NACHA Membership Approves Rule on Mobile ACH Payments

Specifically, the Mobile ACH Payments Rule incorporates mobile ACH debits into the existing category of Internet-Initiated Entries (WEB). This Rule requires that mobile payments use the WEB Standard Entry Class (SEC) Code. In particular, the Mobile ACH Payments Rule:

• Expands the definition of WEB entries to include debit entries authorized and/or initiated via wireless networks
• Applies all provisions of the WEB SEC Code to mobile debit entries
• Revises the definition of Unsecured Electronic Network to include wireless networks and provides additional clarification to the industry

“Because mobile payments are an emerging payments solution, the Rules did not previously address the capability explicitly,” said Janet O. Estep, president and CEO, NACHA. “The Mobile ACH Payments Rule introduces new opportunities for innovation on the ACH Network, striking the appropriate balance between innovation and risk management.”

As a first phase in addressing mobile payments in the NACHA Operating Rules, the Mobile ACH Payments Rule intentionally is narrowly focused and neutral regarding technology and business models. The rule provides clarity to users of the ACH Network regarding authorization, risk-management, and data-security requirements for mobile ACH debits. This clarity in the Rules creates a more stable environment for the industry to develop payment products and services while addressing risks.

“From a risk-management viewpoint, the NACHA Rules Work Group concluded that because mobile payments have a technology profile that is similar to that of Internet payments, the same authorization and risk-management provisions are appropriate,” said Devon Marsh, senior vice president, Wells Fargo, who led the NACHA Rules Work Group on Mobile ACH Payments. “We therefore have applied the NACHA Operating Rules for consumer Internet payments to consumer mobile payments.”

Subsequent phases of rulemaking will address additional topics, including considering transaction identification codes for mobile payments and evaluating unique attributes of specific uses of mobile payments (such as person-to-person payments). Dialogue on these additional aspects has already begun so that the Rules can be responsive to changing technology and requirements of the industry.

The Mobile ACH Payments Rule becomes effective on January 1, 2011. To prepare for the rule introduction, NACHA and its Regional Payments Association members will be making available education and training materials to help ACH Network participants better understand the impact of the Mobile Rule before its implementation date.

Since 1974, the NACHA Operating Rules have provided the foundation for the exchange of ACH payments. The NACHA Rules define the roles and responsibilities of financial institutions and other participants in the ACH Network, and ensure that the ACH Network remains efficient, reliable, and secure for the benefit of all participants. Through the NACHA Rules, the ACH Network has grown into a major facilitator of global commerce, accounting for 18.76 billion payments in 2009 valued at over $30 trillion.