NACHA Rule Changes
2013 / 2014
Don Jackson, AAP, CTP
Senior Vice President, First Tennessee Bank, N.A.
NACHA Rule Changes – 2013 / 2014
DISCUSSION TOPICS
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NACHA Rule Making Process
ACH Security Framework
Heathcare Payments
P2P Transactions
Same Day ACH – Market Survey
Expanded Addenda Records - RFI
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NACHA Rule Making Process
 Current Structure of the Rulemaking Process
became effective January 1, 2012
• Guiding principles
• Hierarchy, roles and composition of groups
• Participation policies
• Process flow and annual timeline
• Benefits and considerations
 Interpretative Rules Process
 Pilot and Opt-in Program Approval Processes
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Guiding Principles for the Rulemaking Process
 Efficient, effective use of members’ and
volunteers’ time and resources
 Consensus reached in order to achieve voting
thresholds
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Inclusive of members and other stakeholders
Open to participation
Solicit and respond to feedback
 Federal Reserve and Treasury incorporation of
NACHA rules is predicated on an open process
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NACHA Rule Making Process - Balance
Inclusive
Responsive
Thorough
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NACHA Rule Making Process - Hierarchy
Rules &
Operations
Committee
Operator
Technical Issues
Product
Innovation
Software
Information
Exchange
Risk & Quality
Compliance &
Operations
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NACHA Rule Making Process – SRG Roles
Rules and Operations Committee
(R&O)
• Provide strategic oversight to the
Rulemaking Process
• Assess potential new applications
and services
• Monitor the progress of issues
through the Process and make
decisions on next steps for an
initiative based on
recommendations from the Work
Group
• Review Requests For Information
and Requests For Comment
• Approve membership of Standing
Rules Groups and provide oversight
to these groups
• Review and approve pilot and opt-in
program proposals
• Review and approve distributing
ballots to the NACHA Voting
Membership
• Responsible for reporting to the
Board.
Operator Technical Issues (OTI)
• Provide input focused on potential
ACH Operator impacts and time
needed for development.
• Review all proposals prior to RFC
and prior to ballot.
Software Information Exchange (SIX)
• Provide input focused on ACH
processing software impacts to the
participants in the Network,
including the amount of
modifications needed and time
needed to implement a change.
• Review all proposals prior to RFC.
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NACHA Rule Making Process - SRG Roles
Product Innovation
Risk & Quality
• Focus on new ways
to use the Network
or substantial
enhancements
• Subgroups
"Industry Work
Groups" could be
formed for specific
topics
• No limit to number
of RFCs/ballots per
year
• Focus on Rules
related to risk and
quality in the ACH
Network
• 2 RFC/ballot
periods per year
(May & November)
Compliance &
Operations
• Focus on Rules
related to
operations,
maintenance, and
compliance with
other regulations
• 2 RFC/ballot
periods per year
(February &
August)
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NACHA Rule Making Process Flow
Idea submission
•Rules Committee reviews Submission and determines SRG placement
•Standing Rules Group develops proposal
•Input from Operator Technology & Software Information Exchange update provided to Voters
•Rules Committee approves distributing RFC to industry
RFC
•After RFC comment period, Group reviews responses, makes revisions to proposal
•Review by Operator Technology & Voters
•Rules Committee approves distributing ballot to Voters
Ballot
•Voters have 15 banking days to cast
vote
•Proposed rule amendment must be
approved by 2/3rds of the votes
cast or by 3/4ths of members
Implementation
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NACHA Rule Making Process
First Quarter
• February –
RFC/Ballot
period for
Compliance &
Operations SRG
• March – Rules
implementation
date (software
changes)
Second Quarter
• May –
RFC/Ballot
period for Risk
& Quality SRG
• June – Rules
implementation
date
Third Quarter
• August RFC/Ballot
period for
Compliance &
Operations SRG
• September–
Rules
implementation
date (software
changes)
Fourth Quarter
• November–
RFC/Ballot
period for Risk
& Quality SRG
 Product Innovation may release RFCs/Ballots as needed
 Rules with no software impacts may implement as
needed
 December implementation date available but rarely used
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NACHA Rule Making Process - Pilots
 Purpose: Allows NACHA to test an application and impacts
on FIs (their clients and customers) to determine whether to
move into rulemaking - generally involves determining
whether to adopt a new SEC Code
 Baseline Assumption: There is a need for a new SEC Code
or changes to the Rules that would require industry-wide
participation, and that a pilot would be needed to test
technological, operational and customer service impacts
before going into rulemaking
 Term: Defined start and end dates
 Business Case:
 Industry level preliminary business case needed to justify
pilot
 Pilot to demonstrate benefits and impacts
 Full business case needed to move into rulemaking
(typically for a new SEC Code)
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NACHA Rule Making Process – Opt In Programs
 Purpose: Allows FIs to utilize the ACH Network, under the
auspices of NACHA, where there may not be a need by all FIs
on the Network, and where there is no immediate need for a
broad-based Rule.
