Nacha, the electronic payments association, has introduced a voluntary program that would use largely electronic methods to fix exceptions or errors in bill payments.
Called the Bill Payment Exception (BPE) Mitigation Opt-in Program, the program allows records to be added to Automated Clearing House (ACH) transactions to correct payments. Nacha is a member-owned association that supervises the ACH network.
Normally, when a consumer bill payment originated via online banking or a similar service has an error, the electronic payment is converted to a paper check and mailed to the biller. Often these checks and other paper-based exception payments lack information billers need to credit the consumer's account, Nacha says. Also, billers have to manage different online banking relationships through different contracts for exception resolution. Bill payment exceptions cost about $800 million per year, according to a Nacha study.
Nacha's new electronic mitigation program provides a standard for billers to manage exceptions, and allows bill payment originators to tag exceptions by using an addenda record. This record provides billers with additional information about the consumer to help repair exception payments electronically. The new program will also require billers to send a notice to the bill payment originator with the corrected information so the original error is not repeated in recurring payments.
Verizon, Capital One and iPay Solutions sponsored the program, and Nacha is seeking additional participants.
"It's an opportunity to utilize the ACH network in an innovative way, capitalizing on its flexibility and ability to move payments and origination," says Robert Unger, senior director for electronic billing and payments at Nacha, in an April 7 press release. "By standardizing the online bill payment exception process, the BPE Mitigation Opt-In Program has the potential to make a significant impact on reducing exceptions."
Nacha also announced that in 2013, ACH network volume grew to by 4% to almost 22 billion electronic payments from the prior year. A total of $38.7 trillion was transferred over the ACH Network during 2013, an increase of almost 5% compared to 2012. In 2013, native electronic payments increased 7.1%, and make up almost 90% of ACH network volume.
"Originally started more than 40 years ago as a system to replace paper checks, the ACH network has grown into a robust payments system facilitating the adoption and advancement of electronic payments," says Janet Estep, president and CEO of Nacha, in an April 7 press release. "The continued growth and increased use of the network attests to its ability to continually adapt and evolve to meet the changing needs of the industry."