NACHA News and Rules Updates

2017 NACHA Updates

2017-September 29—Third-Party Sender Registration

This rule requires Originating Depository Financial Institutions (ODFIs) to identify and register their existing Third-Party Sender (TPS) customers by March 18, 2018 and thereafter register their new TPS customers within 30 days. The registration process will promote consistent customer due diligence among all ODFIs, and serve as a tool to support NACHA's continuing efforts to maintain ACH Network quality.

For ODFIs with Third-Party Sender customers, this Rule requires an ODFI to provide basic registration information for each Third-Party Sender:

  • The name and principal business location of the Third-Party Sender
  • The ODFI's routing number used in ACH transactions originated for the Third-Party Sender
  • The Company Identification(s) of the Third-Party Sender

The registration requirement will apply to Third-Party Senders that are the ODFI's direct customers, as well as those other Third-Party Senders that are direct customers of the first Third-Party Sender, otherwise known as "nested" Third-Party Senders.

Here are the Third-Party Senders obligations to the ODFI:

  • A Third-Party Sender must disclose to their ODFI the identity of any other Third-Party Sender for which it transmits entries to the ODFI, prior to transmitting entries for the other Third-Party Sender.
  • A Third-Party Sender must provide within 2 banking days, upon ODFI's request, the information necessary for the ODFI to complete registration.
  • A Third-Party Sender must provide, upon ODFI's request, the following Supplemental Registration information if requested by NACHA regarding a risk event(s):
    • Any doing-business-as names, taxpayer identification number(s), and street and website address(es) of the Third-Party Sender
    • The name and contact information for the Third-Party Sender's contact person
    • Names and titles of the Third-Party Sender's principals
    • The approximate number of Originators for which the Third-Party Sender transmits entries
    • A statement as to whether the Third-Party Sender transmits debit entries, credit entries or both

2016 NACHA Updates

2016-October 3—Improving ACH Network Quality—Unauthorized Entry Fee

This Rule is intended to improve ACH Network quality by reducing the incidence of ACH debits that are returned as unauthorized. Under this Rule, an Originating Depository Financial Institution would pay a fee to the Receiving Depository Financial Institution for each ACH debit that is returned due to a reason of unauthorized. This Rule will become effective beginning with applicable return entries that have a settlement date of October 3, 2016.

Unauthorized return reasons include:

  • R05 - Unauthorized Consumer Debit
  • R07 - Authorization Revoked by Receiver
  • R10 - Customer Advises Unauthorized, Improper, Ineligible or part of an Incomplete Transaction
  • R29 - Corporate Customer Advises Not Authorized
  • R51 - Item Related to Return Check Entry is Ineligible or Improper

2016-September 23—Same Day ACH—Moving Payments Faster

This Rule enables same-day processing of ACH payments providing Originators the ability to send a same-day ACH transaction for up to $25,000 to an account at any Receiving Depository Financial Institution (RFDI). All RDFIs would be required to receive same-day ACH payments, thereby giving originators the certainty of being able to send same-day ACH payments to accounts at all RDFIs.

Potential use cases for same-day ACH include:

  • Same-day payrolls, supporting businesses’ needs to pay hourly workers, providing flexibility for late and emergency payrolls and missed deadlines and enabling employees to have faster access to their pay in these cases.
  • Business-to-business payments, enabling faster settlement of invoice payments between trading partners including remittance information with the payments.
  • Expedited bill payments using both ACH credits and debits, enabling consumers to make on-time bill payments on due dates and providing faster crediting for late payments.
  • Account-to-account transfers, providing faster crediting for consumers who move money among various accounts they own.

Originating Financial Institutions (ODFIs) would be able to submit files of same-day ACH payments through two new clearing windows provided by the ACH operators:

  • A morning submission deadline of 10:30 am ET, with settlement occurring at 1 pm ET.
  • An afternoon submission deadline of 3 pm ET, with settlement occurring at 5 pm ET.

This Rule is being implemented in a three-phased approach:

  1. Credits Only - effective September 23, 2016
  2. Credits and Debits - effective September 15, 2017
  3. ACH Credit Funds Availability 5 pm RDFI local time - effective March 16, 2018

2015 NACHA Updates

2015-September 18—ACH Network Risk and Enforcement Rules

This Rule is intended to improve overall quality of the ACH Network by reducing the incidence of returned entries and the associated costs and reputational risk that such returned entries impose on the ACH Network and its participants.

