The National Automated Clearing House Association is again at the center of an electronic benefits transfer storm.
The association, which created controversy last year when it sought a role in electronic benefits transfer policymaking, has taken its campaign to a new level by hiring a consulting firm to help explore pricing issues.
The firm, Benton International of Torrance, Calif., has also been asked to make recommendations on whether the association should write rules regulating fees and suggesting what they should be.
The move has enraged bankers and processing company executives, who believe the association, which primarily coordinates direct payroll deposits and other paperless payment programs, is trying to dictate operating rules and prices in the emerging field of delivering welfare and other government payments via electronic terminals.
"This is just wrong," fumed an official at a banking trade group. "The free market should set the fees, not Nacha."
Association officials said they are simply exploring issues and have not determined whether the group will play a role in setting fee guidelines.
"Our first question is whether we should have a role in pricing at all," said Elliott C. McEntee, president and chief executive officer of the Herndon, Va.-based group. "In all our other work on (automated clearing house) rules, we have no involvement on pricing."
The association came under fire last fall when it formed a council to write operating rules for electronic benefits transfers for banks, government entities, merchants, and processors. Representatives from each group of "EBT stakeholders" were invited to take part in the rulemaking process. However, the association decided to finance the initiative by charging dues, a move that many industry insiders criticized.
Despite the backlash, the association proceeded with its plan, and the rules, now in draft form, are expected to be approved by its council members in March.
The council membership was divided over whether the operating rules should include a fee structure, said Helena Sims, senior director of the group's electronic benefits transfer efforts.
"The pricing question is a legitimate issue, and we did not believe that we had all the information we needed to make an informed decision about it," she said. "Hiring a consultant to be sure that information is brought to the table is just a good business decision."
Ms. Sims' critics contend that her background, which included a nine- year stint with the National Association of State Auditors, Comptrollers, and Treasurers, leaves her partial toward government officials and not banks or transaction processing companies.
"She doesn't realize that if you're going to use the existing payments system infrastructure, you have to play by the existing rules, including the cost structure," said an official at a banking trade group.
Mr. McEntee denied that Ms. Sims' background led her to favor the 10 government members of the 42-member council.
"The motivation for doing this study is very clear cut," he said, "and the council members who expressed interest in having us do this pricing study included bankers, processing entities, network people, and government entities."
