Early Results Are Inconclusive for NACHA’s New IAT Code

The first statistics about the new automated clearing house code for international transactions are in, though it's too soon to draw conclusions about how popular the so-called IAT code will become. According to NACHA, governing body of the ACH, IAT had 303,802 transactions in September with a total value of $791 million. IAT went live on Sept. 18, so it was in effect for only nine processing days that month, according to Priscilla Holland, senior director of international programs at Herndon, Va.-based NACHA. In October, IAT had 455,697 transactions with a total of $1.9 billion. NACHA created IAT in 2007 to aid the U.S. Treasury Department's anti-money-laundering efforts. The code was to take effect March 20, but NACHA delayed implementation to give banks, especially smaller ones, more time to prepare to receive properly documented international ACH transactions (Digital Transactions News, June 16). IAT replaces two older ACH codes for cross-border payments?PBR, for consumer payments, and CBR, for non-consumer transactions. These codes required separate batches for international payments to keep them distinct from domestic ones, which led to a higher incidence of exception processing and a higher risk of non-compliance with regulations, according to a July 2008 report from research firm Aite Group LLC. While there was a rush of activity over the summer to meet the extended deadline, by and large IAT's birth had few complications, Holland tells Digital Transactions News. “So far we've been very pleased with how things were going with the implementation,” she says. “There were no major glitches.” There were a few of what Holland calls minor problems in which transaction originators failed to fill in some data fields properly. NACHA collects transaction data from the nation's two ACH operators, the Federal Reserve and The Clearing House Payments Co. LLC's Electronic Payments Network (EPN). Holland says she can't draw conclusions about the September and October IAT numbers because she doesn't have full data yet. The average transaction values, $2,604 in September and $4,169 in October, may indicate corporate transactions, but Holland hasn't reviewed detailed data to confirm that supposition. November's IAT transaction count of 438,421 actually was off 3.8% from October's, but Holland isn't phased. “We don't have a pattern to go back to and say three years ago there was a dip” at that point in the year, she says. NACHA doesn't yet have November's dollar volumes. Both Holland and Aite Group senior analyst Nancy Atkinson say IAT is likely to get a boost when an international product suite the Fed announced Nov. 4 rolls out early next year. The Fed's FedGlobal ACH Payments service is expanding in Europe and will be available in a total of 30 countries. Thanks mostly to bilateral agreements with central banks, the Fed previously had ACH reach in 12 countries, according to Atkinson. The Fed's European expansion is the result of an agreement with Netherlands-based Equens SE, a pan-European payment processor. “It's going to make it easier to settle an IAT” transaction, says Atkinson. “Over time it [IAT volume] will pick up, particularly with the Fed opening up in other countries.” Holland says NACHA will report IAT volumes on a monthly basis for about six months, then roll them into the association's quarterly ACH reports.