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ABA: NACHA push to encourage ACH improvements with fee system “premature”

200px-American_Bankers_Association_LogoThe American Bankers Association said last week that a proposal by NACHA—the Electronic Payments Association—to institute a fee system to encourage improvements to the ACH network is “premature.”

NACHA’s proposal seeks to utilize “’economic incentives’” to reduce the proportion of ACH exceptions caused by unauthorized or inaccurate transactions. Originating institutions would be charged fees for initiating transactions that are returned, and the receiving institution would be compensated with the fees for returning the transactions.

The proposal has been put forth in conjunction with a different proposal that calls for lowering the thresholds for returns related to unauthorized transactions or inaccurate data.

The ABA expressed support for NACHA’s proposal to reduce the threshold for unauthorized transactions to 0.5 percent from the current one percent and to establish a new threshold at three percent for entries with inaccurate account information.

“However, this proposal to institute a system of fees… is premature,” the ABA said. “Until there is experience with the impact of the companion proposal with the same goal of lowering return rates, ABA believes there is insufficient evidence from which to fashion a compensatory fee structure.”

The ABA said the proposal to lower the return rate threshold will directly impact originating institutions and third-party senders because it will involve potential enforcement proceeding for violations.

“The potential benefits of this fee transfer program… are indirect and allows for costs to be shifted on the originating side… and it does not reimburse for the full expense of processing exceptions on the receiving side of the transaction,” the ABA said. “ABA recommends that consideration of this entire proposal be placed on hold until the effects of the companion proposal on reducing return rates can be evaluated.”

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