EFT/POS and Credit Card Networks

Financial institutions should have accurate audit trails for all transactions at each network switch point.  The audit trails should identify the originating terminal and destination.  To ensure accurate transaction posting, the financial institutions should have adequate procedures in place to control transaction activity if the EFT/POS network becomes inoperable.  Also, financial institutions should document and monitor procedures for balancing and settling transactions to ensure that they adhere to interchange policies.  Each participant in the switch should receive adequate transaction journals and exception reports necessary to facilitate final settlement for the institution.

A financial institution should establish stand-in processing arrangements with peer financial institutions as part of its disaster recovery and business continuity plans to ensure availability of the service.  Additionally, it should have adequate oversight and contract provisions for all outsourced services to ensure continuity of expected service levels. Agreements between switch or network participants should delineate each party's liabilities and responsibilities.  The agreements should detail basic control items concerning normal and contingency processing and assign responsibility for corrective action. Grievance procedures and arbitration policies are also an important part of participant agreements.

Internet and Telephone-Initiated ACH

Financial institutions originating ACH debit entries through the Internet should ensure they are in compliance with NACHA requirements.  NACHA rules establish a WEB standard entry class (SEC) code for Internet-initiated ACH debit entries to which a number of requirements apply.  The rules apply to originators and also affect the ODFI and its service providers.  Under these rules, financial institutions must use the WEB SEC code to identify all ACH debit entries to consumer accounts that a receiver authorizes through the Internet.  This code applies to both recurring and single entry ACH debits.  In addition, an ODFI that transmits WEB entries must warrant that its originators have met certain NACHA standards.

Financial institutions offering TEL origination services on behalf of their customers are exposed to substantial risk from merchants that may be engaged in fraudulent or deceptive business practices.  Therefore, these institutions should adopt applicable NACHA risk management practices.


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Appendix A: Examination Procedures