Automated Clearing House Research Articles

A Proposed Framework for Financial Institutions Using Blockchain Tecnology

Blockchain technology plays a pivotal role in the banking industry, being recognized as one of the most crucial sectors. With the financial market expanding and the demand for banking services on the rise, the need for a robust banking system capable of offering top-notch services to clients is paramount. Regrettably, the current banking system in Egypt falls short of meeting these requirements. However, there is hope on the horizon, as blockchain technology has garnered widespread interest in the global banking community for its potential to mitigate fraud and other threats to banking operations. This study offers a concise overview of various blockchain architectures and trading systems, delving into their types and the popular platforms currently being utilized worldwide., such as Automated Clearing House (ACH).

FinTech and the COVID-19 pandemic: Evidence from electronic payment systems

This paper investigates the effects of the coronavirus disease 2019 (COVID-19) pandemic on financial institutions and on consumers' adoption of Financial Technology (FinTech) for payments. This paper documents the following findings in Kenya. (1) The COVID-19 pandemic accelerated the adoption and increased the payment concentration of FinTech. We document an approximately 54% increase in mobile banking transactions, a 19.56% increase in mobile banking agents, and a 14.56% increase in the number of mobile banking accounts. (2) The use of all types of electronic payment cards declined significantly during the pandemic. (3) The pandemic magnified interbank contagion and liquidity risks and reduced both domestic and international electronic fund transfers via both the Real-Gross Settlement System and the Automated Clearing House. Overall, our results indicate that FinTech not only partially alleviated the negative impact of the COVID-19 pandemic during Q1 of 2021 but also accelerated consumers' adoption of FinTech and digital onboarding, especially in Q3 and Q4 of 2022.

Flutterwave—A digital payment solution in Nigeria

This case study analyses the Information & Communication Technology (ICT) sector of the West African country Nigeria; the growth of their internet services leading to online payment options. The rise of telecommunication companies and mobile payment options are also scrutinized here to some extent. The report discusses the overlying assumptions of weak online financial security issues that developing countries face and how payment aggregators are aiding in the process in order to achieve a smooth digital marketplace. Flutterwave, is a B2B digital payment Application Programming Interface (API) that allows processing of credit and debit for cards, other local alternative payments, such as mobile money and Automated Clearing House (ACH), across Africa. They ensure that global merchants are able to process payments like a local African company. The case of Flutterwave is discussed in detail with their business model—customer profiles, provided services, a landscape of their competitors and the challenges faced doing business; in order to shed some light on the aspect of making Nigeria a potential destination of investment for many Multinational Corporation (MNC’s) in the future.

From operational necessity to strategic advantage: Why payments are the next area of transformation in the B2B value chain

Business-to-business (B2B) commerce encompasses multiple spend categories, supplier types and purchasing channels. Yet the providers of payment solutions for this commerce have been slow to innovate and evolve with client needs. Payments through automated clearing house (ACH) networks and cheques still dominate globally as the preferred payment method, despite their inherent weaknesses, and the growth of card-based payments has yet to challenge this. A number of trends across the broader B2B value chain are creating challenges for buyers and suppliers, whose payment strategy can increasingly be seen as a tool for responding to these changes and creating value. This paper explores the current B2B payments landscape, specifically in the UK, the important trends shaping the industry, and recommendations for how end clients and companies should be optimising their payments strategy accordingly.

Blockchain Platform for Real-Time Payments: A Less Costly and More Secure Alternative to ACH

This paper examines the historical development of banking and automated clearing house legacy systems and offers blockchain platform for real-time payments as an alternative. Institutions with legacy systems resist disruptive change unless there are demands by businesses and customers and an opportunity for new products at reduced costs and additional revenues. Although the Automated Clearing House (ACH) in the U. S. has phased in a twice-a-day clearing and settlement system, it is still behind real-time models in use in several other countries. ACH uses individual clearance and settlements for large payments and batches for smaller transactions. Using ACH data, this paper calculates the annual opportunity cost of using a real-time model such as blockchain versus ACH's discrete, twice-a-day clearance and settlement procedure. For 2016, the real-time protocol would have resulted in benefits for businesses and customers of $10 billion.

