NACHA Group Close to Proposals for Mobile Payments on the ACH

A group that has been investigating possible rules changes for the automated clearing house network to account for mobile payments plans to present its proposals by the end of March, according to a senior executive at NACHA, the organization that regulates the ACH. The Mobile Banking Work Group, a NACHA-sponsored panel that was formed in September 2007 and includes more than 100 executives from the electronic-payments industry, will deliver its recommendations to NACHA's Rules and Operations Committee for further consideration, says Susan Pandy, senior director of network development at the Herndon, Va.-based organization. While Pandy says she can't give specific details of the proposals, she says they fall under three topic headings: authorization requirements; transaction monitoring; and requirements for person-to-person payments. How, and when, NACHA's rules might change to accommodate mobile transactions is difficult to say, as the rule-making process is often a long and involved one. But Pandy says the work group is concerned to make sure mobile activity on the ACH carries sufficient consumer protection against unauthorized transactions. The group also wants to create a mechanism by which mobile volume can be measured, possibly by using an existing payment-type code field within transaction records or an addenda record. “I don't know how many mobile transactions are going through the network,” Pandy says. “We have no way to track that volume.” Although mobile-payments volume in the U.S. is still quite low, that traffic is expected to rise rapidly over the coming years, experts say. An appreciable percentage already flows through the ACH, a network often preferred by merchants and processors because of its lower costs compared to bank cards and billing by mobile carriers, says Nick Holland, a senior analyst at Aite Group LLC. “It might be as much as half,” he says. That figure could rise even further with developments such as the decision by Research in Motion Ltd., the maker of the popular Blackberry line of smart phones, to create an online store for applications to compete with Apple Inc.'s iTunes App Store. The RIM app store, which is set to open next month, will use PayPal, a processor that already settles a significant portion of payments through the ACH. Pandy says the Mobile Banking Work Group will meet later this month to develop the final recommendations for NACHA's rules committee. Next, she says, the group will move into what she calls phase two, an examination of emerging technologies such as contactless payments and near-field communication as well as mobile applications such as international remittances and money transfers for the underbanked. Near-field communication (NFC) involves technology embedded in a phone that allows it to establish two-way links with point-of-sale devices to transfer payments and other data.