 Baseline Assumption: Not all FIs may need functionality, so
there is no need for a new SEC Code or broad-based changes
to the Rules. This utilization will bring new volume onto the
Network or prevent volume from moving off the Network, while
still being governed under the auspices of NACHA
 Term: No defined end dates
 Business Case:
 No direct impact beyond opt-in group of FIs participating
and their customers
 Each FI develops its own business case - no industry-wide
assessment required
 Limited NACHA resources to support if outside annual Plan
of Work
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NACHA Rule Making Process – Opt In Programs
Rules proposals are categorized as:
(A) Major impact to Network (Category A),
(B) Moderate impact to Network (Category B), or
(C) Minor impact to Network (Category C).
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NACHA Rule Changes 2013 / 2014
DISCUSSION TOPICS
 ACH Security Framework
 Heathcare Payments
 P2P Transactions
 Same Day ACH – Market Survey
 Expanded Addenda Records - RFI
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NACHA Rule Changes 2013
ACH Security Framework
 This amendment is aimed at protecting the
security and integrity of ACH data throughout it’s
lifetime.
 Participants are required to establish, implement and update
Security Policies, Procedures and systems to initiate, process or
store ACH entries
 ODFIs are required to establish the identity of Originators and
Third Parties using the ACH Network
 All DFIs, Third Party Service Providers and Third Party Senders
are required to conduct and annual audit of compliance with this
amendment.
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NACHA Rule Changes 2013
Healthcare Payment via ACH
 The Patient Protection and Affordability Care Act
(AKA Obama care) requires standards for
healthcare electronic funds transfers.
 Use if the CCD+ NACHA standard entry class with addenda has
been adopted as the standard
 Use of the EDI TRN segment has been adopted to contain the
“reassociation number”
 Providers must contact their FIs to receive
 CCD Batch Header to contain HCCLAIMPMT to identify the
entry as a health care transaction
 CCD Batch Header to contain a Company Name that is easily
recognizable by the receiver
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NACHA Rule Changes 2014
P2P Payments via ACH
 Standardize the use of the ACH Network for
person-to-person payments
 Previously, the WEB Standard Entry Class only allowed debit
entries
 WEB Standard Entry Class for credit entries is restricted to P2P
 Unlike other origination activity, an Originator of a P2P entry is
not required to have an origination agreement with the ODFI
 The Sender of the credit entry is identified within the Individual
ID field and the P2P Service Provider is identified in the
Company Name field of the Batch Header record
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Same Day ACH
Market Survey
 Potential Rule “Strawman”
 ODFIs to submit files by 10:00 a.m. ET and 3:00 p.m. ET, available
to RDFIs by 11:00 a.m. ET and 4:00 p.m. ET
 Phase I – ACH Credits only, limited to $25,000 or less, proposed
effective date of September 2016, Settlement at 5:00 p.m.
ET
 Phase II – ACH Credits and Debits, limited to $25,000 or less,
proposed effective date of September 2017, Settlement at
5:00 p.m. ET
 Phase III – ACH Credits and Debits, limited to $25,000 or less,
proposed effective date of March 2018, Settlement at noon ET
and 5:00 p.m. ET
 Survey gathers data from RDFIs regarding the incremental
expenses incurred under the above Strawman. Staff, potential risk,
and to bank’s P&L.
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Expanded Addenda Records
Request for Information
 Payments plus Information - Expansion of
Addenda Records
 All Standard Entry Classes with the exception of CTX are limited
to one addenda record with 80 characters of available space for
additional information.
 The RFI considers increasing the number of records for 1 to 9
and possibly removing the restriction 9,999 records on CTX.
 Modifications are also considered that would include a type code
to indicate if the addenda contains free text, URL, HML, etc.
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QUESTIONS?
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