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F

e d er a l

R

e s e r v e

B

ank

O F DALLAS
ROBERT

D. M c T E E R , J R .

PRESIDENT
AND CH IE F EX EC U TI V E O F F I C E R

M

,

0

, nnl

March 8, 1991

DALLAS, TEXAS 7 5 2 2 2

N otice 91-17

TO:

The Chief Executive Officer of each
m e m b e r bank and others concerned in
the Eleventh Federal Reserve District
SUBJECT
Postponement o f the Implementation o f a
New $10 Monthly Automated Clearinghouse
P a r t ic ip a tio n Fee
DETAILS

The Federal Reserve Board has postponed the implementation of a new
$10 mont h l y automated clearinghouse (ACH) participation fee that had p r e v i ­
o usly been scheduled to take effect on April 1, 1991.
The Board also has
m odified the m a n n e r in which the fee will be applied during 1991.
These actions are being taken to address concerns raised by some
institutions that they would not be able to act on a sufficiently timely basis
to avoid paying multiple participation fees beginning in April 1991.
The new participation fee will become effective on July 1, 1991.
During the remainder of 1991, it will apply only with respect to participant
records that have commercial ACH volume in a given month.
ATTACHMENT

A copy of the B o a r d ’s notice (Federal Reserve System Docket No.
R-0710) is attached.
MORE INFORMATION

For further information, please contact Johnny Johnson at (214)
651-6641.
For additional copies of this notice, please contact the Public
Affairs Department at (214) 651-6289.
Sincerely yours,

For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas:
Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162,
Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.

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

Federal Reserve System
[Docket No. R-0710]
Federal Reserve Fees for Automated Clearing House Service
Modifications to the ACH Participation Fee

AGENCY:

Board of Governors of the Federal Reserve System.

ACTION:

Modification to the ACH fee schedule.

SUMMARY:

The Board is delaying the implementation of a new $10

monthly ACH participation fee that had previously been scheduled to
take effect on April 1, 1991 and is modifying the manner in which
the fee will be applied during 1991.

These actions are being taken

to address concerns raised by some institutions that they would not
be able to act on a sufficiently timely basis to avoid paying
multiple participation fees beginning in April 1991.

The new

participation fee will become effective on July 1, 1991, and during
the remainder of 1991 will apply only with respect to participant
records that have commercial ACH volume in a given month.
EFFECTIVE DATE:

The ACH participation fee becomes effective July 1,

1991.
FOR FURTHER INFORMATION CONTACT:

Louise L. Roseman, Assistant

Director (202/452-3874), Gayle Brett, Manager (202/452-2934), or
Scott Knudson, Senior Financial Services Analyst (202/452-3959),
Division of Reserve Bank Operations and Payment Systems; for the
hearing impaired only:

Telecommunications Device for the Deaf,

Dorothea Thompson (202/452-3544).

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SUPPLEMENTARY INFORMATION:
On October 31, 1990, the Board approved the introduction
of a monthly participation fee for the automated clearing house
(ACH) service.

[55 FR 46720, November 6, 1990]

Under the new fee

structure, the Reserve Banks would assess a monthly fee of $10 for
each commercial ACH participant (represented by a routing number on
the ACH Customer Information File (CIF)), beginning on April 1,
1991.1

This fixed monthly fee is designed to recover costs that are

influenced by the number of participants rather than by volume.
These costs include accounting-related costs, such as billing and
settlement, the costs of providing statistical reports, and the
costs of maintaining routing numbers on the CIF.
Since the announcement of the new fee, several depository
institutions and ACH associations have raised concerns about the
ability of many institutions to reduce the number of routing numbers
before the April 1 effective date in order to avoid paying multiple
participation fees.

These difficulties are related to the apparent

time it takes for the commercial ACH notification of change (NOC)
process to reroute ACH payments to a different routing number and
the need to monitor routing numbers for payment activity for a
number of months to ensure that they are indeed dormant.

A number

of depository institutions have a large number of routing numbers on

iAlso effective April 1, the Board approved a decrease in the
interdistrict per item transaction fee and an increase in the fees
for processing return items.

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the ACH CIF; many of these numbers are inactive or support only
minimal volume.
The Reserve Banks have made information available to
depository institutions on the routing numbers included on the CIF
together with the recent volume associated with each routing number.
Even though some institutions have begun efforts to reduce the
number of routing numbers by sending NOCs to originators of
payments, these institutions have indicated that payments may
continue to be sent to these routing numbers for some time.

Some

depository institutions have indicated reluctance to eliminate these
routing numbers even after taking action to reroute payments because
they cannot be assured that the originator has complied with NOC
instructions until the next payment cycle has been completed.

Due

to the infrequent nature of some payments, this process may be quite
lengthy.
In order to address these concerns, the Board is delaying
the implementation of the participation fee until July 1, 1991.

The

July 1 implementation date will provide depository institutions that
have multiple routing numbers on the CIF additional time to migrate
commercial ACH transactions to a fewer number of routing numbers, i .
f
they so choose.

The Board is also modifying the manner in which the

fee will be applied during 1991.

The Reserve Banks will assess the

participation fee only for those routing numbers that have
commercial ACH volume in a given month.

This policy will be

effective until January 1, 1992, at which time the Federal Reserve
Banks will begin assessing the monthly fee for all routing numbers

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maintained on the CIF that are eligible to receive commercial ACH
items, regardless of volume levels.

These

actions will

allow

depository institutions to maintain inactive routing numbers on the
CIF until January 1, 1992 without being assessed the participation
fee with respect to these inactive numbers, so that they can ensure
that payment activity has ceased prior to deleting them.
Other ACH fee changes that were approved by the Board in
October 1990 that decreased the interdistrict per item transaction
fee and increased fees for processing return items will
implemented April 1, 1991,

be

as planned.

The Federal Reserve continues to believe that the
elimination of inactive routing numbers will improve overall ACH
processing efficiency by reducing the cost of maintaining the CIF,
by eliminating many accounting and billing statements, and by
reducing statistical processing and reporting.

By modifying the

manner in which the participation fee is applied until January 1,
1992, the Board intends to provide depository institutions with the
ability to manage the elimination of inactive routing numbers more
effectively and maintain the incentives for depository institutions
to act promptly in their efforts to identify and eliminate
unnecessary routing numbers.
These modifications will not materially affect the cost
recovery for the ACH service.

The Board anticipates that projected

revenue from the participation fee will be reduced by approximately
$430,000 due to the delay in its implementation and the modification
to the manner in which it is applied, which would lower the

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projected 1991 ACH cost recovery by 0.8 percent to 98.0 percent.
This revenue reduction may be offset, at least in part, by
unbudgeted revenue generated by a larger number of NOCs as
depository institutions attempt to eliminate volume on routing
numbers that currently receive little ACH volume.

Also, it appears

that further cost reductions can be achieved through the anticipated
deferral of some budgeted expenses related to the development of new
ACH software.

Therefore, the Board estimates that 1991 ACH cost

recovery, assuming the delay in the implementation of the
participation fee, will be substantially similar to the 98.8 percent
target previously approved by the Board.

By order of the Board of Governors of the Federal Reserve
System, February 13, 1991.

(signed) William W. Wiles

William W. Wiles
Secretary of the Board

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