NACHA

Last updated
Nacha
FoundedJune 20, 1974 (1974-06-20)
Type Not-for-profit
23-7451693 [1]
Legal status 501(c)(6) [1]
PurposeTo promote the development of electronic solutions that improve the payment system for the benefit of its members and their customers. [1]
Location
Services Financial services trade association
Members500+
Jane Larimer [2]
Revenue$23,616,643 (in 2019)
Expenses$22,046,071 (in 2019)
Employees70 (in 2019)
Volunteers100 (in 2019)
Website www.nacha.org

Nacha, originally the National Automated Clearinghouse Association, [3] manages the ACH Network, the backbone for the electronic movement of money and data in the United States, and is an association for the payments industry. [4] The ACH Network serves as a network for direct consumer, business, and government payments, and annually facilitates billions of payments such as Direct Deposit and Direct Payment. The ACH Network is governed by the Nacha Operating Rules. [4]

Contents

In 2022, the Nacha through its ACH network handled 30.00 billion payments (3.03% year-over-year (YoY) gain), totaling US$76.7 trillion (5.6% YoY gain). [5] From 2013-22, overall gain in the volume of transactions was 70.95%, or 5.51% annualized. [5] The 2013-22 overall gain of the value of the transactions was 98.25%, or 7.08% annualized. [5]

Nacha is a not-for-profit association under the Internal Revenue Service code 501(c)(6) and was incorporated in 1974. [6] It represents more than 9,000 financial institutions divided into ten regional payments associations [7] and direct membership. Nacha is not directly involved in the ACH transactions, but develops rules and standards and provides education, accreditation, and advisory services. [7]

History and organization

In 1972, the California Automated Clearing House Association (now called WesPay) was formed, becoming the first operational ACH association in the United States. [8]

After two years, other regional ACH associations were formed. The associations came together in 1974 to create Nacha, which was tasked with developing, governing and administering the ACH Network. While Nacha governs the ACH Network, it does not operate the physical ACH Network; the processing of transactions is handled by the Federal Reserve and The Clearing House Payments Company (also known as EPN). [9]

Originally part of the American Bankers Association, Nacha separated in 1985 and hired Bill Moroney as its first Chief Executive Officer. He was succeeded in 1988 by Elliott McEntee. [10] Upon McEntee's retirement in 2008, Janet O. Estep became Nacha's President and CEO. In 2019, Jane Larimer became Nacha's President and CEO. [11]

Leadership

Nacha’s Board of Directors are representatives of depository financial institutions who are tasked with overseeing the governance and administration of Nacha as ACH Network administrator and industry association. [8]

The 2022 Board of Directors:

The ACH Operator Advisor Representatives to the Board:

Initiatives

ACH payments

The ACH Network processes payments. ACH payments can be sent as either “same-day,” “next-day,” or “2-day” [9] – and Same Day ACH payments can be initiated and completed within a single day and as fast as a matter of hours. [10]

Direct deposit

Nacha's establishment led to the first ACH rules being drafted, and that in turn paved the way for the very first type of ACH transactions, known as Direct Deposit. The U.S. Air Force became the first employer in the nation to initiate a Direct Deposit payroll program. Direct Deposit is the way nearly 94 percent of Americans get paid. [12] [13]

COVID-19 Economic Impact Payments

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act provided Economic Impact Payments (EIP) up to $1,200 per adult and $500 per child. [14] The federal government sent hundreds of millions of EIPs by Direct Deposit. [15]

Quest rules for EBT

Nacha wrote and administers the Quest Operating Rules for Electronic Benefits Transfer (EBT) which have been in place since 1996. [16] These rules enable the distribution of government benefits regardless of state borders. [17] Government entities incorporate the rules in their contracts with private sector service providers. Nacha also develops additional standards for related programs. [18]

