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The need for ODFIs to better monitor their ACH risk is driven by several trends:
Because ODFIs are responsible for settling payments originated into the ACH network using their RTN, they may be exposed to three primary types of risks:
No, ACH transactions are not inherently riskier and can actually help avoid some of the risks associated with other payment types such as forgery or unintended destruction. ACH transactions provide financial institutions with many significant opportunities when compared with paper check processing, including enhanced efficiency, reduced processing costs, clearly defined settlement times, control over payment timing, new revenue streams and increased customer retention.
ODFIs can maintain criteria three different ways. Criteria include cumulative debit and/or credit processing limits (caps) and the time frame for accumulating caps.
Because the service is available via FedACH Information Services, ODFIs will need to subscribe to the FedLine Web or FedLine Advantage Solutions and FedACH® Information Services. Account executives can assist ODFIs in adding these services. Sign-up information can also be found on the FedACH Service setup page.
Part 6B must be signed by a person listed on the institution's Official Authorization List as having signatory authority. The ODFI's End User Authorization Contact (EUAC) will request Subscriber access.
An ODFI planning to use Company ID Inclusive will experience a smoother transition by first submitting its request for an appropriate Subscriber role(s). This procedure will allow for the setting of monitoring criteria before the FedACH Risk Origination Monitoring Service begins monitoring ACH activity. If an ODFI simultaneously gains access to its Subscriber role and the service, that ODFI may need to deal with pended batches while still entering monitoring criteria.
Please refer to the FedACH Services Fee Schedule for the current fees associated with the FedACH Risk Origination Monitoring Service.
Billing will begin during the first month of access to the service. The ODFI determines the effective date for the service.
Service screens provide confirmation of the effective date for management criteria additions, edits, and deletions. In general changes may be made intra-day for existing end-of-day defaults. All other management criteria changes will be effective next business day. The deadline for changes to management criteria is 2:00 a.m. ET.
Email notifications of batches pended for breaching caps or for unspecified company IDs are transmitted via FedMail® and do not include detailed pended batch information. A link to FedACH Information Services is included for authorized individuals (with proper credentials) to access details regarding pended batches.
Email address formats conforming to standard email protocol should transmit from the Federal Reserve Banks without problems. ODFIs must ensure their email system does not identify these emails as spam and block the emails. In order for authorized individuals to access the link to detail on FedACH Information Services, ODFIs must also use appropriate browser versions, comply with Internet connection requirements and have proper credentials for accessing the FedLine Web or FedLine Advantage Solutions.
ODFIs can proactively track monitored batches via FedACH Information Services. In fact, accessing information is typically faster via a FedLine Solution than via email. For example, there is the potential for FedLine to show that a batch has been released, while an email notification indicates that the same batch is still pended. The email may not have reached its recipient before the release of the batch occurred. ODFIs should not rely on email as the only source of notification in case of delays or interruptions in email service at the Federal Reserve Banks or the ODFI.
The subject line of the email notifications includes the RTN to which it applies.
Acceptable values range from $0 to $9,999,999,999,999. If the value field is $0, all debits and/or credits will be pended by the service for further review. If the value field is left null, no cap will be applied by the service.
Process Day – cap computations will begin to accumulate at the beginning of the business day (3:01 a.m. ET) and will reset to zero at the beginning of the next process day.
Multiple Exposure Days – cap computations take into account the current processing day totals as well as the previous two processing days of credit and previous three processing days of debits. Multiple exposure day monitoring helps to proactively monitor for things like ACH kiting schemes and return risk for debit payments.
End-of-day defaults should not be relied upon as a part of normal daily operations, but should be relied upon only when extraordinary circumstances result in batches remaining pended at the end of the day. An end-of-day default of "release" means that all FedACH Risk Origination Monitoring Service pended batches will be released for processing. An end-of-day default of "reject" means that all FedACH Risk Origination Monitoring Service pended batches will be rejected and will not be processed by FedACH.
ODFIs can enter search criteria for up to 60 business days of history and a 10-day date range within those 60 days. ODFIs also have the option to download or print these reports and incorporate them into spreadsheets for further data manipulation. An additional benefit of this report is the audit trail it offers for all monitoring criteria: who specified the criteria, whether batches were released or rejected, who released/rejected the batches and when.
ODFIs can view management criteria for up to one prior year. The service will report unlimited entries for that year.