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Federal R eserve Bank
OF DALLAS
W ILL IA M

H. W ALLACE

FIRST V IC E PR ES ID ENT

DALLAS, TEXAS 75222

AND CH IEF O PER ATING O FFIC ER

June 13, 1988
Circular 88-38

TO: The Chief Executive Officer of
all financial institutions in the
Eleventh Federal Reserve District
SUBJECT
Reminder of July 18, 1988, implementation of one-day window for
return of large-dollar ACH debits
DETAILS
Background: Our Circular 88-7 dated January 20, 1988,
notified you of several measures to reduce risk in the automated clearinghouse
(ACH) system that had recently been approved by the Board of Governors of the
Federal Reserve System. These measures become effective on July18, 1988, and
require the Federal Reserve to monitor problem institutions thatoriginate ACH
credit transactions, provide earlier deadlines for return of ACH debit
transactions of $2,500 or more, and provide revised procedures for charging
the originator of ACH credit transactions that settle on nonstandard holidays
or midweek closings observed by the originator. This circular is being sent
as a reminder of the upcoming implementation of these measures, particularly
the fairly tight deadlines for return of large-dollar ACH debits and the
potential for loss that may be incurred by the returning institution if these
deadlines are missed. The National ACH Association (NACHA) has notified us
that these measures have been included in the NACHA rules, and the
Southwestern ACH Association (SWACHA) is in process of distributing copies of
the NACHA rule changes.
New Return Deadlines: According to the measure affecting
return of large-dollar debit items, new deadlines for depositing ACH debit
returns of $2,500 or more at the Reserve Banks will be effective July 18,
1988. If these items are deposited in paper form, they must be received by
the ACH~Division at your local Reserve office (in Dallas, El Paso, Houston or
San Antonio) by 7:00 p.m. Central time (6:00 p.m. in El Paso) on the business
day following settlement or receipt of the debit item (whichever is later).
This is a significant change, since paper returns typically are returned to
Reserve Banks by mail or ground transportation and may now take up to a week
or more to reach Reserve Banks. (Almost two thousand Eleventh District
institutions currently submit paper returns to our four Reserve offices, so it

For additional copies of any circular please contact the Public A ffairs D epartm ent at (214) 6 51 -6 2 8 9 . Banks and others are
encouraged to use the follow ing incom ing W A TS numbers in contacting this Bank (800) 4 4 2 -7 1 4 0 (intrastate) and (800)
5 2 7 -9 2 0 0 (interstate).

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

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is likely that many institutions will need to find alternatives to paper as a
means to return large-dollar ACH debits.) Beginning July 18, large-dollar ACH
debits returned to the Reserve Bank in electronic form must meet the regular
night-cycle deposit deadlines on the business day following settlement or
receipt (ranging from a 7:30 p.m. Central time cutoff for mixed interdistrict
files "with remake" to a cutoff five hours later--12:30 a.m. Central time--for
intradistrict files "without remake").
Coincident with the implementation of the new deadlines for return of
large-dollar ACH debits, the requirement that returning institutions contact
their Reserve Bank to notify staff of these returns is eliminated, since the
originator of the large-dollar debit will receive the actual return on the
second business day following settlement.
Faster Return Methods: The Federal Reserve Bank of Dallas has
been encouraging a shift away from paper and magnetic tape media in the ACH
mechanism for some time due to the costly manual handling and slow delivery
times associated with these media, primarily by offering a variety of types of
full electronic connections (computer interface, data link, and personal
computer-based) by which financial institutions can originate and receive all
types of ACH transactions and can return ACH transactions electronically.
Over 200 Eleventh District institutions now have this full electronic
capability. Several hundred other Eleventh District institutions have
business relationships with service bureaus which have electronic links with
the Dallas Fed and also have a means of returning ACH transactions
electronically.
New Return Options: In the fourth quarter of 1987, the Dallas
Fed began offering two additional options for quick return of ACH debits and
credits. These options should allow any Eleventh District institution to meet
the next-day return requirement for large-dollar debits.
1)

The first option is a computerized voice response system known as
"CATIE" and requires only a Touch-Tone telephone and an access
code to use. CATIE allows the caller to utilize toll-free WATS
lines provided by the Dallas Fed in order to access our ACH
history data base and generate an electronic ACH return. CATIE
is available for use each business day beginning at 8:00 a.m.
Central time. Institutions located in areas without Touch-Tone
service can acquire an inexpensive pulse/tone switchable
telephone to simulate Touch-Tone service for use with CATIE. In
addition to this potential step, all that is needed in order to
gain access to CATIE is to apply for an access code used in
conjunction with the institution's ABA number to ensure
confidentiality.
(See the attached "Help Sheet" for the
step-by-step procedure.) Approximately 500 Eleventh District
institutions currently use CATIE for ACH returns; volumes per
institution range from one return per month to 30 returns daily.

2)

The second new ACH return option is available to all Eleventh
District institutions that are online with a dedicated terminal;
using such a terminal, authorized individuals can also access the
ACH history data base to generate an ACH return.

