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FEDERAL RESERVE BANK
OF NEW YORK
[
9413 ~|
Circular No.
December 3, 1982
J
Fee Schedule for Automated Clearing House Services
Procedures for Administering Clearing Balances
To All Depository Institutions in the Second
Federal Reserve District, and Others Concerned:
The Board of Governors of the Federal Reserve System has approved a new fee schedule, effective December
30, 1982, for automated clearing house (ACH) services and has changed its procedures for administering clearing
balances. The new ACH fee schedule continues to include different prices for inter- and intra-office transactions. In
addition, (a) receivers of ACH credit transactions will be assessed higher fees than originators of day-cycle debits,
since receivers of credits realize greater benefits through operating-cost savings and improved funds availability, and
(b) a surcharge will be imposed on originators of debits in night-cycle operations, because use of the night cycle
provides originators with later deposit deadlines and better turnaround times than day-cycle operations.
The changes in clearing balance procedures permit any depository institution desiring a clearing balance to have
one, and revise the carryover limit for clearing-balance and mixed accounts.
The following is quoted from the text of the Board’s press statement on this matter:
ACH service fee schedule
The Monetary Control Act of 1980 requires that the Federal Reserve establish fee schedules for its automated clearing
house (ACH) service and other Federal Reserve services, according to pricing principles established by the Board. The
Board began charging for ACH services, based on pricing principles published earlier, in August 1981. In adopting the
1981 fee schedule for ACH services, the Board recognized that the ACH service was in the process of development and had
not yet reached a mature level. In recognition of this fact, the Board established 1981 fees on the basis of what it regarded as
a mature volume of ACH items, expected to be achieved in approximately five years, with the objective of promoting the
continuing development of the ACH service in the public interest. The Board said it would review its ACH pricing policy
annually.
In reviewing its ACH pricing policy in April 1982, the Board decided it was appropriate to continue providing a
measure of such encouragement. However, to provide the private sector with information as to when full cost recovery
pricing would begin, the Board decided on a schedule that calls for increasing ACH fees by 20 percent annually, permitting
ACH fees to be set in 1985 to recover 100 percent of the costs incurred in providing commercial ACH services. The Board
has therefore adopted the following schedule, which will be in effect in 1983, designed to recover 40 percent of the current
costs of providing ACH services.
(OVER)
Day Cycle
Intra-ACH
Debits Originated . . . ................. 2.00
Credits Received . . . ................. 4.00
New York Intra-ACH
Debits Originated ........... ...........1.00
Credits Received ........... ...........2.00
Inter-ACH
Debits Originated . . . ................. 3.50
Credits Received . . . ................. 5.50
New York Inter-ACH
Debits Originated ............ .......... 2.50
Credits Received ............ .......... 3.50
Night Cycle Surcharge
Intra- and Inter-ACH
Debits Originated .................................. . . . . 5.00
New York Intra- and Inter-ACH
Debits Originated .................................. . . . . 5.00
The basic structure of the new ACH fee schedule is the same as the current fee schedule. But the new schedule also
recognizes that benefits accrue to receivers of credits arising from reduced costs and from improved availability of funds
that are not realized by originators of daytime debits. Consequently, the fees for receivers of ACH credits will be higher, in
general, than for originators of ACH debits.
The attached notice sets forth the Board’s action in greater detail. Any questions on the new ACH fee schedule may be
sent to District Federal Reserve Banks.
Clearing balance procedures
To improve the flexibility of Reserve Banks in meeting the needs of institutions holding clearing balances with the
Federal Reserve, the Board approved two changes in procedures governing the establishment and maintenance of clearing
balances. Clearing balances are balances maintained with the Federal Reserve by a depository institution for settling funds
transfers cleared through the Federal Reserve. These balances earn credits which institutions may use to pay for Federal
Reserve services. The changes, to be effective January 27, 1983 or as soon thereafter as possible, are:
(1) Permit any depository institution desiring a clearing balance to have one. Current procedures vary widely among
Reserve Banks, with some Banks allowing clearing balances only for institutions that have zero or small reserve
balances and other Banks allowing clearing balances for some larger banks as well.
(2) For pure clearing balance and mixed accounts, revise the current carryover limit of 2 percent of the required
clearing balance plus required reserves by providing penalty-free bands on either side of the total required balance
equal to the greater of $25,000 or 2 percent of the required clearing balance. Any institution holding a balance
within these bands would receive earnings credits on the actual clearing balance held and would not incur penal
ties for deficiencies. The lower bound of the penalty-free band would be truncated at the point where the total
maintained balance equals the required reserve balance. Thus, an institution could not use the penalty-free band
on its clearing balance to lower its effective reserve requirement. Carryover would be allowed for amounts outside
the penalty-free bands but within current carryover limits. Institutions with only a reserve balance would remain
under current carryover rules.
The Board’s clearing balance policy which these changes amend was published February 27, 1981.
