Welcome » IT Booklets » Wholesale Payment Systems » Interbank Payment and Messaging Systems » Other Clearinghouse, Settlement, and Messaging Systems » National Settlement Service (NSS)
NSS is a multilateral settlement service owned and operated by
the Federal Reserve Banks. It allows participants in private
clearing arrangements to settle their net obligations with same-day
finality using participant's reserve or clearing account balances
maintained at the Federal Reserve Banks. NSS participants include
local check clearinghouse associations, automated clearinghouse
(ACH) networks, credit card processors, and automated teller
machine (ATM) networks.
To use NSS, a settlement agent transmits a settlement file
electronically to a Federal Reserve Bank. The file contains a
listing of the participants, the settlers (either the participant
itself or the participant's correspondent), and the dollar amount
of the debit or credit to be posted to the settler's account. If
validity checks are satisfied, the Federal Reserve Bank accepts the
file for processing and sends an acknowledgment to the agent. The
Federal Reserve Bank accepts NSS files for processing and
settlement between 8:30 a.m. and 5:30 p.m. Eastern Time. If an
institution submits files earlier than 8:30 a.m. Eastern Time, they
enter a queue for processing beginning at 8:30 a.m. Eastern Time.
The NSS checks each debit balance on the settlement file against
the account balance and intraday credit available to the settlers.
The system may reject debit balances if a settler does not have a
sufficient balance or sufficient intraday credit to cover the
debit. Once it has posted all debit entries on the settlement file,
NSS posts the credit balances. All transactions are final and
irrevocable once the NSS posts them. The settlement for a file is
complete when all credits have been posted. The NSS then sends an
acknowledgment message to the settlement agent.
NSS offers payment finality similar to that of the Fedwire Funds
Service and provides an automated mechanism for submitting
settlement files to the Federal Reserve Banks. NSS improves
operational efficiency and reduces settlement risk to participants
by providing settlement finality on settlement day. It also enables
the Federal Reserve Banks to manage and limit risk by incorporating
risk controls similar to those used in the Fedwire Funds Service.
NSS can settle transactions across Federal Reserve Districts or
within a single Federal Reserve District.