After spending 25 years of my career working in the ACH network, I still find it a challenge to explain what it is I do. There was reluctance in the early years of the network to try and explain to the general public the mechanisms that supported ACH payments.
In 2010, NACHA - The Electronic Payment Association began a new messaging project initiative to develop clear, powerful messaging ensuring a common understanding of the NACHA Operating Rules, the ACH network, and ACH payments. The initiative involved the definition, adoption, and consistent use of industry terminology to explain the ACH network, ACH payments, and their attributes and advantages.
The recently launched ACH Messaging Campaign and Microsite are very important from my perspective, because consumers and businesses really still don't know and understand the ACH network. Numerous tools have been developed to help those in the industry describe ACH payments with clear, consistent terminology.
Using A New Term
Using consistent terminology means that all end-users will have a better understanding that the ACH network is the payment system that supports direct deposit and direct payment. It is a safe, secure and reliable network for direct account-to-account transactions, and there are rules that govern the ACH network that ensure security and reliability.
One of the most important aspects of the messaging project was the development of the term "via ACH." When this term is associated with products such as direct deposit via ACH and direct payment via ACH or a bank/credit union branded project, the "via ACH" phrase links the ACH payment back to the network.
There's an opportunity for organizations to use the "via ACH" descriptor with their own branded products. For example, many utilities have branded their bill payment programs with their own terms, like EZPay, DirectPay and E-Check. By adding the "via ACH" to these branded program names, it ties them back to the ACH network and reinforces the safety and reliability of the ACH payments.
Businesses, financial institutions and others need to use direct deposit and direct payment via ACH in their agreements, authorizations, disclosures and marketing materials. Industry support is critical to raise awareness. If every financial institution that utilizes the ACH network would begin to use the "via ACH" phrasing in conjunction with their ACH products, ACH would become more understood and a recognized and appreciated payment system.
The Benefits For All
Consumers appreciate knowing there are protections associated with the payment mechanisms they utilize. There will be an increase in the comfort-level with ACH payments for consumers and small to medium-sized businesses when we get to a point where the ACH network is more widely recognized as the reliable and secure payments systems. Clearer messaging and an understanding of security and benefits can lead directly to increased usage that then translates into volume.
For example, direct deposit via ACH - a recognized staple of the network - has been growing at a steady rate since its inception. Last year, direct deposit grew more than 3.5% and, as of March 1, 2013, the U.S. Treasury is mandating all-electronic payments for Federal benefits recipients (a form of direct deposit). We see this growth and ability to increase electronic payments adoption because there is a strong awareness of what direct deposit is, how it works, and the safety that's associated with it.
Driving that awareness in direct payment via ACH offers endless possibilities for volume growth. Non-profit organizations would see more certain cashflow from direct payment accounts from donors. Predictability would increase. Mobile to mobile money transfers are looming on the horizon with Square and other processors.
A higher adoption rate would mean increased volume and there are benefits to all network participants through the use of ACH. Adding the phrase "via ACH" helps consumers draw the connection between the positive attributes of trusted ACH payments and the ACH network. In addition to the obvious benefits of being "greener" with a paperless system, users can significantly reduce costs and increase operational efficiencies.
network participants are encouraged to utilize and incorporate this information throughout their marketing materials to drive usage of the new messages, terminology and phrasing. Taking these basic steps will increase awareness and understanding and that's really what needs to be accomplished through this process.
Consistency Now is Key
Anytime a business or a consumer really understands and is more comfortable with a product or service, and in this case, the ACH network, there's an increased inclination to utilize that product or service. Ensuring that the right terminology and messages are being used to explain the electronic movement of money and information via the ACH network has opened doors to new markets.
The NACHA messaging initiative is a positive step forward in securing the future of our industry. By establishing a better understanding of the ACH network and its value will help demonstrate the effectiveness of the rules and the importance of private-sector rulemaking. The ACH network is governed by rules that are established and approved by financial institutions, which I believe, is preferable to government-imposed regulations.
I am optimistic that collectively we can make greater strides and build a better understanding of the fact that there is a network; there are rules and consumer protections. With more education, communication and outreach, we can build a greater awareness of the benefits of the network.
Ann-Marie Bartels is CEO of EPCOR (Electronic Payments Core of Knowledge), a trade group dedicated to provident payments education and support. For info: www.epcor.org.