Call it the power of persistence.
In three major initiatives this year — fighting automated clearing house fraud, using the ACH network to route payments for online transactions, and clearing checks over the network — Nacha, the electronic payments association, has gained traction after earlier efforts failed.
Last month Nacha's voting members approved a Network Enforcement Rule designed to fight fraud on the ACH network. The first phase of the rule took effect last week, allowing higher fines for originating depository financial institutions that allow "willful disregard" of the rules by originators, such as persistent, unauthorized debits. The fines could go as high as $500,000, and the rule enables Nacha to order an ODFI to suspend an originator.
The second phase, expected to take effect in March, would create a compliance tool that authorizes additional reporting requirements for monitoring financial institutions that have high levels of returns.
For the Herndon, Va., clearing house group, the rule's approval was a significant rebound from the failure of its Network Return Entry Fee proposal, which its members rejected in 2004.
Elliott C. McEntee, Nacha's president and chief executive officer, said the new rule had been crafted to respond to the concerns of critics, who had complained that the 2004 proposal could have been too punitive for small, inadvertent infractions.
"When you're dealing with thousands of financial institutions and all their customers, it takes a while to get to consensus on finding a new way of enforcing network rules." Mr. McEntee said. "It takes time to do that. You don't always get it right the first time."
Peter Yeatrakas, the president and chief executive of the Western Payments Alliance, one of Nacha's voting members, said the 2004 proposal had been one of the most contentious in his 30-year career in the payments industry.
"That was a pretty close vote if you go back and look at it," Mr. Yeatrakas said. Nacha rules require proposals to be approved by two-thirds of its voting members — currently representatives of 24 financial institutions that are direct members of the association and the nation's 19 regional payment associations, including WesPay.
Steve M. Ellis, Nacha's chairman and an executive vice president at Wells Fargo & Co., said reaching agreement among the group's members requires a "thoughtful and deliberate" process. "When you go out to the membership, you go out to lots of people who have not been privy to some of the conversations that have taken place. Everyone gets a voice."
In the case of e-commerce, the obstacles were financial and technological, rather than administrative. Nacha has been trying since 2002 to find a safe, secure way for consumers to use the ACH network to pay for online purchases. The existing approach, which involves providing checking account numbers through an online form, poses a relatively high risk of fraud.
In 2002, Nacha offered a plan, which it called Project Action, to let merchants offer customers a way to link to their online banking service, authenticate themselves to the bank, and authorize a payment over the low-cost ACH network without exposing personal data to the merchant or using relatively expensive payment cards.
But Project Action foundered over issues such as the complexity of the back-end connections and the expenses that banks and merchants would have to bear.
Nacha revisited the issue with a 2005 initiative, now called Secure Vault Payments and built around standardized technology developed by eWise Systems Ltd. of London. The group initially expected to test the systems in the third quarter of this year, but the test has been delayed.
Mr. McEntee said the technology issues have continued to prove tricky. "The eWise network is being tested right now," and he expects two banks to begin the payments trial in the first quarter.
On the check-clearing front, the hurdles have been legal and logistical. A group calling itself the Check ACH Coalition began a high-profile study in the spring of last year to find a way to clear low-value checks over the low-cost ACH network. That effort burned out by the end of the year, snagged on the difficulty of providing access to the checks' images in scattered archives and the legal differences between check and ACH payments.
By October, however, the concept emerged again, when Nacha said it had found enough legal support to test ACH check clearing, with a go-ahead from regulators, though executives cautioned at the time that this might not constitute formal legal approval.
Danne Buchanan, Nacha's vice chairman and an executive vice president at Zions Bancorp. of Salt Lake City, said the group anticipates convening a meeting next month to gauge support for an 18-month pilot test that would focus on checks worth less than $25 and would give the 20 or so participants a choice of whether to receive payment instructions only or to send them as well.
"If you're going to send, you have to receive," Mr. Buchanan said. "We hope to get that moving pretty quickly."
Mr. Ellis said such innovations are a tribute to Mr. McEntee, who said last month that he plans to retire next year.
"You've got to give Elliott a lot of props for looking forward and for looking for opportunities," Mr. Ellis said.
Mr. Buchanan said: "There are times when you try to push something forward and it doesn't happen. We try to learn from it, and we try to come back with something better."