Behind the launch of The Clearing House’s RTP® network: An interview with Timothy Mills

In the 1960s, improvements in telecommunications and computers sparked the first age of electronic payments in the USA, leading to the development of the Automated Clearing House network. In the decades since, increasingly rapid communications and globalised commerce pushed the industry to develop real-time payments to support the modern economy. A critical moment in the pursuit for faster payments occurred in November 2017 when The Clearing House launched the RTP® network, the country’s first real-time payment system. This interview with Tim Mills, Vice President of Business Development and Product Management at The Clearing House, recounts the origins of the RTP® network, shares insights from its first year of operation, and discusses parallels between the development of electronic payments and the race to land a man on the moon.

The Development of Payment Systems in Tanzania: A Discussion on the Laws Governing Electronic Cheque Tanzania

This paper is about the potential understanding of the development of Information and Communication Technology in Tanzania, e-payment (electronic cheque) respectively. Further, the paper assesses the development of cheque system (origin, meaning, and forms of cheque) from traditional means to modern means that is electronic cheque system and the law governing it. The most important part of the paper is on the analysis of the laws dealing with electronic cheque and the admissibility of an electronic cheque system in Tanzania, particularly on how these new laws (the Electronic Transactions Act No.13 of 2015, the National Payment Systems Act NO.4 of 2015, Cyber Crime Act, No.14 of 2015, the Tanzania Automated Clearing House Rules and other related laws) which have provided for the same. The questions guiding this paper are, whether the electronic cheque system in Tanzania is protected by the law, whether the law has provided for the conditions for electronic cheque, whether we have electronic clearing house and system and whether electronic cheque can be admissible before the court of law as evidence in both civil and criminal action. As the fact that electronic cheque is discussed, then we cannot escape a briefly details on electronic evidence, as electronic cheque may form part and parcel of electronic evidence when required to be so.

Investigating the Effectiveness of TSA in Blocking Public Funds Leakages in Nigeria

This study determined the extent to which TSA can block financial leakages in public funds management. The study adopted judgemental method of sampling to select forty workers from a total population of one hundred and fifty eight staff of the Federal Polytechnic, Federal Pay Office, Corporate Affairs Commission and Nigeria Security and Civil Defence Corps Ado Ekiti, Ekiti State Nigeria. Descriptive statistics of percentages, average and standard deviation were used to analyze the respondents’ opinions to the questionnaire. Reactions were allocated weights of 0 to 4 on Likert scale according to the degree of disagreement/agreement with each statement. An overall average mean score of 2.60 indicate that respondents agree that TSA block financial leakages in public fund management. Regression analysis result confirmed that TSA is significant in financial leakage blockages (t value =28.04, p = 0.00), thus indicating the effectiveness of TSA policy operations in blocking financial leakages in public funds management in Nigeria. It was recommended that central bank should improve on the statements of accounts dispatch to real time gross settlement systems and automated clearing house (ACH) to avail them of all transactions details using automated processes on a daily basis. Government should improve on central bank oversight functions on payment and settlement by using automated processes and promote education and training of staff on TSA operations to avert sabotage of the policy.

Faster payments systems gaining speed in the USA: Expanding scope of services

The USA has been playing ‘catch-up’ when it comes to establishing accelerated payment systems — but the wheels are beginning to turn faster. The recent introduction of same-day automated clearing house (ACH) payments was a start, but other federal government-led initiatives are also underway, setting the foundation for even faster and more efficient real-time electronic payment capabilities. For example, the Federal Reserve’s Payment Task Force has enumerated both goals and effectiveness criteria for any new real-time payment solutions. At the same time, efforts at creating real-time payments in the USA are also being influenced by regulatory standards, such as those established by the Consumer Financial Protection Bureau. In one of the most watched developments, The Clearing House’s realtime payments (RTP) platform is scheduled to go live with consumer bill payments and business-tobusiness payments pilots in the first half of 2017. Such developments hold great promise for business users, including improvements in both cash management and supply chain management.

