How Faster Payments Could Reduce Fraud

Payment security and speed are critical issues for the Federal Reserve System and NACHA - The Electronic Payments Association, says Jan Estep, president and CEO of NACHA (see Fed's Payments Overhaul on Fast Track).

As the Fed fine-tunes its roadmap for how banking institutions and other payments providers should update and enhance their methods to move transactions through the ACH network and other payments rails over the next five to 10 years, NACHA is already moving forward with its plans, Estep explains in this exclusive interview with Information Security Media Group.

Estep describes how a newly formed Board Advisory Group will help NACHA, which serves as trustee of the ACH network, will work to ensure its plans for faster and more secure payments meet the needs of banking institutions, merchants and others.

NACHA's ongoing work to support ubiquitous same-day ACH will be a building block for the future of payments the Fed envisions, Estep says.

Moving Payments Faster

NACHA recently closed an industry-wide request for comment about a new rule for ubiquitous same-day ACH, which NACHA has been working on since 2012, when it published a blueprint for the ACH network.

"There is, frankly, a lot of alignment in the NACHA ACH blueprint from 2012 and the Fed's plan," she says. "Right now, we are looking at same-day ACH as a way to move payments faster in the U.S. ... But we also are doing more strategic work on directories, on payments and information, on formats that aid cross-border payments," which also is part of the Fed's vision for payments in the future.

The ACH network moves almost $39 trillion and nearly 22 billion electronic payments annually, according to NACHA.

Board Advisory Group's Role

The new Board Advisory Group will help ensure NACHA is adequately addressing the concerns of a broad range of industries, Estep says. The group includes representation from a diverse pool of non-banking entities, such as retailers, e-commerce providers and transaction-security vendors.

"The Board Advisory Group was really designed to create a robust dialogue from many different users or providers in the ACH network so that the board could hear those other critical voices as they have discussions around strategic topics," Estep adds.

Security surrounding faster payments will be a key issue for this group, says Joe Proto, CEO and chairman of payments solutions provider Transactis. Proto is one of the newly named Advisory Board Group members.

"Security is paramount to all of us: the banks, the corporations that the financial institutions serve, and the technology providers that those corporations and financial institutions use for the movement of money and data," Proto says. "So having the opportunity to come together as a group and ensure that we are knitted together for the common goals that we have around the movement of money and data, ensuring that security is always our first and foremost priority, is really an opportunity for the Board Advisory Group to help lead and ensure that we're covering everything that is most important."

Like the Fed, NACHA is looking beyond ACH transactions as emerging payments tools, such as mobile, are quickly changing how businesses and consumers transact, Estep notes.

During this interview, Estep and Proto also discuss:

• How NACHA and its new Advisory Board Group aim to balance innovation with risk management;
• Why the ACH network is the most secure network for faster payments; and
• Next steps NACHA is taking to push more same-day payment adoption.

Estep guides NACHA's daily operations and encourages the development, promotion and use of electronic payments that run through the ACH network. Under her leadership, the ACH network has continued to expand and diversify its payments through the engagement of network participants in the rulemaking process.

Proto, as head of Transactis, works with seven of the top 17 commercial banks in the U.S. Prior to Transactis, he launched REMITCO, a remittance processing company acquired by First Data in 2000 by First Data, as well as Financial Telesis (CashFlex), which was acquired in 1992 by CoreStates.