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The Green SheetGreen Sheet

The Green Sheet Online Edition

April 12, 2010 • Issue 10:04:01


Automated clearing house, safe and smart

The Green Sheet's Feb. 8, 2010, article "Do banking silos hinder fraud prevention?" contains much good information, but I cannot allow the subhead "The ACH super fraudway" to go unchallenged.

In my role, I can speak frankly and specifically about the ACH Network. The Network is a preferred payment solution because it is the safe and smart way to do business. Simply put, the ACH Network is ubiquitous, efficient, and allows the secure passing of payments plus robust information.

While ACH Network volume continues on an upward trajectory, the effectiveness of sustained ACH Network rules, risk management and enforcement measures has created a subsequent decline in unauthorized debits. An indicator of potential fraudulent activity, unauthorized debits had a substantive 13.8 percent decline in fourth quarter 2009 compared with fourth quarter 2008, and the overall unauthorized rate for debits was a tiny 0.036 percent.

Unauthorized activity related to checks converted at the POS and for online bill payment is even lower, and those rates also have been dropping. Clearly, these statistics speak for themselves about the safety that is inherent to the ACH Network.

The malware attacks you reference are not directly about any single payment channel, but rather are about businesses' compromised online banking credentials. This type of activity - corporate account takeover - is a form of corporate identity theft where a business's online credentials are stolen and used to fraudulently access bank accounts and engage in fraudulent banking activity.

What the fraudsters do once they get access to a business's bank account is of concern, as the doors are then open to any type of fraud. If an account compromise occurs, account alerts or reporting that is done prior to sending files can help manage fraud.

The industry needs to focus on securing access to the account itself. It is exactly this type of threat that should have bankers thinking "outside-the-silo."

Janet O. Estep
NACHA - The Electronic Payments Association


While we cannot change the offending subhead in our print edition, we have replaced it with "Compromised banking credentials" in the article's online version at www.greensheet.com/emagazine.php?issue_number=100201. We regret that the original subhead did not accurately reflect the meaning of the text it preceded. Please accept our apologies, and thank you for pointing out how sound the ACH Network is.


Sub-$25 credit transactions good for merchants

I was just reading "Visa expands No Signature Required program" in the Industry Update section of your Feb. 22, 2010, issue.

The last paragraph states: "Because these transactions will look and feel the same to cardholders, merchants may find a shift from debit to credit for small-ticket purchases. This could be bad news for merchants, who will pay higher fees on credit versus debit card transactions. But it may mean good news for ISOs and merchant level salespeople because they will earn higher residuals due to increased credit card usage."

This conclusion is inaccurate. ... There is a break-even point where online debit is cheaper than credit, but for most merchants, this break-even point is right around or just over the $25 mark. Most merchants will see a decrease in fees for processing these sub-$25 transactions as credit.

The conclusion should be swapped: good news for merchants/bad news for ISOs and MLSs.

Steve Sommers
Shift4 Corp.


Thank you for calling to our attention an unattributed opinion published in Industry Update. We have removed the text from the item's online version. The revision is at www.greensheet.com/emagazine.php?story_id=1803.


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