Faster payments systems: A CUNA update for CUs
WASHINGTON (10/28/14)--There are a number of recent developments in payments innovation of which credit unions and other financial institutions should be aware, efforts that are intended to move the system toward faster payments and improved payments security.
"As more information becomes available, credit unions and other financial institutions should continue to assess how 'faster payments' could potentially affect their institutions, including with operations and implementation, risk management, new products and services, data security, compliance, IT, and other areas," writes Dennis Tsang, Credit Union National Association assistant general counsel, in this week's Regulatory Advocacy Report (RAR).
Just last week, Tsang notes, The Clearing House Association announced a plan to build a real-time payments system. The association, which represents the largest commercial banks, said in a press release that it is taking on a multi-year effort to build a real-time payments system to better meet consumers' and businesses' expectations "in a digital age." The system, the association said, would incorporate strong data security safeguards to protect account information, building on The Clearing House initiative to develop and implement tokenization.
Also, the head of NACHA, the Electronic Payments Association, says same-day Automated Clearing House (ACH) payments are key to the future of the payments system.
In a recent letter published in American Banker (see resource link) NACHA President/CEO Jan Estep said the organization is working on a phased-implementation approach to move the ACH network from next-day settlement to same-day settlement during three different phases. While entities such as the Federal Reserve have stressed the need for real-time payments, Estep said that it is only part of the solution.
NACHA is expected to issue a same-day ACH proposed rule in the coming months. Last week, CUNA's Tsang attended the NACHA Alliance meeting that focused on same-day ACH and other upcoming developments.
Also, Tsang reminds in the RAR, the Federal Reserve Banks announced last month that
they have completed research on their "payment system improvement" initiative.
In the coming months, the Fed banks plan to use research conclusions and stakeholder feedback to prepare and share a roadmap for payment system improvements.