WASHINGTON – NAFCU on Monday endorsed proposed rules that would standardize the process for person-to-person payments.
“Standards will better enable credit unions and other financial institutions to originate ACH credits for their customers, and will enable Originating Depository Financial Institutions to conduct more efficient risk management by monitoring volume and activity for these transactions. NAFCU believes this rule should help achieve this goal,” Tessema Tefferi, regulatory counsel for NAFCU, told NACHA – the Electronic Payments Association – in a comment letter on the proposal.
The proposed rule will standardize the use of the ACH Network for P2P payments by: creating a Standard entry Class Code to be used for P2P credit transactions sent from the consumer’s DDA; establishing standardized formatting requirements for WEB credit; ensuring that WEB credits and debits contain a value that lets the receiver know that the entry is a P2P transaction; clarifying rules for Notifications of Change; creating a new code to enable the originator to provide a URL link to additional payment related information; and, allowing an Addenda Record for a WEB credit to contain more information in free form text.
A standard set of rules for P2P payments, wrote Tefferi, will enable financial institutions and third-party service providers to implement internal process and procedures for these entries to improve operations and customer service, reduce risk and fraud, and minimize exceptions and disputes.
“In sum, this proposal, we believe, will support policies that will better protect credit unions and their customers; therefore, NAFCU supports this proposed rule,” he wrote.