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Article Excerpt
The Automated Clearing House (ACH) Network has the flexibility to accommodate XML-formatted payment remittance records in the same manner that it currently transmits EDI-formatted records, according to NACHA--The Electronic Payments Association.
NACHA develops operating rules and business practices for the ACH network. ACH payments include direct deposit of payroll, Social Security benefits and tax refunds, direct payment of consumer bills (preauthorized checking account deductions), B2B payments, federal tax payments, and, increasingly, e-check and e-commerce payments. In 2001 there were almost 8 billion ACH payments made worth $22.2 trillion.
B2B Payments and Remittance in ACH Network
More than 20,000 financial institutions are connected to the ACH network. As B2B e-commerce continues to grow, corporations are increasingly using the ACH for payment transactions. In 2001 corporate electronic payments over the ACH exceeded 1.4 billion, an increase of 11.9% from 2000. The dollar amount of these transactions was more than $16.3 trillion (figures include B2B, business-to-government, and intracash concentration).
In addition to the actual payment, businesses frequently require remittance information in order to reconcile payments within accounts receivable systems; remittance data provides additional information about the payment that is often necessary for reconciling B2B transactions (e.g., why the invoice is not being paid in full).
The ACH permits remittance data to be transmitted with an ACH payment instruction; the remittance data is placed in an "addenda" record, thereby providing additional information about payment as necessary. The NACHA Operating Rules require that the remittance data in the addenda record be structured in Electronic Data Interchange format according to American National Standards Institute (ANSI) American Standards Committee (ASC) X12 Interchange Control Structures (governing body for EDI), or in NACHA-endorsed banking formats. In 2001 there were 143 million such financial EDI payments using the ACH network with 413 million EDI records. Financial EDI payments on the ACH network have grown by 216% since 1997; use of EDI records has grown by 279% during that period.
The ACH's capability to accommodate both payment and remittance information has given financial institutions the opportunity to provide value-added services to their corporate clients. Financial institutions, as a potential revenue source, offer a number of EDI-related products and services to support...
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