The National Automated Clearing House Association is proposing to clear the way for banks to use its network to make payments initiated from consumers' PCs.
The Herndon, Va.-based trade association has proposed to drop a requirement that consumers provide written authorization for each ACH payment they initiate.
For Nacha, the rulemaking body for the nation's automated clearing house network, the goal is extra volume to the ACH. For banks, the benefit would be gaining a practical direct channel to complete some home banking transactions.
The change - made possible by recent changes in the federal Regulation E - would pave the way for consumers to use their PCs to authorize automated clearing house debits from their bank accounts.
The purpose of the proposal "is to bring in other technologies besides paper and pen," said Mary O'Toole, vice president at Chase Manhattan Corp. and a member of the Nacha work group that drafted the proposal.
Utilities and mail-order companies would be among corporate beneficiaries of the rules change.
"This has been kind of a frustration for corporations for a long time, in that they have to get this prior written approval," Ms. O'Toole said. "The technology is there to support authentications, so there is less concern about consumers' being defrauded."
Nacha's board of directors has been asked to vote on the proposal by May 1.
As its first order of business, the board must define the technical implications of offering electronic options to consumers. Security issues are sure to dominate the board's talk.
Experts said on-line transaction security is one of the greatest challenges facing those who would provide the paths for electronic financial transactions.
Early indications are that transaction security would be based on consumer passwords or digital signatures. Observers said this would keep the Nacha rule changes in step with Regulation E, which allows electronic transactions so long as they have been confirmed by the consumer using such authentication.
Security concerns notwithstanding, Nacha members favor a rules change.
"I'm strongly in favor of it, if it's done in an open standards fashion," said Nicholas Alex, a senior vice president at NationsBank Corp., Charlotte, N.C.
He said banks' consumer electronic services have been hampered by "ridiculous" written authorization requirements.
"It's become an administrative albatross ... and a relic that we've been meaning to get to," Mr. Alex said. "I think most bankers would strongly support" a rules change.
Nacha is considering the rules change because of banker demand for unfettered use of the ACH network for fixed or variable consumer payments over personal computers.
The rules change would take effect immediately after approval by Nacha's board of directors.