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FEDER A L RESERVE BAN K OF DALLAS
DALLAS, TEXAS

75222

Circular No. 83-107
September 12, 1983

MODIFICATION TO ACH SERVICE
TO ALL DEPOSITORY INSTITUTIONS IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
The Board of Governors of the Federal Reserve System has
announced a modification of the automated clearinghouse (ACH) service to
permit all types of ACH items to be deposited at the nighttime deposit deadline.
The new service will be made available on October 6, 1983, and will be subject
to an interim fee schedule approved by the Board.
Attached is the text of the Board’s press release and Federal
Register notice regarding the new service.
Questions regarding this program should be directed to Robert L.
Whitman, (214) 698-4357 or Thomas D. Holloway, (214) 651-6123 at the Head
Office; Larry Wilson, (915) 544-4730 at the El Paso Branch; Vernon L. Bartee,
(713) 659-4433 at the Houston Branch; and John A. Bullock, (512) 224-2141 at the
San Antonio Branch.
Additional copies of this circular will be furnished upon request to
the Public Affairs Department, Extension 6289.
Sincerely yours,

William H. Wallace
First Vice President

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
Banks and others are encouraged to use the following incoming W A T S numbers in contacting this Bank:
1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the
extension referred to above.

FEDERALRESERVEpressrelea^
For immediate release

September 1, 1983

The Federal Reserve today announced a modification of its
automated clearinghouse service to permit all types of automated clearing­
house transactions to be deposited at the nighttime deposit deadline.
In conjunction with this action, the Board approved an Interim
fee schedule for nighttime per item ACH deposit, effective October 6, 1983,
Since 19 79, the use of the nighttime deposit deadline has been
restricted to cash concentration debits.

Cash concentration debits are

used by businesses to draw down balances held at a number of depository
institutions in order to accumulate funds for investments or other purposes
at a primary institution.
The addition of a later deposit deadline for other types of
transactions will provide originators of ACH payments with additional
processing time as well as better funds availability for these deposits.
The interim fee schedule for the ACH nighttime deposit deadline
is as follows:
Per Item
Surcharge to Originators
Debits

5 cents

Next-day Settlement Credits

2 cents

Two-Day Settlement Credits

0

The Board's notice is attached.
* * *

Attachment

FEDERAL RESERVE SYSTEM
FEE SCHEDULES FOR FEDERAL RESERVE BANK SERVICES
AGENCY:

Board of Governors of the Federal Reserve System,

ACTION:
Interim Fee
Night Cycle Deposits.

Schedule

for Automated

Clearing

House

SUMMARY:
The Board has approved an interim fee schedule for
automated clearing house (ACH) night cycle transactions.
EFFECTIVE DATE:

October 6, 1983.

FOR FURTHER INFORMATION CONTACT:
Elliott C. McEntee, Associate
Director (202/452-2231) or Florence M. Young, Program Manager
(202/452-3955), Division of Federal Reserve Bank Operations?
Gilbert T. Schwartz, Associate General Counsel (202/452-3625),
or Elaine M. Boutilier, Attorney (202/452-2418) Legal Division,
Board of Governors of the Federal Reserve System, Washington,
D. C. 20551.
SUPPLEMENTARY INFORMATION:
In 1979, the Federal Reserve
enhanced its ACH services by adding a second, later deposit
deadline restricted to cash concentration debits.i/
Before this change was implemented, only one deposit deadline
was available to depository institutions.
The addition of a
later deposit deadline improved the ACH service because it
provided originators of ACH cash concentration debits
additional processing time as well as better availability than
they were able to achieve with a single deposit deadline.
The
primary reason for imposing this restriction was due to concern
about potential volume shifts from morning deposit deadlines to
the nighttime deposit deadlines, which might have caused
capacity constraints at some offices.
During the last four
years, however, the Reserve Banks have gained considerable
experience with the ACH nighttime operation and sufficient
capacity currently exists to handle anticipated volume levels.
The Federal Reserve has received requests to accept
deposits of all types of ACH transactions at the nighttime
deposit deadline because depository institutions believe the
nighttime deposit deadline increases the flexibility of the
1/
Cash concentration debits are used by businesses to draw
down balances held at a number of depository institutions in
order to accumulate funds at a primary institution for
investments or other purposes.

