NACHA panel mulls new data format for ACH remittance

<p>HERNDON, Va. – A new gold standard for data exchange on the Internet got mixed reviews in a report from a key watchdog of electronic commerce in the world of financial institutions. In an April white paper, the Internet Council of NACHA said there are some potential market changes that could prompt it to recommend changing the ACH network to accommodate XML as a format for remittance data. But it also says that, despite the sharp increase in financial electronic data interchange (EDI) transactions, there are potential advantages to the adoption of XML technology for the handling of remittance data by financial institutions. NACHA – the Electronic Payments Association represents more than 12,000 financial institutions and develops the operating rules for the Automated Clearing House Network and payments of all kinds in the world of electronic commerce, including over the Internet, EDI, electronic bill payment and presentation (EBPP), and electronic checks and benefits transfer (EBT). Last year, the ACH network handled more than $22 trillion in about 8 billion transactions, a number it expects to nearly double in five years. There were 143 million payments through the network using 413 million EDI records in 2001, a near tripling of 1997 figures. But now comes XML, an acronym for extensible markup language. The World Wide Web consortium created XML as a standard for exchanging data among the myriad of disparate legacy systems that make up the world of the Internet. Similar to its predecessor, HTML (hypertext markup language), XML uses tags to define and code information, but it allows users the freedom to create their own tags, since, unlike HTML, it defines values for the information rather than tells browsers how to display it. To decide whether XML technology should be used for remittance data, the Internet Council looked at strengths, weaknesses and opportunities of current technologies such as EDI and of XML. It put those together into a 15-page report titled “XML Formatted Remittance Data in the ACH: A Feasibility Assessment” and released it in April. The council decided there were five potential changes in market conditions “that may warrant the need” for XML remittance data in the ACH. There also are several opportunities to consider, despite the growth of financial EDI, including lower long-term costs, lower barriers to e-commerce entry for small medium-sized enterprises, integration of payment systems with XML-formatted supply chains, and increasing markets for payment and remittance services. The bottom line? “XML is a topic of great interest that the Internet Council will continue to monitor closely. The council will recommend rule and format changes to NACHA as warranted by developments in the marketplace,” says David Merritt, the council’s chairman and a Mellon Global Cash Management vice president. The NACHA Internet Council report is accessible on the Web at http:// internetcouncil.nacha.org. -</p> <p>[email protected]</p>