NACHA Mulls Recurring TEL Debits, Other E-Check Changes

by Mercator Advisory Group 0

As pressure mounts to reduce expense,paper-check processing unit costs rise, and consumers become more comfortablewith electronic payments, NACHA continues to explore ways to expand the valueof their network.

Interestingly, one ofthe changes they are reviewing is modifying the TEL code to allow recurringpayments – an old school electronic payment method which requires no internetconnection, can be automated through an IVR, or promoted through callcenters.

In 2009, NACHA processed over300 million TEL transactions, down slightly under 1% from 2008.

NACHA, governing body of theautomated clearing house, is considering rules changes that could add volume tothe ACH. Among them: allowing recurring payments under the TEL code fortelephone-authorized electronic-check conversions; raising the dollar limit to$50,000 for three major e-check codes, and eliminating opt-out notificationrequirements on two codes.

Possibly the most significantis the proposal to allow TEL to be used for authorizing recurring payments.Currently, even if a consumer has allowed it before, all e-check conversionsarising from permission obtained over the phone from the consumer for an ACHdebit must be separately authorized, according to Michael Herd, managingdirector, ACH network rules.

NACHA says a revised TEL rulecould make the ACH more attractive to billers now using RCCs, and in generalshine some light on demand drafts.

If approved by NACHA’smembership, the revised rules would take effect March 18, 2011

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