NEGOTIATION OF ACH TRANSACTION FEES WITH PRIVATE-SECTOR OPERATORS.The Federal Reserve Board announced on October 31, 2000, a new approach to pricing Federal Reserve Banks' automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. clearinghouse (ACH (Automated Clearing House) A system of the U.S. Federal Reserve Bank that provides electronic funds transfer (EFT) between banks. It is used for all kinds of fund transfer transactions, including direct deposit of paychecks and monthly debits for routine payments to ) transactions, which is intended to enhance competition in the provision of services to depository institutions Depository institution A financial institution that obtains its funds mainly through deposits from the public. This includes commercial banks, savings and loan associations, savings banks and credit unions. . The ACH is a nationwide system used to process electronically originated credit and debit transfers. ACH credit transfers include direct deposit payroll payments and corporate payments to contractors and vendors. ACH debit transfers include consumer payments on insurance premiums, mortgage loans, and other bills. The Reserve Banks and private-sector ACH operators (PSOs) rely on each other to process some transactions in which either the originating depository The place where a deposit is placed and kept, e.g., a bank, savings and loan institution, credit union, or trust company. A place where something is deposited or stored as for safekeeping or convenience, e.g., a safety deposit box. financial institution or receiving depository financial institution is not their customer. Some industry representatives expressed concern that Reserve Banks' deposit deadlines and price structure do not permit the PSOs to compete effectively. Under the new approach approved by the Board, the Reserve Banks will negotiate with the PSOs regarding new deposit deadlines and fees for interoperator transactions between Reserve Banks and the PSOs. Eligibility for the new deposit deadlines and fees will be limited to operators as defined by the rules of the National Automated Clearing House See ACH. Association. The new interoperator deadlines will be implemented no later than June 2001 and the new fees no later than September 2001. |
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