Using either of these options, if a return is generated by 9:30 a.m., it will
be processed on the day cycle and be settled immediately. Returns generated

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after that time will be processed in the night cycle for next-day availa­
bility. The price per return for use of either the CATIE or dedicated
terminal options is $1.25, which includes all electronic processing fees. No
minimum monthly fees or subscription fees are imposed. The important
distinction to keep in mind between the use of these options and full
electronic connections is that even though these new options can be used to
deposit only ACH returns, they require only a few keystrokes (trace numbers
and return reason codes) to generate electronic returns. Therefore, these
options may be ideal for low-volume institutions. Full electronic connections
can be used to originate and receive all types of electronic ACH transactions
but also require them to be composed and formatted in files by your terminal
operator.
Fee comparisons: To decide which return method is best for
your institution, it may be useful to compare certain costs of using the
various ACH return options once a certain volume level is reached. Assuming
an institution returns a total of five intradistrict ACH debits daily for
night cycle processing, Federal Reserve fees for this volume vary by method
used as follows (prices vary by a few cents per item depending on whether the
items are debits or credits, intra- or interdistrict, and whether the day or
night cycle is used):
Paper ($3.75 paper return fee plus $.055 intradistrict night cycle
processing fee)
$3,805 x 5 = $19.02 charge per day
CATIE or dedicated terminal option ($1.25 per item)
$1.25 x 5 = $6.25 charge per day
Electronic connection (PC, data link, or computer interface)
$.055 x 5 plus $1 file deposit fee = $1.28 charge per day
(note: electronic connections can deposit returns mixed with other
ACH items in the same file at no additional file deposit fee)
Clearly, as the volume of returns grows, an institution may find its costs of
an electronic connection repaid by its use of that connection for ACH returns
alone.
ATTACHMENT
A help sheet for handling ACH returns using CATIE is attached.
MORE INFORMATION
For more information, please contact Jonnie Miller at (214) 651-6290
or Larry Ripley at (214) 651-6118 at the Dallas office; at the El Paso Branch,
Eloise Guinn or Jane Pyke at (915) 544-4730; at the Houston Branch, Marilyn
Salmon at (713) 652-1582 or Louis Moore at (713) 652-1581; and at the San
Antonio Branch, Herb Barbee or Jennifer Pruitt at (512) 224-2141.
Sincerely yours,

HELP SHEET FOR HANDLING
ACH RETURN ITEMS THROUGH CATIE

1.

CATIE MAY BE DIALED DIRECTLY FROM ANY STATE AT (214) 651-6632. TO AVOID
TOLL CHARGES, DIAL CATIE AT 1-800-443-1549 IF YOUR INSTITUTION IS LOCATED
IN TEXAS.
IF YOUR INSTITUTION IS LOCATED IN LOUISIANA OR NEW MEXICO, DIAL
1-800-527-9200 AND ASK THE OPERATOR FOR EXTENSION 6632.

2.

WHEN

PROMPTED, ENTER YOUR 9-DIGIT ABA/TRANSIT ROUTING NUMBER.

3.

WHEN

PROMPTED, ENTER YOUR 4-DIGIT ACCESS CODE.

4.

CATIE WILL RESPOND WITH MENU OPTIONS.
OPTION.

5.

WHEN PROMPTED, ENTER THE 15-DIGIT TRACE NUMBER.
(IF ERRORS AREDETECTED
WHILE ENTERING THE TRACE NUMBER, PAUSE MOMENTARILY, AND CATIEWILL
ERASE
THE DATA AND PROMPT YOU FOR REENTRY.
BE AWARE THAT A LONGER PERIOD OF
INACTIVITY WILL CAUSE CATIE TO RESPOND WITH "BYE" AND TERMINATE THE CALL.)

6.

IF THE ORIGINAL ITEM IS RETRIEVED FROM THE HISTORY DATA BASE, CATIE WILL
RESPOND WITH EITHER DEBIT OR CREDIT INFORMATION AND THE DOLLAR AMOUNT.
CATIE THEN WILL PROMPT YOU FOR A 2-DIGIT RETURN REASON CODE OR "00" TO
TERMINATE THE TRANSACTION.
(RETURN REASON CODE 99 AND NOTIFICATIONS OF
CHANGE WILL NOT BE ACCEPTED BY CATIE.)

7.

IF THE RETURN REASON CODE IS VALID, CATIE WILL RESPOND THAT THE RETURN
ITEM WAS ACCEPTED.
IF THE RETURN REASON CODE IS INVALID, CATIE WILL
TERMINATE THE TRANSACTION.
IF RETURN REASON CODES 14 OR 15 ARE ENTERED,
CATIE WILL PROMPT YOU FOR A 6-DIGIT DATE OF DEATH IN MM/DD/YY ORDER.

8.

IF THE ORIGINAL ITEM IS NOT RETRIEVED FROM THE HISTORY DATA BASE, CATIE
WILL RESPOND THAT THE ITEM SHOULD BE PROCESSED ON PAPER THROUGH YOUR LOCAL
FEDERAL RESERVE BANK.
(ITEMS WITH DUPLICATE TRACE NUMBERS AND ITEMS MORE
THAN TWO WEEKS OLD WILL NOT BE RETRIEVED.)

9.

BY ENTERING 7 QUICKLY, CATIE WILL PROMPT YOU TO ENTER ANOTHER ACH RETURN
ITEM. ENTERING 9 WILL TERMINATE THE CALL.

ENTER 3 FOR THE ACH RETURN ITEM

10. IN ORDER TO ENTER ACH RETURN ITEMS FOR ANOTHER ABA NUMBER, SUCH AS THAT OF
AN AFFILIATE, YOU MUST ALSO USE THE ACCESS CODE FOR THAT NUMBER. SEPARATE
CALLS TO CATIE MUST BE PLACED TO RETURN ITEMS FOR SEPARATE ABA NUMBERS.

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