NACHA has released several concurrent requests for comment (“Requests”) on proposals to amend the NACHA Operating Rules (Rules), including amendments to the Rules regarding “compliance/operational topics” and international ACH transactions. In addition, NACHA has proposed standardizing the Rules to allow for person-to-person (P2P) payments, which should be of particular interest to emerging and mobile payment services. Although many financial institutions and third-party P2P payment providers currently utilize the ACH network to facilitate P2P payments, there is no recognized standard. Consequently, such providers are required to come up with their own P2P mechanisms that conform to the Rules. NACHA’s proposal is intended to put all ACH participants on equal footing with respect to P2P payments via the ACH network, though at varying initial costs to each.
Currently, P2P payments generally are made using a “split” payment model. For example, a financial institution may first debit funds from a payor’s account, then send an ACH credit to the recipient’s account. Or a third-party provider may first send a WEB debit entry to the payor’s account, then send an ACH credit entry to the recipient. These processes are necessary because the Rules do not, among other things, permit WEB credit entries.
The NACHA proposal would revise the Rules to add a definition for “P2P” and allow for WEB “credit” entries. These changes would permit individuals to be the subject of both WEB debits and credits. The primary benefit of the proposal would be consolidation of P2P payments under one SEC code which, in turn, should make it easier to implement compliant P2P payment systems that utilize the ACH network and facilitate the administration, risk-management, tracking and statistical analysis of P2P transactions.
Implementing the proposal, however, will require ACH participants to make certain technical changes. For example, ACH Operators will have to revise their systems to accept WEB credit entries (they currently reject WEB credits as improper entries), and ODFIs and RDFIs must reprogram their systems and processes to adopt WEB credit entries, accommodate new formatting and addenda record information (e.g., sender and P2P provider identification, P2P provider URL links, payment details), and provide customer service and technical training.
NACHA has proposed to allow ODFIs to use WEB credit entries starting March 21, 2014, and make WEB credit entries mandatory starting March 21, 2015. The comment period for the proposed P2P rule is open now and is scheduled to close October 1, 2012.