The American Bankers Association today said it opposes a proposal by Nacha to modify Automated Clearing House return timeframes, pointing to the high costs that would be imposed on financial institutions, particularly smaller banks.
Nacha has proposed to shorten the timeframe for returns that are typically returned without human decisioning or handling by a receiving depositary financial institution. In a letter, ABA said the proposal would involve substantial systems reengineering, enhanced exception processing, vendor coordination and changes to staffing models – all at high cost to financial institutions for relatively little benefit. The proposal would disproportionately affect community and regional banks, which often depend on service providers and have limited control over system changes, ABA said.
ABA also said that the proposal would reduce processing flexibility, which would impair effective risk management. It urged Nacha to consider more targeted, data-driven approaches to improving return efficiencies.
In addition, ABA weighed in on two other Nacha proposals:
- ABA said the industry would benefit from a revised definition of “banking day” that would remove uncertainty as to whether Sunday or bank holidays could be included in the interpretation. A banking day is a day on which an ACH operator performs an ACH settlement.
- ABA said new rulemaking is not necessary on dishonored and contested returns. Banks report that the existing frameworks governing dishonored and contested returns and defining banking day are well understood, operationalized and functioning effectively across the network, the association said.
