In terms of overall n/w utility across banks from a regulator perspective ACH being quite bilateral(or multi) it seems nice, but i guess the returns part makes it look more credit-risky(for ODFI) than most multilateral netting transactions should be.Wanted to know if there are any insurance products that thrive on this very credit risk ODFI takes?
I haven't seen a lot of payment gateways but does ODFI place block limits or OverDraft limits on the originator and does it vary from bank to bank?
The ODFI usually places a daily limit based on the anticipated types of transactions, how risky your business is, how well they "know" you, and a variety of other things.
All of that depends on the bank, and is somewhat negotiable. We had much better luck talking to a local bank where we were able to get a meeting with the head of the business banking division.
I haven't seen any insurance products that thrive on the risk that ODFI takes, but the ODFI does minimize their risk by requiring the originator to keep a collateral account to which they'll take money from should they incur any kind of loss.
The ODFI does place daily (soft) limits on the originator, and the amount of collateral you have to put up is proportional to your daily limit. It definitely varies from bank to bank and is a largely of a factor of how much your bank trusts you and your past ACH history with them.
I haven't seen a lot of payment gateways but does ODFI place block limits or OverDraft limits on the originator and does it vary from bank to bank?