FedACH Risk® Origination Monitoring Service
The FedACH Risk Origination Monitoring Service allows originating depository financial institutions (ODFIs) to monitor Automated Clearing House (ACH) forward batches associated with subscribed routing transit numbers (RTNs) and Company IDs. You can control ACH payments originated by your customers regardless of the network entry point or your ACH software. The service enables you to tailor and self-administer the monitoring criteria to reflect your particular risk management strategies and customer profiles. Request that we contact you regarding your interest in FedACH Risk Management Services.
- Set and control cumulative debit and credit caps (processing limits) by RTN and/or Company IDs
- Monitor accumulated totals over a single or multiple processing days
- Receive email notification if caps are exceeded
- Automatically release pended batches before the last same day deadline with same-day default options
- Set end-of-day defaults to release or reject pended batches in extraordinary circumstances
- Generate monitoring reports
- Learn more about the benefits by viewing the FedACH Risk Origination Monitoring Service product sheet (PDF) and browsing through the frequently asked questions.
The FedACH Risk Origination Monitoring Service enables ODFIs to mitigate some ACH origination risk associated with forward batches. Returns are not included in the service. The Service allows ODFIs to set cumulative credit and/or debit processing limits (caps) for certain forward ACH batches processed by FedACH.
A participating ODFI has the option of identifying batches that are subject to the Service by either RTN only, or by the combination of RTN and associated Company IDs. If the ODFI chooses to identify batches by routing transit number, batches in which that RTN occurs in the ODFI identification field of the batch header record are accumulated and compared to the debit and/or credit cap(s) that applies to that RTN. If the ODFI chooses to identify batches by RTN and associated Company ID(s), batches in which that RTN and associated Company ID(s) occur in the batch header record are accumulated and compared to the debit and/or credit cap(s) that applies to that RTN and associated Company ID(s).
In addition, an ODFI that chooses to identify batches by RTN and associated Company ID(s) will choose one of two Service options.
- Under the first option, Pend All Batches for Unmonitored Companies (previously Company ID Inclusive), the ODFI is responsible for defining all valid Company IDs for a RTN. The Service will pend all batches for the defined Company IDs that exceed debit and/or credit caps. In addition, the Service will pend all batches containing Company IDs not defined by the ODFI.
- Under the second option, Monitor Companies (previously Company ID Select), the ODFI is responsible for defining only the Company ID(s) they wish to monitor. The Service will pend batches for the defined Company ID(s) that exceed debit and/or credit caps. All undefined Company ID(s) will not be monitored.
The defined Company ID(s) must match exactly to the Company ID(s) in a batch’s header record. This includes leading and trailing spaces and upper/lower case sensitivity.
The Service provides ODFIs with the opportunity to determine timeframes for cap computations based on either a single day or multiple days. Caps defined in the Service are compared to the accumulated dollar amounts of batches.
- Selecting “process day” means that the dollar values of subject batches are accumulated and compared to applicable caps for the current process day only and do not accumulate over multiple days. Process values will be reset to zero at the beginning of the next processing day (3:01AM ET).
- Selecting “exposure days” means that the dollar values of subject batches accumulate over multiple days and are compared to applicable caps for the current process day as well as the amount of credits processed for the past two days and the amount of debits processed for past three days. Cap computations will begin to accumulate on the first business day after the Managed Routing Transit Number or ODFI RTN and associated Company ID are defined in the Service. The Service requires three full days of monitoring to build batch history into the accumulative totals.
Each participating ODFI selects an end-of-day default to either reject or release for processing any batch that remains in pend status at the end of the day. The end-of-day default action is in place for extraordinary circumstances only and should not be relied upon for routine operation.
Designated contacts at the ODFI will be notified via email when a batch has pended. Service subscribers are requested to release or reject pended batches that are displayed in FedLine screens.
Prior to entering service criteria, ODFIs must designate one or more contacts who are FedLine subscriber(s) with the authority to release or reject pended batches. Participating ODFIs should have a contingency plan in place that provides for access to FedLine screens in the event of an ODFI outage. FedACH and Check Services Customer Support staff will not provide information about pended batches to and will not release or reject pended batches for customers who are unable to access FedLine screens.
Service Feature Examples
The following examples demonstrate ways an ODFI may elect to use the features within the Service.
Monitor Routing Transit Number (previously “Routing Number Only”) Examples
- It is concerned with financial exposure to ACH processing and would like to be alerted by the service on days with unusual levels of activity
- It views ACH as a general utility originating from various internal sources but lacks a simple, comprehensive and consistent process for monitoring and tracking exposure
- It uses a third-party processor or correspondent to process ACH and needs an independent verification of its activity to satisfy audit or regulatory concerns
- It has assigned an originator with operator-direct access to a single RTN in order to isolate activity for monitoring purposes
Pend All Batches for Unmonitored Companies (previously “Company ID Inclusive”) Examples
- To prevent unauthorized originators from originating under its RTN
- To know of any new originators set up on its RTN
- To use the most stringent risk origination monitoring option
- To supplement or replace a manual monitoring process in place today that lacks consistent application across all originators
Monitor Companies (previously “Company ID Select”) Examples
- To monitor originators requiring pre-funding or to limit originators to credit or debit origination only
- To monitor and track performance of a group of high-risk customers
- To comprehensively track individual customer relationships across more than one software application or outsourced processing relationship
The Service may increase the FedACH processing time for originated files. FedLine screens will provide a detailed description of the processed batches. Batches monitored by the Service will initially pend in FedACH while a cap review occurs. Upon competition of the cap review, the batch will either be processed, or the status will change to pended. The ODFI and/or Sending Point may observe this process in FedLine screens. The Service provides reporting to assist in the monitoring of the decisioning of batches as well as changes in management criteria.
Upon submission of a file containing batches that are subject to the Service, the sending point will receive an acknowledgement from FedACH containing a message with reference to the Service. Messages will advise if batches are pended, accepted or rejected. It may be beneficial for the ODFI to inform its sending point of the notification provided by the Service.
An End User Authorization Contact (EUAC) will need to request access credentials that define the Service access roles for each Subscriber. Credentials are issued by RTN and must be established for any ODFI RTN monitored by the Service.