Comments on: Heidi Miller Challenges the Status Quo at NACHA Payments 2009 http://paymentsviews.com/2009/04/06/heidi-miller-challenges-the-status-quo-at-nacha-payments-2009/ Views and Opinions about the World of Payments Wed, 10 Mar 2010 18:51:41 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: George Thomas http://paymentsviews.com/2009/04/06/heidi-miller-challenges-the-status-quo-at-nacha-payments-2009/comment-page-1/#comment-743 George Thomas Mon, 13 Apr 2009 11:42:31 +0000 http://paymentsviews.com/?p=1529#comment-743 While Heidi Miller's speech had interesting commentary, nothing really new was revealed. Removing large value payments from the ACH has been a topic for many years. It is interesting to note that Ms. Miller was touting structured remittance for wire transfer as a solution for large value payments on the ACH when JP Morgan was the bank most vocally opposed to adding structured remittance to wire transfers. While the large value dollar amount is significant and the transactions few, many of those large value payments are CTX payments where a single amount covers multiple payments. Many payrolls total well over a million dollars, is she suggesting that those direct deposit payments move to the wire as well. Clearly the credit risk is no different for a payroll file hat exceeds a million dollars than a B2B payment of the same amount. The company must fund both and the ODFI needs to manage the risk either with a balance on hand or a credit line. With regard to comparing SWIFT pricing to ACH pricing that is like comparing apples to oranges. SWIFT pricing can vary from $.10 to $.15 a transaction maybe less for the large users (since pricing is not public). Compare the SWIFT price to the price that the ACH operators charge, a mere $.0025 a transaction. Based on the transaction volume on SWIFT and the volume on ACH, SWIFT pricing would need to be as low as $.01 for all transactions to be equivalent to the U.S. ACH. I would suggest that Ms. Miller review the P&L of SWIFT as compared to the P&L of the ACH operators, she would see that SWIFT needs to do significantly more price cutting and streamlining their spending habits. JP Morgan needs to understand that the value of the ACH network is achieved by the receivers and that not all of the benefit needs to be passed back to the originators. The danger of Pariter is real and I have to give Ms. Miller credit for taking that topic on. She was also on target on reigning in healthcare costs. Overall, this was a good speech. Ms. Miller should get the various silos at JPMorgan in sync because this is a bank that is extremely reluctant to change and innovate when it comes to payments. While Heidi Miller’s speech had interesting commentary, nothing really new was revealed. Removing large value payments from the ACH has been a topic for many years. It is interesting to note that Ms. Miller was touting structured remittance for wire transfer as a solution for large value payments on the ACH when JP Morgan was the bank most vocally opposed to adding structured remittance to wire transfers.

While the large value dollar amount is significant and the transactions few, many of those large value payments are CTX payments where a single amount covers multiple payments. Many payrolls total well over a million dollars, is she suggesting that those direct deposit payments move to the wire as well. Clearly the credit risk is no different for a payroll file hat exceeds a million dollars than a B2B payment of the same amount. The company must fund both and the ODFI needs to manage the risk either with a balance on hand or a credit line.

With regard to comparing SWIFT pricing to ACH pricing that is like comparing apples to oranges. SWIFT pricing can vary from $.10 to $.15 a transaction maybe less for the large users (since pricing is not public). Compare the SWIFT price to the price that the ACH operators charge, a mere $.0025 a transaction. Based on the transaction volume on SWIFT and the volume on ACH, SWIFT pricing would need to be as low as $.01 for all transactions to be equivalent to the U.S. ACH. I would suggest that Ms. Miller review the P&L of SWIFT as compared to the P&L of the ACH operators, she would see that SWIFT needs to do significantly more price cutting and streamlining their spending habits. JP Morgan needs to understand that the value of the ACH network is achieved by the receivers and that not all of the benefit needs to be passed back to the originators.

The danger of Pariter is real and I have to give Ms. Miller credit for taking that topic on. She was also on target on reigning in healthcare costs.

Overall, this was a good speech. Ms. Miller should get the various silos at JPMorgan in sync because this is a bank that is extremely reluctant to change and innovate when it comes to payments.

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