The National Automated Clearing House Association has formulated a marketing campaign to assure the public that no year-2000 problems will affect automatic payments.
The Herndon, Va.-based association, one of a growing number of financial organizations hoping to allay consumer fears about the date change, is particularly concerned about reaching some 100 million recipients of direct deposits.
Nacha, among other groups, fears that year-2000 misinformation could pose bigger risks than the event itself.
"The financial industry has been touted as the most prepared of any industry," said Nacha chairman Harold Piotrowski, who is also manager of retail operations at Charter One Bank of Cleveland.
Mr. Piotrowski stressed that consumer funds are insured-but only if they remain in depository institutions. "We want people to know that it will be business as usual," Mr. Piotrowski said during the Nacha-sponsored Payments '99 conference.
The marketing efforts will be coordinated with regional and local ACH associations. They will include a video news release and radio appearances.
Nacha also comes armed with year-2000 compliance statements from payroll processors Automatic Data Processing Inc., Ceridian Employer Services, and Paychex Inc. and from the Social Security Administration.
Speaking Tuesday at the Payments '99 conference, Federal Reserve Board Governor Roger W. Ferguson Jr. said the year-2000 issue evolved from a technology problem into a chief executive officer concern and "has now become a public confidence issue."
The banking industry has "a committed responsibility to the public to ensure the smooth operations of payments systems through year-2000 and beyond," said Mr. Ferguson. He said there may be inconveniences, but "I believe that most disruptions will be mild and short-lived."
The Federal Reserve, anticipating a problem with public confidence, announced last year that it will make $50 billion of additional cash reserves available to banks.
George Thomas, senior vice president of the New York Clearing House, said there is a call from certain industry quarters, notably the securities business, for a reduction of clearing and settling activities between Dec. 31 and Jan. 3.
He also noted that Target, Europe's equivalent of the Federal Reserve's Fed Wire funds transfer system for the euro, has announced that it will temporarily shut down.
"We are extremely confident that the ACH network will continue to perform at the highest levels of accuracy and reliability in the year- 2000," he said.
He said confidence in the ACH system can be undermined if false rumors are allowed to spread unchecked. Bankers as well as consumers need to be informed.
"I read an e-mail from a bank that said, 'Well, we know the Fed is testing, but not the other operators,' and that really upset us because we have been testing since October 1997," Mr. Thomas said.
The Fed and competing ACH operators-the New York Clearing house, Visa U.S.A, and the American Clearing House Association in Arizona-said jointly that they had successfully completed a Y2K simulation on Feb. 27. It demonstrated those entities' ability to exchange payment data, advice files, and settlement reports on either end of the New Year's 2000 weekend.
