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November Executive Summary — Payments Modernization Remains in High Gear

By Mark Dixon, AAP, APRP, NCP posted 11-09-2020 10:32


As we move toward the end of the year, payments modernization remains in high gear. The Federal Reserve recently announced the launch of the FedNow(SW) Pilot Program and is inviting participation from the industry. Early Warning and The Clearing House just completed a critical integration milestone of the Zelle® and RTP® Networks, which opens the door to new opportunities. And Nacha recently approved eight rule changes that reflect a long-term strategy to modernize the ACH system.

With changes like these coming fast and furious, it is sometimes hard to stay on top of new developments and emerging trends. The good news is that we’ve got you covered. One of the best ways you can keep apprised of what’s happening in the industry is by attending our virtual Payments Management Conference, November 16-17. I promise you won’t be disappointed.

For now, read on for more on what is happening in payments.


The FedNow(SW) Pilot Program

The Federal Reserve continues to gain momentum with its FedNow(SW) Service, having recently announced its launch of the FedNow(SW) Pilot Program, which according to its website, will “support the development, testing and adoption of the FedNow Service.”

The pilot program will include three phases: advisory, testing, and closed-loop production. Organizations interested in participating should submit an expression of interest form by November 16. Participants, including financial institutions, service providers, payments processors and other industry stakeholders, will be selected from the pool of interested organizations, seeking to ensure they are representative of the industry.

If you have questions about the FedNow community or the pilot program, email


RTP® and Zelle® Integration Milestone

In other news, Early Warning Services, LLC, the owner and operator of the Zelle Network and The Clearing House (TCH), the operator of the RTP® network announced October 27 that financial institutions can now settle Zelle payments over the RTP network.

NC Bank and U.S. Bank successfully completed a pilot, transmitting money using Zelle over the RTP network. According to the release, additional FIs will integrate the two networks and start testing later this year.

Lou Anne Alexander, chief product officer at Early Warning Services, was quoted in the release:

Participating Zelle Network FIs can choose the RTP network as an optional route to clear and settle Zelle transactions in real-time. It’s on this foundation that new real-time payment use cases will be possible, including bill payments for auto loans, mortgages, and utilities.


And speaking of faster payments, happy anniversary to the U.S. Faster Payments Council (FPC), which launched two years ago.

In an email sent to its members, the FPC thanked its members for their commitment to the FPC and the advancement of the U.S. faster payments system. The organization also recounted its accomplishments, including pointing out the Faster Payments Barometer (a second set  of survey results will be released in the coming weeks), white papers on interoperability, fraud, and consumer bill payment, and the launch of the online Faster Payments Knowledge Center to further faster payments learning. 

Visit the FPC’s website to learn more.



Nacha Q3 Volume

Nacha recently announced its third-quarter volume, citing a 9% increase and a resurgence of commercial volume. According to its October 20 news release:

Volume on the ACH Network totaled 6.8 billion payments in the third quarter, a 9% increase from the same period in 2019. The value of those payments, $15.9 trillion, reflects a 13.1% increase.

Commercial ACH volume, initiated through the private-sector financial institutions, grew by 9.6%. Business-to-business (B2B) payments jumped by 12.4%. Healthcare claim payments to providers rebounded in the third quarter, likely due to more dental and medical offices reopening. The 94.5 million healthcare claim payments reflect an increase of 8.1% from a year earlier and 18.8% from the second quarter of 2020.

A shift away from paper payments to electronic payments was also evident, with a 52% jump in person-to-person payments, a 15.8% jump in Direct Deposit, and a 14% increase in Internet-initiated payments and transfers. The average dollar amount per Same Day ACH payment rose 31%, continuing a trend that began with the March 2020 increase in the dollar limit per transaction to $100,000. 

For an infographic summarizing Q3 results, visit Nacha’s website.


Zelle Q3 Volume

Zelle® also showed an increase in volume. Early Warning Services, LLC, the network operator behind Zelle, announced November 2 that during the past 12 months (September 2019 – September 2020), the Zelle Network processed more than one billion payment transactions. In Q3 2020, the Zelle Network processed 323 million transactions, totaling $84 billion in money sent — an increase of 17% and 18% quarter-over-quarter, respectively.




Nacha announced October 2, it has approved eight new amendments to the Nacha Operating Rules. The rule changes reflect a long-term strategy to modernize the ACH system.

Notably, two of the rules provide businesses, financial institutions, payments providers, and technology companies with a framework for authorizing consumer ACH payments applied to new channels and technologies that consumers are adopting to interact and transact businesses.


Risk & Fraud


As we consider the innovation around payments modernization, so too, does fraud become a key topic. Business Email Compromise (BEC) continues to rise as a threat for FIs’ business clients, and detection and quick response remain the most critical actions for banks and credit unions in supporting their customers. 

To that point, FS-ISAC recently hosted its Business Email Compromise (BEC) exercise, which offered a hands-on experience for participants to evaluate a potential attack under pressure and identify their organization’s best response. In the introduction to the event, FS-ISAC shared some critical facts about BEC, including:

  • Majority of BEC scams involve gift cards (62%) Direct transfer 22% and 16% Payroll diversion
  • BEC scams are not a technical threat. Instead, they attack the human firewall (social engineering)
  • Less technical and easier to conduct then other cybercrime

BEC continues to plague the industry, and NEACH is offering a session at its

Payments Management Conference entitled, “The FBI says BEC is Number 1,” to address its impact. More details follow below.




As I’ve mentioned before, partnerships between FIs and FinTechs are nothing new. But the current environment means it is no longer quite enough to only ponder the benefits of FI/FinTech partnerships or to point out changes in our field and estimate where we'll be in one month, six months, or a year. The status quo has changed for everyone, everywhere, largely due to the impact of COVID-19.

Check out my take on new opportunities for FI/FinTech partnerships and other payments-related topics at “Mark’s Corner.”


In late September, we convened the New Role of Operations Workgroup with the intent of exploring exactly how FI operations have evolved in the wake of COVID-19 and recent industry developments. From the introduction of "smart" data to the role of faster and real-time payments, the industry continues to offer new opportunities for FIs.  As banks and credit unions embrace these options, where they fall within FI infrastructure depends upon the institution. Ultimately, these changes create a new dynamic in the world of operations. 

To learn more about what we discussed during our first meeting, click here. You also can join Serena Petrucci, AVP, Deposit Operations Manager at Centreville Bank and a workgroup member, and me during our session at the upcoming Payments Management Conference to learn more about our work to date.



It is no secret that COVID-19 has changed the face of payments. It’s more critical now than ever to stay on top of today’s important issues.

NEACH’s Payments Management Conference, which is being held virtually, November 16-17, addresses the changes happening in our industry and how to address them. For example, as referenced above,  business email compromise (BEC) scams accounted for half of the cyber-crime losses in 2019. Average loss per BEC scam amounted to nearly $75,000, per complaint, on average. BEC scams cost victims $26B over a three-year period. Giles Witherspoon-Boyd, president and CEO of Protocol Enterprises will explain how this scam works and steps you can take to educate your team and your clients.  

Other sessions include:

  • Using RTP to Enhance Legacy Payment Products
  • Update from NEACH’s New Role of Operations Work Group
  • Fighting Fraud: What’s Ahead from the Federal Reserve in Payments Security

I hope you will join me for what promises to deliver the most up-to-date information on what is happening now and what the future holds for payments. Visit for more on the conference, or register online.


As we have said before, NEACH is always here to support you. Contact us via the payments hotline at 855-NEACHQA.