A Comparative Assessment of Automated Clearing House(ACH) of America and SEPA of EU -Focus on a Risk Management Policy and Key Features-

A Comparative Assessment of Automated Clearing House(ACH) of America and SEPA of EU -Focus on a Risk Management Policy and Key Features-

Present Status of E-Business and E-Banking in Bangladesh: A Study on Some Selected Commercial Banks of Chittagong City

Now a day e-business has created wonderful prospect all over the world. E-banking can perform as a complementary factor of e-business. The central bank (BB) of Bangladesh has recently introduced automated clearing house (ACH) system. This pushed upward transition from the manual banking system to the e-banking system. This study has been undertaken to observe present status of e-business and as its complementary factor of e-banking system in Bangladesh. The study analyzes the data collected from local banks of Bangladesh and also used snowball sampling techniques to gather answer from about three hundred respondents who have already been using e-banking system on the basis of a questionnaire. The study found that dealing officials of the banks are not well conversant about their desk work. It has been observed that the country can benefit from successful utilization of e-business and e-banking as this will help to enhance productivity. Also, monetary gain of both producer and customer may have a feasible and positive impact on raising gross domestic product in Bangladesh. E-business, especially with the help of e-banking, can develop the economy of Bangladesh in a better way of customers’ satisfaction.

Lessons learned from 24/7 payments operations

In the past seven years, a new type of the payment infrastructure (Immediate Payments) has been introduced alongside Real-Time Gross Settlement (RTGS) and Automated Clearing House (ACH) mechanisms. Historically, banks have responded to this development by creating ad hoc, single country solutions or by tactical changes to their existing payment platforms. This paper argues that a more strategic response is possible and is in fact the optimal approach for banks that operate in multiple countries. It shows that the drivers of adoptions are similar for RTGS and Immediate Payments, and it is therefore possible to use the historical diffusion patterns of RTGS to estimate the rate of adoption for this new infrastructure and that it is going to be a regular and frequent occurrence on the payment product roadmap of a global bank. The case studies will demonstrate that, although each country takes a unique approach, rooted in its history and market practices, significant commonalities have emerged. Global banks can take advantage of these commonalities to implement a generic multi-country payments solution that supports the common core, and then deal with a significantly smaller undertaking to implement country-specific variations when a particular country creates its own Immediate Payments infrastructure. Alternatively, single-country banks can defer the investment until their country expresses the intention to create such an infrastructure. Even purely domestic banks should take note that the common characteristics are well beyond the capabilities of their legacy payments platforms and that, in order to create new compelling value for their customer base, architecture modernisation will be an important component of the overall initiative.

ACH Payments: Changing Users and Changing Uses

Declining paper check usage, growing reliance on credit cards, and the rapid expansion of debit cards are all well-known aspects of the rise of electronic payments, but less focus has been placed on automated clearing house (ACH) transactions. This Policy Analysis Paper describes the changing ACH landscape, and considers the degree to which this growth and change have heightened one risk issue in particular: the susceptibility of ACH payments to fraud. The paper begins by summarizing overall trends in ACH payments and factors underlying the growing demand. This description of the ACH landscape also focuses on the emergence and rapid recent growth of a new set of ACH debit transactions, referred to as “e-checks” that, unlike traditional ACH debits, do not rely on established customer-originator relationships.

