How can the ACH network be simplified to compete with Check 21?

Abstract

It is suggested that the automated clearing house (ACH) network has gone beyond being necessary and has become too complicated. To remain a viable low-cost payment solution and compete with other services related to Check 21, the network and its transactions need to be simplified. Various factors contribute to ACH complications, including cheque conversion and multiple standard entry class (SEC) codes, having various transaction types for any forward presentable items, the complexity of ACH rules, too many exclusions regarding which items may be converted, and the current provision in eChecks that let consumers 'opt-out' of having cheques converted into ACH debits. While ACH holds some advantages over Check 21, several suggestions are provided to simplify the ACH network and benefit all participants, including eliminating unnecessary SEC codes, written authorisations for eChecks, 'opt-outs' and all cheque conversion exceptions. In order to facilitate these suggestions, additional action items are also discussed.