More Competitive Approach to Pricing Automated Clearinghouse Transactions
November 8, 2000
Circular No. 11286

To All Depository Institutions and Others Concerned in the Second Federal Reserve District:

The following press release was issued on October 31 by the Board of Governors of the Federal Reserve System:

The Federal Reserve Board today announced a new approach to pricing Federal Reserve Banks' automated clearinghouse (ACH) transactions intended to enhance competition in the provision of services to depository institutions.

The ACH is a nationwide system used to process electronically originated credit and debit transfers. ACH credit transfers include direct deposit payroll payments and corporate payments to contractors and vendors. ACH debit transfers include consumer payments on insurance premiums, mortgage loans, and other bills.

The Reserve Banks and private-sector ACH operators (PSOs) rely on each other to process some transactions in which either the originating depository financial institution or receiving depository financial institution is not their customer. Some industry representatives expressed concern that Reserve Banks' deposit deadlines and price structure do not permit the PSOs to compete effectively.

Under the new approach approved by the Board, the Reserve Banks will negotiate with the PSOs regarding new deposit deadlines and fees for interoperator transactions between Reserve Banks and the PSOs. Eligibility for the new deposit deadlines and fees will be limited to operators as defined by the rules of the National Automated Clearing House Association. The new interoperator deadlines will be implemented no later than June 2001 and the new fees no later than September 2001.

The Board's official notice of this action (pdf - 134kb) was published in the Federal Register of November 3, is available. Questions may be directed, at this Bank, to me.