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|Founded||June 20, 1974|
|Type||Financial services trade Association|
|Purpose||To promote the development of electronic solutions that improve the payment system for the benefit of its members and their customers.|
|Janet O. Estep|
National Automated Clearing House Association (NACHA) manages the development, administration, and governance of the ACH Network, the backbone for the electronic movement of money and data in the United States. It is funded by the financial institutions it governs. 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, a set of rules that guide risk management.
NACHA is a 501(c)(6) not-for-profit association incorporated in 1974. It represent nearly 11,000 financial institutions by way of eleven regional payments associations and direct membership. In 2016, the ACH Network processed more than 25 billion payments worth more than $43 trillion in 2016. NACHA is not directly involved in the ACH transactions that flow to and from organizations and financial institutions.
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.
In the two years that followed, 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 administers the Network, it does not operate the physical ACH Network; the processing of transactions is handled by the Federal Reserve and The Clearing House (also known as EPN).
Originally part of the American Bankers Association, NACHA separated in 1985 and hired Bill Moroney as its first CEO. He was succeeded in 1988 by Elliott McEntee. Upon McEntee's retirement in 2008, Janet O. Estep became NACHA's President and CEO. In 2019, Estep was named President Emeritus and Jane Larimer became NACHA's President and CEO. NACHA has several different membership levels.
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 transaction: Direct Deposit. The U.S. Air Force soon became the first employer in the nation to initiate a Direct Deposit payroll program. Today, Direct Deposit is the way nearly 93 percent of Americans get paid.
Same Day ACH was first launched in 2016, enabling faster credit and debit payments for consumers and businesses.
Three enhancements to Same Day ACH are coming. On Sept. 20, 2019, the availability of funds for both Same Day and traditional ACH may occur earlier in the day. On March 20, 2020, the dollar limit per Same Day ACH transaction will increase from $25,000 to $100,000. On March 19, 2021 (delayed from Sept. 18, 2020), financial institutions will be able to submit Same Day ACH transactions to the ACH Network two hours later each business day.
NACHA reported that in 2018, the ACH Network processed 23 billion payments, up 6.9 percent from 2017 and marking the fourth consecutive year that the number of new ACH transactions increased by more than 1 billion. The 2018 payments were valued at more than $51.2 trillion, an increase of 9.5 percent from 2017.
Under the administrative simplification provisions of the Affordable Care Act, NACHA was designated by HHS as the standards development organization (SDO) for the healthcare EFT. NACHA’s “CCD+Addenda” payment (a business-to-business payment with one addenda record of remittance information) was designated as the standard healthcare EFT transaction. Under the administrative simplification framework, health plans are required to pay claims using the standard EFT transaction when requested by healthcare, medical or dental practices. In 2018, more than 306.7 million ACH electronic funds transfer (EFT) payments, valued at $1.59 trillion, were made from health plans to healthcare providers.
In 2018 NACHA acquired the Interactive Financial eXchange (IFX) Forum. NACHA said the combined organizations will improve the development of standardized Application Programming Interfaces (APIs). In September 2018, NACHA launched Afinis Interoperability Standards, a membership-based standards organization, to develop interoperable, portable financial services standards. IFX Forum is now part of Afinis Interoperability Standards.
In October 2018, NACHA announced it had acquired the Business Payments Directory Association, which had said earlier in the year that it was working with Discover Financial Services on a proof-of-concept platform for a B2B payments directory built on blockchain technology.
NACHA also provides several association services programs. Those include annually hosting both the Smarter. Faster. Payments conference and the Payments Institute; offering Accredited ACH Professional (AAP) and Accredited Payments Risk Professional (APRP) certifications; offering the NACHA Certified program for Third-Party Senders; and operating a consulting arm called Elevation.
Secure Vault Payments
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Nacha, which serves as the administrator of the ACH network, identified the need for faster payments six years ago when it implemented Secure Vault Payments. SVP is an online and mobile payment system that leverages the ACH Network and offers a real-time guarantee of good funds, 24 hours a day and seven days a week. Although the technology already exists to meet the demand for faster payments, not all financial institutions have adopted it.