NACHA Payments 2014 Roundup

After attending IPS, NACHA Payments is always a slightly strange experience. Not bad, just quite a different set-up. IPS is very international – if anything the UK is under represented – and more senior. NACHA offers much to the more junior member of staff, particularly those seeking to renew their AAP accreditation. This means that the attendance is much, much higher, but that there is a real mix of people. As a result, some of the sessions are detailed, nitty-gritty discussions, great for learning about areas I don’t usually cover. The main topic of conversation for me was real-time payments. I’ve spoken a couple of times in the past at NACHA on the topic, partly because of my involvement in the UK Faster Payments scheme, and clients will know about my forth coming series of reports on the topic. Real-time was also mentioned in numerous places across the agenda, with several friends and former colleagues speaking. The focus of my first report was also the starting point for many of my conversations – addressing the many myths that seem to pervade about real-time. These include:

• that it’s only in the UK and Singapore (it’s not – there are at least 35 other systems globally)
• that its new and leading edge (its not – at least one system is 40 years old)
• that it’ll canabalise wire revenue so should only be a p2p proposition (multiple examples proving that this doesn’t have to be the case!)

Shortly before NACHA Payments, NACHA announced it’s enhanced Same Day ACH proposals which also came under great debate. It’s my belief, and shared by a growing number of people, that the Fed has decided the US *will* have a real-time payments system. As such, one group of people saw this announcement as being a response to ensure that NACHA is not bypassed in some way. Jan Estep, the CEO, of NACHA, was on one of the panel sessions, and was asked about how this attempt will be any different to the previous NACHA proposal. The vote on that proposal received a Yes from the majority of banks, but not the 75% voting majority to pass it. It’s widely believed a handful of big banks effectively blocked the proposal. To my point at the beginning about there being a large operational audience, Jan gave an excellent and detailed explanation of how this proposal differed from the last. But a number of the audience suspected that the question was rather more pointed and was really asking why the blocking banks would suddenly vote for this now. That specific question was never addressed. By the time the conference finished, I was left with the impression that the debate had turned a corner, or at least moved into a new phase. Over the last year, I’ve increasingly found that people have formulated their opinions on the subject. But as my discussions highlighted, there are a lot of misconceptions, and I’m not always sure some of the people contributing to the debate aren’t muddying the waters further. I think the next step for the Fed is to address that, and even if it stops short of compiling a list of requirements, a view on what isn’t the solution would be helpful. I understand the logic of the NACHA proposal, but I fear it's a short-term solution to a long term problem.