An interview with Jan Estep
Q. The title of your session, "ACH: Friend or Foe?" asks an important question. Are we reaching a critical point in which innovation is happening outside of banking?
A. Today, more than ever, customers are driving payments choice. Innovation in payments is happening to meet end-user needs. And at the center of this is the bank account.
To that point, the ACH Network offers a foundation on which to innovate, providing a safe, secure, reliable network for direct bank account-to-bank account transactions. Leveraging this infrastructure, consumer and business needs are met in new ways. For instance, consumers can now pay one another via one straight-through ACH credit payment, a WEB credit. Similarly, banks are exploring ACH credit solutions to help businesses take checks out of the system.
Where there are needs, new solutions will arise. As these needs continue to evolve, everyone must continue to innovate to remain competitive.
Q. What role does mobile commerce place in this balance?
A. It is important to think distinctly about payment instructions versus the flow of the payment funds. Instructions may flow via a mobile device, while funds flow through traditional payment channels. In this way, you can think about authorizations as instructions, and how they support various different types of payments.
As the work toward a mobile wallet continues, the ACH Network again provides a way for financial institutions to meet customers' needs with personalized options. The Network’s distinctive core competencies - connectedness, ability to transmit payment and information together, efficiency - create a significant opportunity for FIs who innovate on this existing infrastructure.
Q. Who do you view as the greatest competitors to ACH in the U.S.?
A. Its ubiquity is a critical component of the nation’s payments infrastructure and a differentiating factor that makes it the backbone system that supports all electronic payments.
Because of this, the ACH Network actually provides support to other payment types and holds attributes that are not replicated by others. In fact, other payments systems, such as card networks, and many alternative payments solutions, rely on the Network for settlement and beyond. The ACH Network is an enabler of payments and innovation, offering infrastructure, flexibility, and ubiquity for the development and implementation of innovative payments solutions, products and services.
Q. How do additional ACH settlement windows play into this?
A. Implementing additional settlement windows is important for the ACH Network and for the payments industry as a whole. The industry continues to evolve and the ways that everyone utilizes technology and makes payments is changing rapidly. Because funds only flow via the settlement process, it is important to think about how settlement can support needs for funds flow sooner than "next day." As such, it is important that we continue to work with the industry to meet the changing needs of the industry by supporting such initiatives as the expanded FedACH SameDay Service, and continuing our work on a rule supporting same-day settlement of ACH transactions. In this way, we can create a ubiquitous foundation for all financial institutions on which they can then develop valuable services for their customers.
Hear more from Jan Estep at the ATM, Debit and Prepaid Forum as she continues to answer the question, “ACH: Friend or Foe?”