The Green Sheet Online Edition
February 23, 2009 • Issue 09:02:02
ACH network gets more mobile
In December 2007, NACHA - The Electronic Payments Association formed the Mobile Banking Work Group. The new body was charged with evaluating the rules for mobile payment applications on the automated clearing house (ACH) network and suggesting appropriate rule changes to enable and track efficient and secure mobile transactions.
Group participants were recruited from NACHA's councils and include representatives from across the payments industry. "This is the first time that we have ever done a cross-council work group," said Susan Pandy, Senior Director of Network Development at NACHA. "Participation was extended across all council memberships, including our Internet, Electronic Billing and Payment and Electronic Check councils, as well as the Global Payments Forum."
Pandy said the MBWG has representatives from small and large processors, financial institutions, wireless carriers, various information technology and mobile platform providers, and network operators. Their goal is to analyze expert predictions regarding growth in diverse markets and propose rule changes to accommodate all mobile payments on the ACH network.
"Certainly these respective council members give us a broad range of expertise to draw from," Pandy said. "Members have been studying various aspects of the network, looking at the future potential for mobile and wanting to accommodate growth within the ACH by making the rules synergistic with evolving and emerging applications."
The work group can then advise ACH account holders, customers and network stakeholders on the potential for new market growth, new types of applications, and how the rules apply to their sectors' mobile payment transactions. "Additionally, we want to be able to identify any unique risk considerations and respond to any future issues related to risk management for mobile,"
Rules of engagement
The MBWG focused on four primary objectives:
- Assessing the NACHA Operating Rules for the accommodation of mobile banking and payments
- Identifying authorization and authentication considerations
- Identifying unique security characteristics and requirements
- Assessing systemic opportunities and barriers in the ACH network
NACHA emphasized the importance of assessing how mobile transactions flow, determining the risks and returns, and reviewing the rules and guidelines to protect the quality and reputation of the ACH network. The association has tentatively scheduled to submit its rule proposals and recommendations in March 2009.
Keeping better track
The MBWG is also developing proposals to implement the monitoring of mobile transactions going through the ACH network. Currently, transaction volume is tracked using existing Federal Trade Commission standard entry class codes, whether transactions are telephone-initiated, ACH debit or Wireless Equivalent Privacy, which is used for Internet-initiated ACH debit transactions.
"There are a whole host of standard entry class codes that allow us to keep track of the various types of transactions that are flowing through the network," Pandy said. "And certainly with different types of codes the risk varies according to the transaction, whether it's consumer, corporate, debit or credit. We want to identify any transactions that may be originated from the mobile channel."
And while Pandy said there is currently nothing in the NACHA operating rules hindering mobile payment and banking implementation, there is a need to clarify the rules and to ensure the standard entry codes being used to move mobile transactions are the appropriate ones.
"NACHA members are well-suited to address the questions and challenges that are raised in mobile banking and ACH payment applications," said Steve Ellis, Executive Vice President of Wells Fargo Bank and Chairman of NACHA's board of directors. "They understand that the key driver of any mobile platform is functional inter-operability led by security, authentication and authorization standards that will meet the needs of all stakeholders." For more information, visit www.nacha.org.
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