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ACH.
For example, hourly payrolls, unlike salary payments, may
require last minute calculations to reflect an individual's
actual work experience.
The early morning deposit deadline for
ACH credit transactions does not provide corporations
sufficient time to determine hourly employees' pay.
This
modification of the night cycle will enable credit transactions
to be deposited at the nighttime deposit deadline, allowing
additional time for calculating hourly payrolls.
Additionally,
the night cycle can be used to. accommodate payments that would
normally be processed during the daytime but are delayed due to
operating problems at originating depository institutions.
In opening the night cycle to all ACH transactions and
in offering next-day availability for both debit and credit
transactions, there may be an increase in the number of ACH
payments delivered to country institutions after the actual
settlement date due to the short processing time and long
distances for delivery.
However, institutions faced with this
late delivery situation currently only receive about four
percent of total ACH payments; it is unlikely that a large
proportion of these payments will be converted to next-day
settlement payments.
Nevertheless, these institutions may face
some problems in continuing to provide high quality service to
their customers.
Therefore, the Reserve Banks will expand
their current ACH telephone advice services to country banks to
include all debit and credit transactions processed during
nighttime operations so that country institutions will be able
to receive the transaction information that they need.
The current ACH fees were implemented on December 29,
1982, and were set to recover 40 percent of the total costs of
providing commercial ACH services.
A new ACH fee schedule
based on a 60 percent recovery rate, as required under the
Board's ACH incentive pricing policy, is currently being
developed.
Since expansion of the night cycle is desired by
users of the ACH service as soon as possible, the new service
will be made available on October 6, 1983, with an interim fee
schedule based on the current 40 percent recovery rate.
These
interim fees will be in effect until the new ACH fees, based on
a 60 per cent recovery rate, are implemented.
Presently, originators of cash concentration debits
are assessed a surcharge of five cents per transaction for each
debit deposited at the nighttime deposit deadline.
This fee is
based on the benefits realized by originators of cash
concentration debits, including improved funds availability
obtained by using the night cycle.
Since opening the night
cycle to all types of debit transactions will afford all
originators of debit transactions benefits similar to those

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realized by originators of cash concentration debits, the
current five cents surcharge will apply to all debit
transactions deposited at the nighttime deposit deadline.
The current ACH fee schedule assesses no fees to
depository institutions that originate credit transactions
because most of the benefits of the ACH service are realized by
receivers of credit transactions.
Originators of credit
transactions
for two-day settlement will not realize
significant benefits from the additional processing time.
Further, by initiating credits for two-day settlements,
originators are taking steps to ensure that payments reach
receiving institutions by the settlement date.
In view of
these factors, a surcharge for two-day credit transactions
would not be appropriate.
Originators of credits deposited for
next-day availability, however, clearly benefit from the
increased processing time this option offers them.
Because
originating institutions will be able to realize benefits that
previously were unavailable to them, it is appropriate that a
fee be charged for this new service.
Since originators of
credits are not able to realize benefits comparable to those
realized by originators of debits, the Board has determined
that a surcharge of two cents rather than five cents will be
assessed to originators of credit transactions deposited for
next-day settlement.
Depository institutions located in the Cleveland and
Richmond Federal Reserve Districts are now able to deposit all
ACH transactions at the nighttime deposit deadline.
Further,
the Federal Reserve Bank of Richmond currently does not offer a
daytime ACH deposit deadline.
Because of the difference,
depository institutions located in these two Districts will
need some time to adjust their operating schedule in order to
use the daytime deposit deadline and to avoid nighttime
surcharges where they are not cost effective.
To avoid the
inequity of requiring originators in the Cleveland and Richmond
Districts to pay increased fees for a deposit deadline that is
optional in other districts, all Reserve Districts will
establish daytime deposit deadlines.
Further, the Board has
determined to grant a temporary waiver of the five cents debit
surcharge for non-cash concentration debits in those two
Districts to permit originators and depository institutions to
make the necessary operational adjustments.
The two cents
surcharge on next-day settlement credits, however, is a new
service for all Districts and no inequities will result from
universal application.
Consequently, this surcharge will not
be waived for originators located in the Cleveland and Richmond
Federal Reserve Districts.

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Accor-dingly, the Board has determined that the interim
fee schedule for the ACH night cycle, effective October 6,
1983, will be as follows:
Per Item
Surcharge to Originators
Debits*

5z
ji

Next-day Settlement Credits

2^

Two-day Settlement Credits

0

*This surcharge will not be assessed for
debits, other than cash concentration debits,
originated by depository institutions located
in the Cleveland and Richmond Federal Reserve
Districts.
Any comments regarding the interim fee schedule should
be forwarded to your local Federal Reserve office.
This interim fee schedule will remain in effect until
the repricing of the ACH service.
By order of the Board of Governors of the Federal
Reserve System, September 1, 1983.
(Signed)

William W. Wiles

William W. Wiles
Secretary of the Board
[SEAL]


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102