Nacha News

Nacha creates broadly adopted payment and financial messaging rules and standards through consensus-led governance, international collaboration, and innovative development practices. We continually advance the ubiquitous ACH Network and engage diverse stakeholders to accelerate a digital future of global financial services interoperability.

PAYMENTS 2017: Innovating to Enhance the Customer Experience

Nacha ♦ PAYMENTS 2017

Jan Estep Opening Remarks

Austin Convention Center
Monday, April 24, 2016 

Good morning and welcome to Austin and the Faster PAYMENTS conference! It’s fitting that we are meeting in this city nicknamed "Silicon Hills" with its many tech companies, as we discuss how innovation can totally reinvent products and services. You’ll have a chance to see these types of innovative companies throughout the conference and in the exhibit hall, including a new Innovator Row section. Let’s ask Beth Cronenweth to take a sneak peek for us. Beth – what are you seeing?
Thanks Beth, we are all looking forward to visiting the exhibit hall and seeing so much payments innovation. For decades, we’ve coped with common every day friction – well before the inventions of a TV remote, suitcases with wheels or on demand car services. Today’s digital marketplace is all around us. More often, customers are receiving products and services in frictionless ways – and now we can’t imagine life without them.
In the payments industry, we are seeing innovation all around us – it has moved from the brainstorming phase to implementation, which is bringing transformative solutions. Innovation is focused on gaining efficiencies, removing friction or improving customer service – or any combination of these. And the best ways to reach these goals is to break down the silos of information and bridge communication gaps to address pain points that drive real customer value. Keeping the user or customer in the forefront is key.
Nacha, in partnership with the Regional Payments Associations, relentlessly pursues ways to cultivate innovation that increases the use of electronic payments by providing an abundance of venues for dialog and education among payments industry stakeholders – including our current focus on providing faster payments education.
Active participation in Nacha’s many programs is diverse, with robust input from financial institutions – ranging from large international banks to natural person credit unions; organizations that use payments – from Fortune 500 companies to universities to small nonprofits, and government entities ranging from the U.S. Treasury to local municipalities. Also included are solution providers that enhance the payments experience in countless ways – and it is those best of breed solutions providers that uniquely contribute to enhancing electronic payments that are showcased in the Nacha Preferred Partner program.
As we actively seek to understand, address and resolve pain points, we must continually engage in dialogue with payments users. Throughout the year, the Nacha Board Advisory Group, comprised of end users, fintechs and core processors, provides direct engagement with the Nacha Board of Directors. And here, at PAYMENTS, there are many specific learning opportunities for businesses - including the Corporate Learning Center that Beth showed us.
As an industry, many of you are cultivating innovation that builds upon the ACH Network’s skinny architecture and safely supporting new participants in the payments ecosystem. For example, ICBA Bancard and Linked2Pay created an “ACH in a box” solution for small businesses that makes ACH more accessible and easier to use. And each and every day there are organizations taking steps to benefit from ACH payments - such as Capital Public Radio, which recently changed its preferred donation method to ACH because those using ACH were retained for up to 20 percent longer than other donors.
With so much going on, I want to focus the remainder of my time on three important topics:  1) to give you an update on ACH overall and Same Day ACH; 2) to talk about how Nacha is working with the industry to address pain points with the help of APIs; and 3) to highlight new Nacha programs for accreditation and certification.
ACH continues its robust growth – both in terms of the number of transactions and in the amount of money moved. In 2016, we saw four consecutive quarters of more than 5 billion payments and a 5.4 percent growth in ACH transactions over 2015 – totaling more than 25 billion ACH payments valued at $43 trillion. And in the first quarter of this year, ACH volume increased nearly seven percent over the same quarter last year.
Another way the industry is growing electronic payments and enhancing customer service is by providing faster payments options such as Same Day ACH. I’m really pleased to report that since we were here last year, Same Day ACH credits had a smooth launch, is fully operational connecting all US DDAs, and its usage is strong. In the first quarter of 2017, Same Day ACH credit volume increased 13.6 percent over the last quarter of 2016. Also, in a survey conducted late last year with financial institutions comprising nearly two-thirds of Same Day ACH origination, not a single FI saw any increase in fraud due to Same Day ACH, and ALL – 100% – had a payroll success story.