Effectively managing third-party sender risk in the ACH Network

The Automated Clearing House (ACH) Network offers many options for financial institutions and third-parties to provide transaction processing. In one example, a third-party acts as a sender of ACH transactions by originating debits for its originators through its banking relationship with a financial institution. This role introduces unique opportunities, as well as obligations, for all parties in maintaining diligent risk management processes. This paper focuses on the role of the third-party sender, its unique relationships with other Network participants and application to global transactions, appropriate due diligence processes for engaging a third-party sender, and sound business practices for risk management with third-party senders on the ACH Network.

How to create successful relationships between third-party senders and banks when developing an ACH strategy

Third-party senders and financial institutions, when working together to develop a strong Automated Clearing House (ACH) payment strategy and processing profile built on a foundation of sound operating controls, provide the ACH network with high-quality transactions which deliver significant value to all participants. This paper explores the working interactions between third-party senders and financial institution, including an overview of strategic and tactical activities that are leveraged by both parties to manage ongoing ACH transaction quality and data integrity. The reader is introduced to the ACH third-party sender processing model and provided with insight into the deployment of various control points and quality assurance techniques. This paper also highlights key interactions between third-party senders and financial institutions for establishing and monitoring qualitative and quantitative controls, which are important for evaluating ongoing performance and adherence to service levels.

Developing a Usage-centered e-Payment Model using Open Network System

One-tenth of the world’s ever-growing internet population shops online, representing a staggering 627 million people. As more organization adopts e-payment methods, changes in the market-place for business-to-business (B2B) payments increasingly demand executives’ attention. Businesses are beginning to realize they must add new payment options to a process still dominated by paper checks, wire transfers, and automated clearinghouse (ACH) transactions. Extreme programming and other emerging agile methods represent an important new direction in software engineering and development. This paper explores the integration of both usage-centred engineering and extreme programming for epayment model using open network system. This paper describes the development of a B2B E-payment system using Use-Case modelling techniques as well as, ESignatures and XML. We propose an open network system which can adapt to users changing needs as well as allowing effective and secured transaction via any customers’ bank account.

PC-based Automated Clearing House origination: Dinosaur or niche application?

As time marches forward, more and more financial institutions are moving their Automated Clearing House (ACH) origination offerings from PC-based to web-based platforms. With the emergence of high-speed internet service and remote working arrangements, most businesses have welcomed this shift. So is this the end of the line for PC-based ACH origination, or are there still compelling reasons for companies to use non-web-based ACH solutions? To explore this question, this paper begins by reviewing PC-based and web-based ACH origination, explaining how they have evolved and noting each method’s advantages and disadvantages for both financial institutions and corporate users. The paper reveals the results of U.S. Bank’s experience with customer origination preferences, explores some key characteristics that drive customer adoption of different solutions, and ultimately draws some conclusions about whether PC-based ACH origination will survive. Finally, the paper discusses corpor­ate best practices for both methods of ACH origination.

Person-to-Person Electronic Funds Transfers: Recent Developments and Policy Issues

The paper investigates the reasons why person-to-person electronic funds transfers are still not very common in the United States compared with practices in many other countries. The paper also describes recent enhancements to online and mobile banking that provide account holders with low-cost interfaces to manage person-to-person electronic funds transfers via automated clearing house (ACH). On the theoretical side, the paper characterizes the critical mass levels needed for payment instruments to become widely adopted. Given the Fed's long-term heavy involvement in check clearing, the paper concludes with policy discussions of whether intervention is needed.

Turn your luck around: Reversals on ACH payroll credits

With the extensive use of electronic payment to staff and the encouragement of further participation by payroll departments within many corporations, this paper looks at the Automated Clearing House (ACH) Network and the challenges it faces, particularly with respect to reversals on ACH credits. The ACH Network provides an efficient, cost effective payment network that benefits all participants, but there are issues that may need to be taken outside of the network for resolution.

Facilitating money movement globally using international Automated Clearing House payments

This paper explains how trends in global trade are affecting cross-border payments, explains what is driving heightened interest in International Automated Clearing House (IACH) solutions, and explores the perceived benefits of and barriers to the use of IACH.