ACHs world-wide are under extreme pressure to change and innovate as immediate payment facilities are demanded/expected and the fintech companies launch new facilities and services that make it easier to make and collect payments. They just have to keep up or they will lose market share.

USA’s NACHA clarify their strategic direction

Last week NACHA announced a number of key staffing changes all designed, the press release claimed, to: “Generally reduce friction and increase utilization of the ACH Network, while working to strategically expand and diversify the organization.” What this gobbledygook statement means is clarified a little by two strategy statements approved by the NACHA board:

• The ACH Network enables end users to easily make payments through a high-quality, ubiquitous payment system that securely and efficiently moves money and information directly from one bank account to another
• NACHA enables financial services industry stakeholders to shape and benefit from common rules sets and standards for ACH and other transaction types through its expertise in convening diverse parties in rulemaking, standards development, governance and education.

Payment systems are the rails not the service

NACHA define what they do as: securely and efficiently move money and information directly from one bank account to another. The ACH is the underlying rail that other systems use, e.g. Most mobile payments in the UK are initiated by the mobile phone and MADE (cleared) through the Faster Payments Service which is part of the UK’s ACH BACS.

To do this NACHA accepts that their role is to enable financial services industry stakeholders to: “shape and benefit from common rules sets and standards for ACH and other transaction types through its expertise in convening diverse parties in rulemaking, standards development, governance and education.”

The PSD2 initiative in Europe is the same: the basic payment function is provided by the system provider and then approved parties (there will be many more than the USA) can connect to the rails to provide the payment service.

The corporate opportunity

Given the acceptance and increasing understanding of what the payment system rails approach means:

• A/P departments can now dream about, think about:
  • Developing their own way of paying their suppliers, their staff, etc.
• A/R departments can now dream about, think about:
  • Developing their own way of collecting payments from their customers, etc.

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CTMfile take: All that is needed is a creative fintech and/or bank to open up new market segments.