The annual conference of NACHA, the Electronic Payments Association, was enlivened this year by giant retailer Wal-Mart's call to add corporate representatives to the group's board. NACHA's ACH Network clears electronic payments between banks, and its board currently includes only bankers.
Two Wal-Mart representatives hosted a session at the meeting to discuss the issue, which provoked considerable debate.
Daphne Gilliam, Wal-Mart's check product manager, argued that NACHA's "consensus rule-making, resistance to change and fear of criticism" have made it slow to adapt to changes in technology and meet the automated payment needs of banks' corporate clients.
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Jason Marshall, Wal-Mart's senior director of payments services, added that banks only represent "maybe a third" of the industry. Alternative payment processors like PayPal should also be included on the board, he said.
Wal-Mart is unhappy with the pace at which banks are adopting same-day clearing, especially for small-value debit and credit payments, which are central to the retail business. Wal-Mart and other companies also want banks to adopt business check conversion.
The NACHA board responded cautiously to Wal-Mart's request. Janet Estep, NACHA's president and CEO, said the organization's rule-making process "is what enables the evolution of network use" and "all participants, including corporations, play a pivotal role in these developments."
Marcie Haitema, past chair of the NACHA board, argues against corporates joining the board. "Wal-Mart and others feel they are the ones paying for the true cost of the ACH system, and that is simply absurd," she says. "Years ago, NACHA did have corporate board representation, and it was not productive, because the representatives only cared about their companies' needs, and not the ACH as a whole."
David Bellinger, director of projects at the Association for Financial Professionals, counters that corporations should have board seats. "NACHA policy is set at the board level, and right now corporate input is indirect and at the end of the decision-making process," he says.
"It may be some banks don't want Wal-Mart on their board," Bellinger adds. "But longer term, whether it's Wal-Mart or not, getting corporates on the NACHA board will happen."
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