Enclosed, for depository institutions, is the text of the Board’s official notice regarding the ACH fee schedule. If
you have any questions on the fee schedule, please call David S. Slackman, Manager, Electronic Payments Depart
ment (Tel. No. 212-791-8959) or Mark Harris of that Department (Tel. No. 212-791-6592).
Questions on clearing balance procedures should be directed to John M . Eighmy, Assistant Vice President (Tel.
No. 212-791-7766) or Kathleen A . O ’Neil, Manager, Accounting Department (Tel. No. 212-791-7768).
A nthony
M.
Solom on,
President.
FEDERAL RESERVE SYSTEM
F EE S C H E D U L E S F O R F E D E R A L RE S E R V E BANK SERVICES
AGENCY:
B o a r d of G o v e r n o r s of the Fed e r a l Reserve System.
ACTION:
N e w Fee S c h e d u l e for the A u t o m a t e d Cl e a r i n g House Service.
SUMMARY:
The M o n e t a r y C o n t r o l A ct of 1980 (Title I of Pub.L. 96-221)
re q u i r e s that s c h e d u l e s of fees be e s t a b l i s h e d for Fed e r a l R e serve
Bank services.
On December 31, 1980, the Board a d opted a fee
st r u c t u r e for the a u t o m a t e d c l e aring h o use service,
effec t i v e
A u g u s t 1, 1981.
The F e deral R e serve has now a d opted a new fee
sc h e d u l e for this service.
E F F E C T I V E DATE:
D ecember 30, 1982.
F O R F U R T H E R I N F O R M A T I O N CONTACT:
E l l i o t t C. McEntee, A s s i s t a n t
Dire c t o r
(202/452-2231), or F l o r e n c e M. Young, P r o g r a m Manager,
(202/452-3955) D i v i s i o n of F e d e r a l Res e r v e Bank Operations; G i l b e r t T.
Schwartz, A s s o c i a t e G e n e r a l C o u n s e l (202/452-3625), or Daniel L.
Rhoads, A t t o r n e y (202/452-3711), L e gal Division, Board of G o v e r n o r s of
the F e d e r a l Res e r v e System, W a s h i n g t o n , D. C.
S U P P L E M E N T A R Y INFORMATION:
The M o n e t a r y C o n t r o l Act of 1980 ("Act")
requ i r e s that fee sch e d u l e s be d e v e l o p e d for Federal R e serve Bank
serv i c e s bas e d on p r i c i n g p r i n c i p l e s e s t a b l i s h e d by the Board.
The
Board, in a c c o r d a n c e w i t h the r e q u i r e m e n t s of the Act, p u b l i s h e d for
co m m e n t p r o p o s e d p r i c i n g p r i n c i p l e s and fee s c hedules for services on
A u g u s t 28, 1980
(45 FR 58689).
On Decem b e r 30, 1980, after
c o n s i d e r i n g the c o m m e n t s r e c e i v e d from the public, the B o ard a dopted
r e vised p r i c i n g p r i n c i p l e s and a fee sc h e d u l e for the a u t o m a t e d
c l e a r i n g house ("ACH") ser v i c e (46 F R 1338) . The ACH fee sched u l e was
e f f e c t i v e A u g u s t 1, 1981.
In a d o p t i n g the 1981 fee schedule for the
AC H service, the B o a r d r e c o g n i z e d that the A CH service was in the
p r o c e s s of d e v e l o p m e n t and had not yet re a c h e d a matu r e level.
In
r e c o g n i t i o n of this fact, the B o a rd e s t a b l i s h e d 1981 fees on the basis
of w h a t it r e g a r d e d as a m a t u r e v o l u m e of AC H items, w h ich was
e x p e c t e d to be a c h i e v e d in a p p r o x i m a t e l y five years.
The B oard
d e t e r m i n e d that e s t a b l i s h i n g a fee sc h e d u l e that promotes the
c o n t i n u i n g d e v e l o p m e n t of the A CH s e rvice was in the p u b l i c interest.
The Boa r d a lso c o m m i t t e d to r e v i e w its A C H p r icing p o l i c y annually.
The Boa r d revie w e d its p o l i c y of incentive pr i c i n g for the
ACH service in Ap r i l 1982 and d e t e r m i n e d that it was a p p r o p r i a t e to
c o n t i n u e p r o v i d i n g a level of p r ice s u p p o r t for the service.
The
B o a r d b e l i e v e d that such s u p p o r t was n e c e s s a r y to avoid jeopar d i z i n g
the future of this p a y m e n t service.
Further, the B o a r d b e l i e v e d that
an a d e q u a t e v o l u m e is n e c e s s a r y in order to at t r a c t pri v a t e sector
-
2
-
c o m p e t i t i o n in this area.
It was a l s o r e c o g n i z e d that the p rivat e
sector w o u l d b e n e f i t from knowl e d g e of wh e n the Federal Reserve w o uld
b e g i n f u l l - c o s t p r i c i n g of the ACH service.
C o nsequently, the B o ard
d e t e r m i n e d to p h a s e out its i n centive p r i c i n g p o l i c y and e s t a b l i s h a
date for p r i c i n g the AC H s e rvice to recover the full costs of
p r o v i d i n g the service, including the p r i v a t e sector a d j u s t m e n t
factor.
