and principal business location of TPS• RTN and Company ID used for TPS transaction originated

30 day grace period for changed info or adding new TPS

Registration Charge to Cover Costs of Registry

Comments Due October 9, 2015

MARCY CAUTHON, AAP, NCPDIRECTOR, PAYMENTS EDUCATION

[email protected]

Questions?

mailto:[email protected]

© 2015, epcor®. all rights reserved. 1 2015 northern ohio afp conference ach rules update...

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