New Fed Product Monitors ACH Transactions in Real Time
Managing risk is important to all businesses, but it’s crucial to financial institutions as they conduct payment transactions on behalf of their customers. To make this task easier, the Federal Reserve Banks recently introduced a new risk management service that allows originating financial institutions to monitor automated clearinghouse (ACH) transactions originated by their corporate customers.
This new service, called FedACH RiskSM, allows institutions to monitor payments in near real time, the first time the ACH industry has had this capability. With the service, institutions can preset debit and credit caps for one or more companies originating ACH transactions or across their ACH origination business. Users can set end-of-day defaults and select cap monitoring by process day or by exposure over several days.
|“Our risk management service will allow banks to control ACH payments originated by their customers regardless of network entry point.” —Richard Oliver, Federal Reserve Bank of Atlanta executive vice president
The service also includes breached-cap notifications to originating bank contacts who release pended ACH batches for processing or who reject pended batches. The automated risk service incorporates bank self-administration of risk management criteria and resides within the Fed's Web-based FedACHSM Information Services.
FedACH Risk, unveiled in April at the National Automated Clearinghouse Association’s 2005 Payments Conference in San Antonio, will be piloted later this year and available in early 2006.
Wide latitude of control
“Our risk management service will allow banks to control ACH payments originated by their customers regardless of network entry point, [including] payments coming from a bank’s back office or payments sent directly to the network by third-party processors,” said Richard Oliver, Federal Reserve Bank of Atlanta executive vice president and manager of the Fed’s Retail Payments Office.
The service is the second to be launched of a suite of FedACH Risk Management Services. The Fed ACH Risk Returns Reporting Service has been available to FedLine® Web subscribers since October 2003. Work is beginning on ACH risk management services for receiving banks.