“Getting it Right” at the NACHA Mega Meeting
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Last week, ACH payments and fraud prevention professionals attended the NACHA Council Mega Meeting held on the waterfront in Boston, MA. In the sessions related to quicker payment processing, the overall sentiment was that banks need to do a better job of monitoring to manage the increased exposure. Two of the hottest topics were Expedited Processing and Settlement and, of course, the new Supplement to the 2005 FFIEC Guidance.
Expedited Processing and Settlement (EPS): As anyone who is involved in ACH payments knows, NACHA is proposing a new payment option called EPS, which would allow an ACH payment to be processed and settled within the same day it was originated. As a point of comparison, the current ACH settlement time range is one day in advance for a debit, and one to two days in advance for a credit.
From a fraud management perspective, the impact of this expedited payment option heightens the need for a fraud monitoring solution that can identify questionable ACH transactions and quickly alert fraud team members of risky transactions. Banks will need to know their customer better and take action faster before, if an account takeover is suspected.
NACHA is looking for feedback on EPS, with the deadline extended to Monday, December 12.
FFIEC Authentication Guidance Update: Discussion on the new Guidance came up several times, particularly on measures that banks can take with layered security. However, one area I was interested in learning more about was the transaction monitoring component of the Guidance. As one speaker remarked, it’s no longer enough to “know your customer”; these new guidelines urge banks to “know your transactions".
The key point in this discussion was monitoring the whole payment lifecycle: from the initial customer login to the point of transaction. Monitoring shouldn’t end once a customer has successfully logged into the system – it’s as important to understand what they do as it is to validate who they are. Knowing the pattern of your accounts’ transactions will enable organizations to identify when something occurs out of the ordinary that should be reviewed.
Having a solution that can detect erroneous payment patterns within each ACH file throughout the day will allow banks to provide the level of service that some customers expect, e.g. EPS, while managing the risk involved. As one speaker commented at the NACHA conference, banks “have to get it right. We can’t send files we shouldn’t send!”
How is your institution planning on “getting it right?” and balancing the demands of customers for expedited processing with the new Supplement to the FFIEC Guidance?
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ACH and Wire Fraud