Financial Update (Second Quarter 2002)

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FedACH

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FedACH

FedACH Consolidation Completed

A year-long project to consolidate FedACH (automated clearinghouse) to central operations sites in Atlanta and Minneapolis is now complete.

The decision to consolidate these operations was reached in early 2001 after careful consideration was given to how FedACH customers could best be served in a business environment of increasing competition and commodity-like pricing.

“We are challenged like all other businesses to meet the market’s expectation of quality service balanced with competitive pricing,” said Marie Gooding, an assistant vice president in the Retail Payments Office. “As a result, we must constantly look for ways to make our business more efficient while not missing a beat where quality is concerned.” The consolidation reduces operating expenses, and these savings have been passed on to the customer through lower prices.

As of March 2002, FedACH customers in the first through seventh Federal Reserve Districts (Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta and Chicago) are supported by the Atlanta central operations site. Customers in the remaining five districts are now supported by the Minneapolis central operations site.

The automated clearinghouse is a nationwide electronic payment delivery system used most often to process recurring payments like payroll, corporate payments to vendors, Social Security payments, insurance premium payments and utility payments. FedACH and other ACH operators act as central clearing facilities through which financial institutions transmit or receive ACH entries. First introduced in the early 1970s as a more efficient alternative to checks, the ACH now handles billions of payments annually.