ACH news and viewsMike Watercott, CTP
Vice President
Technical Product Consultant
Office of the State Controller eCommerce Conference
Raleigh, NC
October 30, 2012
Discussion agenda
Volume trends
Recent developments
Exceptions and error correction
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ACH volume trends
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For the last three years, ACH growth has been below 5% annually
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ACH Volume 2005 – 2011
Billions of Transactions. Includes commercial and government paymentsTotal Volume includes interbank, direct send, and on-us transactionsNetwork Volume includes interbank transactions onlyData Source: Wells Fargo and NACHA
2011 ACH volume highlights
“Headline” Network growth rate of approximately 3% in 2011 “Native” electronic transactions (non-check
conversion entries) increased by over 5%
ARC volume declined over 9%
WEB transactions grew at 9% There are now more WEB transactions processed
than all check conversion transactions combined
CTX transactions – a key indicator of B2B activity – grew by almost 13%
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Selected SEC Code detail
2009 Volume
2010Volume
2011Volume
2011Growth
Accounts Receivable Conversion (ARC) 2,410MM 2,206MM 2,000MM (9.3%)
Point of Purchase Conversion (POP) 481MM 513MM 493MM (3.9%)
Back Office Conversion (BOC) 161MM 181MM 195MM 7.9%
Internet Payments (WEB) 2,280MM 2,449MM 2,680MM 9.4%
Telephone Payments (TEL) 344MM 354MM 367MM 3.7%
Direct Deposit (PPD Credits) 4,545MM 4,710MM 4,879MM 3.6%
Direct Payment (PPD Debits) 2,770MM 2,833MM 2,933MM 3.5%
Corporate Credit or Debit (CCD) 1,996MM 2,064MM 2,165MM 4.9%
Corporate Trade Exchange (CTX) 60MM 67MM 76MM 12.7%
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Millions of Transactions. Network (interbank) volume onlyData Source: Wells Fargo and NACHA
2011 Wells Fargo ACH highlights
Total origination volume up 9.1% v. 2010
Nearly 4 billion transactions originated(3.1 billion Network transactions)
20% origination market share
Top ACH Processors 2011
Wells Fargo 4,612MM
JP Morgan 4,238MM
Bank of America 3,638MM
PNC 1,081MM
Citigroup 1,050MM
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Volume includes interbank originated and received paymentsData Source: Wells Fargo and NACHA
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2011 NACHA ACH rankings
Data Source: NACHA
Largest Interbank Originators
Volume (MM)
YOY Change
1 J.P. Morgan Chase 3,189 0.5%
2 Wells Fargo 3,140 3.7%
3 Bank of America 2,033 5.1%
4 Citigroup 835 6.0%
5 U.S. Bancorp 619 5.7%
Largest Interbank Receivers
Volume (MM)
YOY Change
1 Bank of America 1,605
4.8%
2 Wells Fargo 1,472 0.8%
3 J. P. Morgan Chase 1,049 6.2%
4 PNC Financial Services Group 463 4.4%
5 U.S. Bancorp 429 6.6%
Recent developments
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Same-day ACH – update
FedACH Same Day Service
Federal Reserve service launched inAugust, 2010
Service limited to some consumer debits; optional participation by financial institutions
Minimal bank participation, to date 18 banks/30 Routing-Transit Numbers
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Same-day ACH – update
NACHA Expedited Processing and Settlement (EPS)
Developed a Rules framework for a mandatory same-day ACH settlement capability All ACH transactions would be eligible (except IAT) Unique identifier for same-day transactions In by 2:00 p.m. ET/out by 3:00 p.m. ET
$25,000 transaction cap
Next-steps: Formal ballot issued; voting concluded Aug 10th If passed, implementation in March, 2014
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ACH phishing
Increased incidence of fraudulent e-mails purporting to come from NACHA Can look legitimate by using authentic NACHA e-mail
address and IP address
Typically create a sense of urgency by reporting a failed or incomplete transaction
E-mails may contain links to fraudulent websites used to collect personal information or banking credentials
Attachments are often used to deliver/install malware
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ACH phishing examples
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From: [email protected]: Pending Payment from CJ Industries
We received a payment request against your account for $1,720.00 from CJ Industries.
