WASHINGTON - The Federal Reserve Board has agreed to modify deposit deadlines and pricing practices at its automated clearing house and is seeking industry comment as to what changes are necessary.
At issue is the private sector's long-running claim that the Fed's pricing practices and deposit deadlines create unfair competition. For years the three private-sector ACH operators - the New York Clearing House, the American Clearing House Association, and VisaNet ACH Services, a unit of Visa U.S.A. - have demanded the Fed adjust its pricing in a way that gives financial institution customers credit for work done by the private operators.
This charging practice has cost the New York Clearing House, which processes the ACH transactions for 885 members in the second Fed district, approximately $1 million a year in lost revenues, clearing house officials have said.
The Fed is now proposing a multi-tier pricing structure. First, it would charge ACH operators a monthly fee for each routing number they access on the Fed's automated clearing house network, and it would charge ACH operators per-item fees for transactions they send through the Fed.
The Fed would charge noncustomers (banks that use private-sector operators) a monthly settlement fee rather than the current monthly account-servicing fee.
But it would also pay private-sector operators for transactions they send to depository institutions.
Lastly, the Fed is proposing that Reserve Banks work collaboratively with ACH operators to establish inter-operator deposit deadlines by which the Fed banks and private-sector operators exchange transactions. As it stands now, private-sector members must enter their payments data 30 minutes earlier than Fed customers.
An executive with a private-sector operator, who requested anonymity, was "cautiously optimistic" regarding the Fed's latest proposal, but said the organization would have to study the proposal in depth before passing final judgement.
Comments on the modifications are due July 25.