Standards for ACA payments

Under the administrative simplification provisions of the Affordable Care Act, Nacha was designated by the United States Department of Health & Human Services as the standards development organization (SDO) for healthcare Electronic Funds Transfer (EFT). The Healthcare Electronic Funds Transfer (EFT) standard supports electronic claim payments and remittance information between health plans and health care providers, accelerating cash flow and simplifying reconciliation for providers. [19] Nacha's CCD+Addenda payment (a business-to-business payment with one addenda record of remittance information) is the standard for healthcare EFT transactions. Under the ACA's administrative simplification framework, health plans are required to pay claims using the standard EFT transaction, whenever requested by healthcare, medical or dental practices. In 2018, more than 306.7 million ACH EFT payments, valued at $1.59 trillion, were made from health plans to healthcare providers. [14] In the second quarter of 2021, health processed 108 million EFTs, up almost 36% from the same 2020 period. [20] Today, 84% of providers prefer EFT from payers. [21]

Phixius

On 12 August 2020, Nacha reported that Visa has entered a growing list of collaborators piloting Phixius. Phixius is a Nacha-built and managed business that uses technologies, structured APIs and rules to allow interoperability in a secure network of linked credentialed service providers (CSPs) for the protected exchange of payment related details. [22] In 2022, Phixius forecasts 1 million transactions, reaching more than 1,700 financial institutions and 7,000 businesses. [23]

Membership

Nacha has more than 500 members, and offers the following membership categories.

Nacha Direct Member [24]

Nacha Direct Members are Financial Institutions and Payments Associations, and are active participants in educating and advocating for the ACH Network with regulators, legislators, and other stakeholder organizations whose policies affect the payments system. As Direct Members, these entities vote on amendments to the Nacha Operating Rules.

Payments Innovation Alliance [25]

The Payments Innovation Alliance is a membership group of domestic and international organizations who develop new ideas and initiatives to advance the electronic payments industry.

Nacha Affiliate Program [26]

The Affiliate Program is an information-only membership option that gives access to resources on the ACH Network and the Nacha Operating Rules.

Education

Nacha provides educational programs to its members and the financial services industry. These programs include:

Smarter Faster Payments Conference [27]

Smarter Faster Payments is an annual conference for the financial industry, which includes an exhibit hall, education events and networking opportunities. Payments Remote Connect is the virtual option for those who are unable to attend the conference in person.

Payments Institute [28]

The Payments Institute is an in-person academic program where students build their own curriculum from five schools of study, two master’s programs, and lecture halls. TPI Homeschool is a virtual option for the Payments Institute.

PaymentsIQ by Nacha [29]

PaymentsIQ by Nacha is a subscription-based education platform offering on-demand, virtual payments education content.

ACH Legal and Compliance Summit [30]

ACH Legal and Compliance Summit is a program founded in 2021. The Summit serves to provide attendees with the knowledge necessary in ACH compliance and regulations in the payments industry to protect clients and organizations.

Accreditation

Nacha offers accreditation programs for financial industry professionals and organizations, including the Accredited ACH Professional (AAP) and the Accredited Payments Risk Professional (APRP) accreditations. [31]

Accredited ACH Professional [32]

The Accredited ACH Professional (AAP) is a professional certification designating that an individual has demonstrated a comprehensive knowledge of all areas of ACH, a deep understanding of and experience in one or more specific ACH subjects, and a broad knowledge of concepts that relate to the payments system.

Accredited Payments Risk Professional [32]

The Accredited Payments Risk Professional (APRP) is a professional certification designating that an individual has demonstrated a comprehensive knowledge of risk management strategies, concepts, and mitigation techniques within the payments ecosystem, while mastering the complexities of risk management for ACH, check, wire, debit, credit, and prepaid cards, and emerging and alternative payments.