Transaction Reference Number: 45276654
If you made this transaction or authorize its payment, please ignore this e-mail.If you would like to decline this payment, please click on the following link:Decline transaction #45276654 for $1,720.00 from CJ Industries
From: [email protected]: ACH Transfer Cancelled
The ACH Transaction (ID:33456941), recently initiated from your checking account (by you or any other person), was cancelled by the other financial institution.Please click here to view further information
If you have any questions or comments, contact us at [email protected]. Thank you for using http://www.nacha.org.
ACH phishing – best practices
Any e-mail with transaction details purporting to come from NACHA is fraudulent NACHA does not process ACH transactions
Do not respond to, open attachments, or click on links in any suspicious e-mails
Train employees never to give out online banking credentials
Use the Wells Fargo ACH Fraud Filter service on all accounts
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ACH Fraud Filter service
Stop option Automatically returns all ACH debits you do not
authorize in advance Best for accounts with predictable ACH activity
Review option Allows you to review all ACH debits you do not
authorize in advance Make your pay/return decision by 7:00 p.m., CT
the day following the Effective Date
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ACH Fraud Filter service
Extensive CEO® reporting for unauthorized transactions, preauthorizations, anddecisioned items
CEO Event Messaging alertsyou when you have exceptionsto decision
Use CEO Mobile® to decisionitems on the go!
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Exceptions and error correction
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Exceptions and error correction
Rejects
Returns/Notifications of Change (NOCs)
Deletes and Reversals
Recalls
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Rejects
Items rejected by the Wells Fargo ACH system before being released to the ACH Network
Common reject reasons: Invalid Routing/Transit Number Invalid Transaction Code Mandatory data element missing
Information on rejected transactions is available shortly after receiving your ACH file
How are rejects reported to you? Data transmission file CEO ACH Origination Report or ACH Customer Activity Report E-Mail (available September, 2012)
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Returns
Items returned by the receiving bank (or ACH Operator) after being released to the ACH Network
Common return reasons: Non-sufficient funds (item can be redeposited one or
two additional times) Account closed Unauthorized
Most returns are received within 48 hours of the original settlement date Some consumer debit returns can be received up to 60
days after the original settlement date
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Returns
Information on returned items is available by 10:00 a.m., CT each business day
How are returned items reported to you? Data transmission file CEO ACH Return Item/NOC Report
Use CEO Event Messaging to notify you of returned item activity
Fax (mid-day)
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Notifications of Change (NOCs)
Informational transaction sent by the receiving bank Original transaction posted successfully; requested
change must be made before initiating another transaction to that account
Common change codes: Change Routing/Transit Number (RTN) Change account number Change RTN and account number
Most NOCs are received within 48 hours of the original settlement date
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Notifications of Change (NOCs)
Information on NOCs is available by 10:00 a.m., CT each business day
How are NOCs reported to you? Data transmission file CEO ACH Return Item/NOC Report Fax (mid-day)
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Deletes and Reversals
Deletes allow you to remove a transaction from your file before your transactions are released to the ACH Network Credits can be deleted up to 3:00 p.m., CT two business
days before your Effective Date or 3:00 p.m., CT the day you deliver your file to us, whichever is later
Debits can be deleted up to 3:00 p.m., CT one business day before your Effective Date or 3:00 p.m., CT the day you deliver your file to us, whichever is later
A separate settlement transaction will post to your account for the amount of your deletes
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Deletes and Reversals
Once a transaction has been released, you can initiate a Reversal Reversals can be requested up to 3:00 p.m., CT four
business days after the original Settlement Date If you request a delete and the transaction has already
been released, we will automatically initiate a Reversal A separate settlement transaction will post to your
account for the amount of your Reversals
Reversals can be returned; there is no guarantee you will recover the funds (when reversing a credit)
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Deletes and Reversals
Requesting a delete or Reversal CEO portal – ACH Deletes and Reversals Online service E-Mail Fax
Reporting CEO ACH Customer Activity Report E-Mail (available September, 2012)
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Recalls
Can be requested after the allowable Reversal time period has passed
Manual request from Wells Fargo ACH Operations to the receiving bank requesting the return of the transaction Typically done for debits Almost never successful for credits
Some receiving banks will charge Wells Fargo for each item returned
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