The Electronic Payments Association—also known as NACHA—recently expressed support for many ideas presented by the Federal Reserve in its consultation paper on improvements to the payment industry.
The Fed noted in its paper that several other nations are working towards ubiquitous near-real-time payment systems not available in the U.S. The central bank said that while the U.S. payment system has started to “migrate incrementally” towards faster payments using private-sector innovations, the innovations “have not resulted in a ubiquitous near-real-time system.”
“NACHA agrees that some use cases for emerging types of person-to-person payments and mobile payments would be substantially improved from being near-real-time,” the group said in its comment letter. “There are many types of payments use cases that are either well-served today by existing payment system features or that could be better served with incremental improvements to existing features.”
NACHA said its vision for development of the ACH network aligns with ideas discussed in the Fed’s consultation paper: allowing customers and businesses to initiate ACH transfers, implementing near-real-time payment messages for desired use cases, enhancing remittance data capacity and formats of the ACH network and removing barriers to cross-border interoperability of ACH-like retail payment systems.
“To achieve these objectives, NACHA envisions an ACH architecture in which a near-real-time messaging system is ‘layered’ on top of the existing ACH Network clearing and settlement system,” NACHA said. “Additional tools such as routing and account validation directories would serve to fully integrate these two layers.”
NACHA said an ubiquitous system would allow financial institutions to compete in the payments market and would give them a “greater stake in the continued viability of the payment system.”