Acquisitions and partnerships

In March 2018, Nacha acquired the Interactive Financial eXchange Forum (IFX). [15] In September 2018, Nacha launched Afinis Interoperability Standards, a membership-based standards organization, to develop interoperable, portable financial services standards. IFX Forum is a part of Afinis Interoperability Standards. [17]

Nacha announced it had acquired the Business Payments Directory Association in October 2018. [18] BPD supports business-to-business (B2B) payment services, including blockchain-based B2B transactions. [19]

See also

Related Research Articles

<span class="mw-page-title-main">ACH Network</span> United States automated clearing house

In the United States, the ACH Network is the national automated clearing house (ACH) for electronic funds transfers established in the 1960s and 1970s. It processes financial transactions for consumers, businesses, and federal, state, and local governments. ACH processes large volumes of credit and debit transactions in batches. ACH credit transfers include direct deposit for payroll, Social Security, and other benefit payments, tax refunds, and vendor payments. ACH direct debit transfers include consumer payments on insurance premiums, mortgage loans, and other kinds of bills.

Cheque clearing or bank clearance is the process of moving cash from the bank on which a cheque is drawn to the bank in which it was deposited, usually accompanied by the movement of the cheque to the paying bank, either in the traditional physical paper form or digitally under a cheque truncation system. This process is called the clearing cycle and normally results in a credit to the account at the bank of deposit, and an equivalent debit to the account at the bank on which it was drawn, with a corresponding adjustment of accounts of the banks themselves. If there are not enough funds in the account when the cheque arrived at the issuing bank, the cheque would be returned as a dishonoured cheque marked as non-sufficient funds.

<span class="mw-page-title-main">Check 21 Act</span> U.S. law allowing checks to be digitized

The Check Clearing for the 21st Century Act is a United States federal law, Pub. L. 108–100 (text)(PDF), that was enacted on October 28, 2003 by the 108th U.S. Congress. The Check 21 Act took effect one year later on October 28, 2004. The law allows the recipient of a paper check to create a digital version of the original, a process known as check truncation, into an electronic format called a "substitute check", thereby eliminating the need for further handling of the physical document. The recipient bank no longer returns the paper check but electronically transmits an image of both sides of the check to the bank it is drawn upon.

<span class="mw-page-title-main">Wire transfer</span> Method of electronic funds transfer

Wire transfer, bank transfer, or credit transfer, is a method of electronic funds transfer from one person or entity to another. A wire transfer can be made from one bank account to another bank account, or through a transfer of cash at a cash office.

<span class="mw-page-title-main">Giro (banking)</span> Payment transfer from one bank account to another bank account and initiated by the payer

A giro transfer, often shortened to giro, is a payment transfer between current bank accounts and initiated by the payer, not the payee. The debit card has a similar model. Giros are primarily used in Europe; although electronic payment systems exist in the United States, it is not possible to perform third-party transfers with them. In the European Union, the Single Euro Payments Area (SEPA) allows electronic giro or debit card payments in euros to be executed to any euro bank account in the area.

The Australian financial system consists of the arrangements covering the borrowing and lending of funds and the transfer of ownership of financial claims in Australia, comprising:

In banking and finance, clearing refers to all activities from the time a commitment is made for a transaction until it is settled. This process turns the promise of payment into the actual movement of money from one account to another. Clearing houses were formed to facilitate such transactions among banks.

A payment system is any system used to settle financial transactions through the transfer of monetary value. This includes the institutions, payment instruments such as payment cards, people, rules, procedures, standards, and technologies that make its exchange possible. A payment system is an operational network which links bank accounts and provides for monetary exchange using bank deposits. Some payment systems also include credit mechanisms, which are essentially a different aspect of payment.

<span class="mw-page-title-main">Electronic funds transfer</span> Electronic transfer of money from one bank account to another

Electronic funds transfer (EFT) is the electronic transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems, without the direct intervention of bank staff. Funds transfers are the primary mechanism used by the business community for fast and reliable transfer of funds between two parties. The funds transfer process generally consists of a series of electronic messages sent between financial institutions directing each to make the debit and credit accounting entries necessary to complete the transaction. A funds transfer can generally be described as a series of payment instruction messages, beginning with the originator's instructions, and including a series of further instructions between the participating institutions, with the purpose of making payment to the beneficiary.

