WASHINGTON – On July 2, NACS responded to the Federal Reserve’s request for comment on its proposal to implement mandatory same-day Automated Clearing House (ACH) transactions. Specifically, the Fed is considering adopting mandatory same-day ACH with an interbank fee by incorporating the National Automated Clearing House Association’s (NACHA) amended operating rules into the Fed’s rules governing ACH.
While NACS applauded the Fed’s push to modernize the U.S. ACH system, which predominately offers next-day processing as its fastest option, it expressed serious concerns with the Fed’s proposal to incorporate NACHA’s amended rules. To pay for a system-wide upgrade to same-day processing, NACHA’s newly amended rules (recently adopted on May 19, 2015) set a fixed 5.2 cent “interbank fee” per same-day ACH transaction that will be paid by the bank originating the same-day ACH transaction to the receiving bank that processes the transaction.
In its comments, NACS acknowledged that mandatory faster settlement of ACH transactions would be helpful to both consumers and retailers, yet NACS criticized the Fed’s possible incorporation of NACHA’s centrally set interbank fee to fund this upgrade. NACS pointed out that the “interbank fee” looks suspiciously similar to a swipe fee, and would eventually undermine ACH as a low-cost alternative to payment cards by “incentivizing banks’ wasteful spending on services” and “driving bloated costs to the ACH system.” Moreover, NACS noted that requiring a centrally set fee established by a private entity amounts to price-fixing that “cannot survive scrutiny under U.S. antitrust laws because it destroys the incentive for banks to compete on price.”
In addition, NACS questioned why the Fed would not push to update the ACH system to permit real-time processing, the most technologically advanced option available that is already used abroad and in other areas of the U.S. payments system. “No merchant wants to invest in a system that will be considered obsolete when he finishes paying for it,” argued NACS.
The NACS comment letter is available here.