To ach i e v e a smooth transition, the Board d e t e r m i n e d that
fees for the A C H s e rvice will be incr e a s e d a n n u a l l y to recover an
a d d i t i o n a l 20 p e r c e n t of the costs of p r o v i d i n g the service, plus
p r i v a t e sector a d j u s t m e n t factor.
Accord i n g l y , the fee schedule
e s t a b l i s h e d in 1982 w o u l d p r o v i d e for r e c o v e r y of 40 p e r c e n t of the
c u r r e n t costs of p r o v i d i n g the service, including the pri v a t e sector
a d j u s t m e n t factor.
The fee s c h e d u l e s to be ado p t e d in 1983, 1984, and
1985 w o u l d p r o v i d e for r e c o v e r y of 60 percent, 80 per c e n t and 100
percent, r e s p e c t i v e l y , of c o m m e r c i a l AC H costs, including pri v a t e
sector a d j u s t m e n t factor.
The s t r u c t u r e of the new fee sc h e d u l e for the ACH service
w i l l r e main u n c h a n g e d from the 1981 fee schedule.
Fees will continue
to be c h a r g e d to the p a r t y o r i g i n a t i n g an A C H d ebit and the p a r t y
r e c e i v i n g an AC H credit.
Addit i o n a l l y , the fee schedule conti n u e s to
include an i n t e r r e g i o n a l p r ice d i f f e r e n t i a l .
No fees will be asses s e d
r e c e i v e r s of d i r e c t d e p o s i t p a y m e n t s m a d e under the T r e a s u r y
D e p a r t m e n t ' s F e d e r a l R e c u r r i n g P a y m e n t s Program.
In gener a l , re c eivers of A C H cr e d i t s will pay a fee that is
h i g he r than that paid by o r i g i n a t o r s of ACH debits.
This r e c ognizes
the b e n e f i t s a c c r u i n g to rece i v e r s of c r e d i t s through o p e r a t i n g cost
sav i n g s and i m p r o v e d funds a v a i l a b i l i t y that are not realized by
o r i g i n a t o r s of day cycle debits.
The 1981 fee s c hedule did not d i s t i n g u i s h b e tween fees paid
by o r i g i n a t o r s of cash c o n c e n t r a t i o n d e b i t s using the night cycle and
those paid by o r i g i n a t o r s of deb i t s using the d ay cycle.
In
r e c o g n i t i o n of the s u b s t a n t i a l b e n e f i t s that accrue to o r i g i n a t o r s of
cash c o n c e n t r a t i o n d e bits using the n i g h t cycle, the Board has decided
to impose a s u r c h a r g e for the n i ght c y cle operations.
Cash
c o n c e n t r a t i o n d e b i t s are g e n e r a l l y time c r i tical since c o n c e n t r a t i o n
banks are not n o r m a l l y advised of d e p o s i t s at regional d e p o s i t o r y
i n s t i t u t i o n s until late in the day.
Further, be c a u s e of the
r e l a t i v e l y h igh ave r a g e value of cash c o n c e n t r a t i o n debits, the
r e l i a b i l i t y of the A CH m e c h a n i s m is of importance to o r i g i n a t o r s of
these debits.
The nig h t cycle also p r o v i d e s o r i g i n a t o r s of cash
c o n c e n t r a t i o n d e b i t s better d e p o s i t d e a d l i n e s and better t u r n around
times than are p r o v i d e d by day c y cle o perations.
As expe r i e n c e with
the nig h t cycle o p e r a t i o n s is gained, the o p e r a t i o n a l n e c e s s i t y of
r e s t r i c t i n g n i g h t cycle o p e r a t i o n s to cash c o n c e n t r a t i o n debits m ay be
eliminated.
-3-
T he n ew fee s c h e d u l e for the F e d e r a l Reser v e ' s AC H service
as follows:
is
C y cle
Int r a - A C H
Debits Originated
Credits Received
I nt e r - A C H
Debits Originated
Credits Received
2.00
A . 00
3 . 5jz5
5.50
N e w York Intra - A C H
Debits Originated
C r e d i t s Received
1.00
N e w York I nter-ACH
Debits O r i g i n a t e d
C r e d i t s R e c eived
2.5^
2.00
3.50
N i g h t Cycle Surch a r g e
Intra- and I n t e r - A C H
Debits Originated
5.00
N e w York Int r a - and Inter-ACH
Debits Originated
5.00
This fee sche d u l e w ill be e f f e c t i v e December 30, 1982.
An y
co m m e n t s r e g a r d i n g the fee s c h e d u le should be forwa r d e d to your local
Fed e r a l R e s e r v e office.
B y order of the B o a r d of G o v e r n o r s
System, N o v e m b e r 19, 1982.
of
the
Federal
R eserve
(signed) W i l l i a m W. W i l e s
W i l l i a m W. W i l e s
S e c r e t a r y of the B oard
[SEAL]
@FedFRASER