Originating Depository Financial Institution or ODFI is a banking term in the United States used in connection with ACH Network (ACH). In the ACH flow, the ODFI acts as the interface between the Federal Reserve or ACH network and the originator of the transaction. The ODFI warrants to the ACH network that the transactions it transmits to the network comply with the rules. The depository institution that is a member of ACH is usually a bank or other financial institution which is initiating a payment on behalf of its client. This is different from check processing in which the paying bank on which the check is drawn warrants that the transaction is in compliance.

SWACHA, the Southwestern Automated Clearing House Association, is a regional trade association with the mission of providing education, training, representation and knowledge regarding electronic payments and payments system risks to its approximately 1,100 members across the Southwest, United States. SWACHA members are provided electronic payments training and industry resource materials, risk management programs and representation at a national level in the development of ACH policies and rules.

A Universal Payment Identification Code (UPIC) is an identifier for a bank account in the United States used to receive electronic credit payments. A UPIC acts exactly like a US bank account number and protects sensitive banking information. The actual bank account number, including the bank's ABA routing transit number, are masked by the UPIC. Only credit transactions to an account can be initiated with a UPIC. All direct debits are blocked, which should mitigate unauthorized transactions to an account.

A payment processor is a system that enables financial transactions, commonly employed by a merchant, to handle transactions with customers from various channels such as credit cards and debit cards or bank accounts. They are usually broken down into two types: front-end and back-end.

Pathward Financial, Inc. is a U.S.-based banking and financial services company. It adopted its current name in 2022 after its parent, Meta Financial Group, sold the "Meta" trademark to Meta Platforms.

The Electronic Healthcare Network Accreditation Commission (EHNAC) is a voluntary, self-governing standards development organization (SDO) in the United States established to develop standard criteria and accredit organizations that electronically exchange healthcare data. These entities include electronic health networks, payers, financial services firms, health information exchanges (HIEs), management service organizations and e-prescribing solution providers.

Dwolla is a United States-only fintech company that provides businesses with a connection to the ACH Network or RTP Network.

The Clearing House Payments Company L.L.C. (PayCo) is a U.S.-based limited liability company formed by Clearing House Association. PayCo is a private sector, payment system infrastructure that operates an electronic check clearing and settlement system (SVPCO), a clearing house, and a wholesale funds transfer system (CHIPS).

FedACH is the Federal Reserve Banks' automated clearing house (ACH) service. In 2007, FedACH processed about 37 million transactions per day with an average aggregate value of about $58 billion. For comparison, Fedwire processed about 537,000 transactions valued at nearly $2.7 trillion per day in the same year.

<span class="mw-page-title-main">Payments Associations</span>

U.S. Payments Associations are independently-run, U.S. not-for-profit trade associations that provide payments-related education, industry representation, and guidance to payments professionals. Each association is a direct member of Nacha and certified to provide ACH education.

<span class="mw-page-title-main">Automated clearing house</span> Type of electronic network for financial transactions

An automated clearing house (ACH) is a computer-based electronic network for processing transactions, usually domestic low value payments, between participating financial institutions. It may support both credit transfers and direct debits. The ACH system is designed to process batches of payments containing numerous transactions, and it charges fees low enough to encourage its use for low-value payments.

