In the recent episode of Payments Pros, a much-followed podcast in the legal domain, hosts Carlin McCrory and Keith Barnett had guests James Rowe and Nanci McKenzie from Affirmative Technologies, a chief technology provider recognized for its work in Automated Clearing House (ACH) processing and risk management software.
The conversation revolved around the ACH originator risk, a topic of serious concern for professionals involved in payment processing and ACH sponsoring organisations, known as, Originating Depository Financial Institutions (ODFIs).
ACH processing involves movement of funds between banks through a centralized system, facilitating direct deposits and payments. ACH originator risk rises from the fact that the origins of these fund transfers are businesses that could potentially present financial, legal or reputational risks to the ODFIs. For instance, if an originating business is involved in illegal practices or a legitimate business faces unexpected insolvency, the ODFIs could find themselves bearing the brunt of these financial obligations.
Affirmative Technologies, with its innovative electronic payment solutions, servicse an expansive array of businesses, including financial institutions and third party payment processors. Understanding the risk associated with ACH processing, the company has plans to delve deeper into risk management software development.
While the ACH processing system offers undeniable conveniences in the realm of transactions, recognizing and managing the inherent risks are challenging tasks to ensure the ongoing smooth operation of payment processors and ODFIs. This podcast shines a light on these risks and encourages important dialogues to chart safer pathways in the context of ACH transactions.
For more details on the topic, listen to the complete podcast episode on Payments Pros.