Same Day ACH is being used in a variety of ways beyond the very important payroll use case. For example, Safety Insurance is providing its customers claim payments in emergency situations and Protection One security is providing refunds for overpayments to enhance their customer service. We are also pleased to learn that the largest user of the ACH Network, the U.S. Treasury, is committed to participating in Same Day ACH beginning in September 2017.
We are not resting on our laurels as we look forward to enabling Same Day ACH debits in mid-September. With Same Day ACH debits, when a customer asks for a payment to be made from their bank account more quickly, businesses can now respond.  This delivers capabilities endorsed by consumer advocates and the CFPB – the ability to pay bills on time and giving consumers a better sense of their true bank account balance. As such, making sure that the effective entry date is accurate is really key for everyone – no stale dates allowed! An added benefit is that faster debits can also mitigate some risks because faster file exchanges mean that returns happen more rapidly.
In order to continue smooth implementation of Same Day debits, I ask everyone - financial institutions, solution providers, processors and corporates to conduct full end-to-end testing. If your company hasn’t heard from a key organization relative to support or testing – reach out now and ask. Nacha has a wealth of information available on in the Same Day ACH Resource Center, including educational offerings, checklists, case studies and a “Business Essentials Guide” specifically designed for corporates.   
There are many other faster payments options available or being developed in the U.S. market - many real-time payment options. It is here, at Faster PAYMENTS, that we will be showcasing these solutions in the Faster Payments Experience, FP Center Stage and FP Zone. Additionally, we, in partnership with the Regional Payments Associations continue to provide payments education leadership for the industry and we are now also providing Faster Payments education.
As promising as these faster payments solutions are, we must all recognize that they don’t solve all the gaps, and that pain points beyond speed still exist. Let’s move to my second topic – APIs.  APIs are being used by financial institutions and are transforming the way they and their customers communicate. While APIs are not new, they are being used to enhance digital offerings using integrated applications and services. Nacha is now playing a significant role as we work with the industry to assess where the standardization of APIs can address pain points or increase efficiencies.
For the ACH Network, APIs have the potential to eliminate manual processes – such as searching for contact information amongst banks when timely communication is crucial. Today, one financial institution has to navigate through customer service channels of another FI to reach the appropriate personnel to respond to basic tasks such as a fraud alert. However, in the future, an API could provide real-time information among financial institutions and provide far quicker response times, that could result in reduced fraud losses. Separately, through the Nacha Payments Innovation Alliance, work is underway to also develop a “playbook” for API Standardization focusing on other types of APIs. Visit the Nacha booth to learn more about this important work.
Now let me address the third area – which is about you, your knowledge, and demonstrating excellence.  A thriving and secure ACH Network does depend on quality Third-Party Senders, and Nacha’s new program - Nacha Certified - enables Third-Party Senders to set themselves apart in today’s competitive market by demonstrating to financial institutions that they are vetted, validated and valued. The program will help them demonstrate that they have effective oversight of their businesses and understand the risk and compliance obligations associated with processing ACH transactions.
Additionally, in 2018 we will be launching a new accreditation program called APRP. Individuals will have the opportunity to demonstrate a comprehensive knowledge of risk management strategies, concepts and mitigation techniques within the payments ecosystem.  It will demonstrate that they are knowledgeable of all types of payments risk – not just ACH.
It is through Nacha’s varied programs, coupled with our steadfast support for inclusive engagement and collaborative self-governance, that we are seeing customer service enhancements and evolution on every level in this vibrant payments industry. At this event, we are here to not only talk about friction and risk – but all of us here at Faster PAYMENTS are also here to cheer payments successes, so others can learn from them. Please do your part by virtually cheering on your choice for the Nacha Challenge via the PAYMENTS mobile app, and at tomorrow’s lunch, congratulate the Challenge and Payment Systems Awards winners.
At this transformational moment of innovation that is focused on customer service solutions, I leave you with a quote by Mahatma Gandhi to keep with you during the conference, “A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him…We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.”
Thank you for giving us the opportunity to serve you at Faster PAYMENTS – we hope you enjoy the conference!