References

  1. 1 2 3 "Form 990: Return of Organization Exempt from Income Tax". National Automated Clearing House Association. Guidestar. December 31, 2016.
  2. ↑ "Nacha Leadership". Nacha. Retrieved July 17, 2019
  3. ↑ "Nacha definition". Investopedia. Retrieved January 25, 2023.
  4. 1 2 "ACH Network: How it Works | Nacha". nacha.org (Press release). Retrieved 2019-02-14.
  5. 1 2 3 "ACH Network Volume and Value Statistics | Nacha". www.nacha.org. Retrieved 1 November 2023.
  6. ↑ "National Automated Clearing House Association", Division of Corporations, Delaware Department of State. Retrieved December 23, 2018
  7. 1 2 "Regional Payments Associations". www.nacha.org (Press release). Retrieved November 22, 2016.
  8. 1 2 "WesPay History". wespay.org. Retrieved 2019-02-14.
  9. 1 2 "The Evolution of the ACH" (PDF). nacha.org (Press release). Retrieved 2019-02-14.
  10. 1 2 "Nacha Timeline 1990s". nacha.org (Press release). Retrieved 2019-02-14.
  11. ↑ "About Nacha". nacha.org (Press release). Retrieved 2019-02-14.
  12. ↑ "A primer on Nacha". Fin (Press release). Retrieved 2019-02-14.
  13. ↑ "With Labor Laws In Flux, Here's How Americans Get Paid Today". PYMNTS.com. 2017-09-20. Retrieved 2022-07-29.
  14. 1 2 PYMNTS (2019-01-17). "305M+ Healthcare Claims Paid Via ACH In 2018". PYMNTS.com (Press release). Retrieved 2019-02-14.
  15. 1 2 PYMNTS (2018-03-01). "Nacha, IFX Forum Join Forces for API Development". PYMNTS.com (Press release). Retrieved 2019-02-14.
  16. ↑ "Nacha" (PDF) (Press release).
  17. 1 2 "Nacha Launches Afinis Interoperability Standards for Financial Services | Nacha". nacha.org (Press release). Retrieved 2019-02-14.
  18. 1 2 "Nacha Acquires the Business Payments Directory Association To Bolster B2B Payments Services". Digital Transactions (Press release). Retrieved 2019-02-14.
  19. 1 2 "Nacha acquires BPDA to push blockchain-based B2B payments directory". Finextra Research. 2018-10-03. Retrieved 2020-07-21.
  20. ↑ "Healthcare Finance Trends for 2022 Patient Payments Focus Report". www.commercehealthcare.com. Retrieved 2022-07-29.
  21. ↑ Grubin, Hank. "InstaMed's 11th Annual Report Finds Consumers Want Contactless Healthcare Experiences Beyond the Pandemic". InstaMed. Retrieved 2022-07-29.
  22. ↑ "Nacha Adds Visa to Phixius Pilot Program". Cision PR Newswire. 12 August 2020. Retrieved 25 August 2020.
  23. ↑ PYMNTS (2022-06-06). "Phixius, Aliaswire Team on Account Verification". www.pymnts.com. Retrieved 2022-07-29.
  24. ↑ "Nacha Direct Member | Nacha". www.nacha.org. Retrieved 2022-07-29.
  25. ↑ "Payments Innovation Alliance | Nacha". www.nacha.org. Retrieved 2022-07-29.
  26. ↑ "Nacha Affiliate Program | Nacha". www.nacha.org. Retrieved 2022-07-29.
  27. ↑ "Smarter Faster Payments Conference | Payments 2023". payments.nacha.org. Retrieved 2022-07-29.
  28. ↑ "Payments Institute | Payments Institute". tpi.nacha.org. Retrieved 2022-07-29.
  29. ↑ "Nacha Launches SPEAK and Expands its Leadership in Payments Education". AP NEWS. 2021-01-20. Retrieved 2022-07-29.
  30. ↑ "ACH Education from the Legal Perspective | Nacha". www.nacha.org. Retrieved 2022-07-29.
  31. ↑ "Accreditation | Nacha". www.nacha.org. Retrieved 2022-07-29.
  32. 1 2 "About Us | Nacha - Administrator of the ACH Network". www.nacha.org. Retrieved 2022-07-29.
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