The National Automated Clearing House Association is making a bold and controversial bid to play a key coordinating role in electronic benefits transfer systems.
With strong backing from federal and state officials, but against the resistance of some electronic banking networks and processors, the bank- dominated payments association has formed an EBT Council.
Its objective is to set operating rules for distributing welfare, food stamps, and other government benefits through automated teller machines and point of sale terminals.
Claiming it has the necessary experience in rulemaking and in mediating between the public and private sectors, Nacha contends it can assemble the "stakeholders" - ranging from banks and government agencies to retailers and data processors - that together can turn the long-delayed, fragmented EBT phenomenon into a nationwide reality.
Since Nacha's core constituency includes 14,000 financial institutions, the Herndon, Va.-based association's involvement could mollify bankers' fears that they might lose control over EBT payment systems.
Then again, banks also own the regional ATM networks that believe they have better ideas for managing EBT.
Two full weeks before the EBT Council's first meeting in Washington, it already has endorsements from prominent government players led by the Federal EBT Task Force and the National Association of State Auditors, Comptrollers, and Treasurers.
Buoyed by that support and the bankers on his board, Nacha president and chief executive officer Elliott C. McEntee said he is optimistic that a system of rules can be in place by October, in time to be stipulated in some state EBT contracts.
Mr. McEntee, who has spent several months conferring with federal and state EBT officials and laying the groundwork for the council, said he hopes to sign 40 initial members in five categories to which votes will be allocated: government entities, card-issuing financial institutions, merchant-acquiring institutions, retail merchants, processors and other service providers, and payment networks.
The last two may pose some problems.
"Nobody really knows who will show up at their party," said Tom McLaughlin, vice president of government services at Deluxe Data in Milwaukee, which processes EBT transactions in Maryland, New Jersey, and elsewhere.
Mr. McLaughlin is chairman of the EBT Industry Council of the Electronic Funds Transfer Association, which is skeptical of the new council despite its otherwise friendly relations with Nacha.
He opposes centralization of authority in any entity that will have its own identity, dues structure, and potentially bureaucracy. Indeed, Mr. McEntee expects to hire one or two staffers to administer the EBT Council.
"Something of that magnitude is not needed," Mr. McLaughlin said. He contends that centralization is necessary in two areas that can be managed by existing authorities: the American National Standards Institute for technical standards, and the Department of Agriculture for rules covering the peculiarities of food stamps.
Also critical of the new body is the EFT Association's Network Executives Council, which brings together the leaders of regional teller machine networks.
"They have not taken an official position but have indicated privately that it's very premature to create a new entity for this purpose," said EFT Association president Wayne Boucher. The networks have the requisite infrastructure and operating rules, and "if they take the lead, there is no need for a new government agency or management organization."
But it was a desire to avoid government intervention and rely on existing infrastructure that motivated Nacha, which historically has coordinated rulemaking for paperless transfers of recurring or direct payments like Social Security, salaries, and corporate dividends.
"We in Nacha have been looking at being involved in things besides ACH, we see the payment systems converging, and EBT is a major issue," said Andrew Higgins, an executive at Barnett Banks Inc. and chairman of Nacha.
"Some may ask if we are the right organization for this, and consensus will be difficult. But someone had to step forward to set operating rules and regulations," Mr. Higgins said. "I want to emphasize this is an open forum. We want everyone involved."
"Others could have come to the fore, but they didn't. Nacha did," said Jack Radzikowski, executive director of the federal EBT task force.
"It's a tough bill to fill," he said, but Nacha meets the requirements of neutrality, rulemaking expertise, "a track record, and a steady hand on the wheel."
Mr. Radzikowkski added that the Nacha framework conforms to the spirit of the "reinventing government" initiative of Vice President Gore. As extended to EBT by the federal task force, it emphasizes use of commercially available systems and networks and "portability of benefits" - permitting recipients to use terminals anywhere in the country.
Kenneth S. Apfel, an Office of Management and Budget official who is chairman of the federal task force, and Darrell Daines, Nevada state controller and head of the state financial officers' group, have sent Mr. McEntee written endorsements. Mr. Daines said his association "will recommend states enroll and participate in the EBT Council."