Reduce Unauthorized Return Rate Threshold

  • The Rule reduces the current return rate threshold for unauthorized debit Entries (Return Reason Codes R05, R07, R10, R29 and R51) from 1% to 0.5%.
    • R05 - Unauthorized Consumer Debit
    • R07 - Authorization Revoked by Receiver
    • R10 - Customer Advises Unauthorized, Improper, Ineligible or part of an Incomplete Transaction
    • R29 - Corporate Customer Advises Not Authorized
    • R51 - Item Related to Return Check Entry is Ineligible or Improper

Establish an Inquiry Process For Administrative and Overall Return Rate Levels

  • Establish an administrative return rate level of 3% for debit entries returned due to administrative or account data errors (Return Reason Codes R02, R03 and R04).
    • R02 - Account Closed
    • R03 - No Account/Unable to Locate Account
    • R04 - Invalid Account Number Structure
  • Established an overall return rate level of 15% for all debit entries (excluding Return Check Entries) that are returned for any reason.
  • Administrative and overall return rates above the fore mentioned levels will not automatically be considered a Rules violation or result in a rules enforcement proceeding. Rather, a return rate above either of these levels is considered a starting point for a review of the Originator’s or Third-Party Sender’s origination activity to determine if a reduction is warranted.

Re-initiation of Entries

  • This Rule requires the description “RETRY PYMT” to be included in the Company Entry Description field for permissible re-initiated Entries.
  • This Rule permits the Receiving Financial Depository Institution to return a Re-initiated Entry for a violation of the Re-initiation Rule using the Return Reason Code R10 which allows for a 60-day extended return timeframe. The RDFI will need to obtain a Written Statement of Unauthorized Debit.

2015-March 20—Unintended Credit to a Receiver

This Rule provides an automated mechanism to resolve situations in which a Reversal Entry has resulted in an unintended credit to the Receiver. An unintended credit occurs when either:

  1. An erroneous debit Entry is returned by the Receiving Depository Financial Institution while the Reversal credit Entry is posted to the Receiver’s account.
  2. A erroneous credit Entry posting to a Receiver’s account while the Reversal debit Entry is returned.

2014 NACHA Updates

2014-September 19—Prenotification Entries—Waiting Period Reduced to Three Banking Days

This Rule reduces the previous six banking day waiting period to three banking days between the initiation of a zero dollar Prenotification Entry and “live dollar” Entries. Originator may now initiate a “live” Entry to a Receiver’s account as soon as the third banking day, provided that the Originator has not received a return or Notification of Change (NOC) related to the Prenotification. A Prenotification provides notification to the Receiving Depository Financial Institution that the Originator intends to initiate Entries to a Receiver’s account in accordance with the Receiver’s authorization.

2014-September 19—Proof of Authorization for Non-Consumer Entries

This Rule establishes a Receiving Depository Financial Institution’s right to request, and an Originating Depository Financial Institution’s obligation to provide, proof of authorization for an Entry to a corporate account. The Originator is required to provide proof of authorization or Originator’s contact information, which should help facilitate resolution of dispute over the validity of the Entry. The proof of authorization or contact information is required to be provided within 10 banking days.

2014-March 21—Person-to-Person Payments

Mandatory use by Originating Depository Financial Institutions and Third-Party Senders by March 20, 2015

This Rule enables a credit version of the Internet / Mobile Initiated Entry (WEB) Standard Entry Class Code to be used when a credit transaction from one consumer account to another is authorized over the Internet. The Rule also addresses exceptions, indemnifications, and statement and formatting requirements that are unique to a credit (WEB) Entry.

2014-March 21—International ACH Transaction—Identification of Country Names

This Rule clarifies the manner in which countries must be identified within an International ACH Transaction Entry, eliminating the potential for ambiguity in identifying countries to or from which Entries are directed.

2014-March 21—International ACH Transaction—Identification of Additional Parties

This Rule establishes obligations and formatting requirements for Inbound International ACH Transactions to identify both parties that are ultimately being debited and credited.

2013 NACHA Updates

2013-September 20—ACH Security Framework

This Rule establishes the following minimum data security obligations for ACH Network participants to protect ACH data:

  • Requires non-consumer Originators, Participating Depository Financial Institutions, Third-Party Service Providers and Third-Party Senders to establish, implement and, as appropriate, update security policies, procedures, and systems related to the initiation, processing and storage of Entries.
  • Requires each Participating Depository Financial Institutions, Third-Party Service Provider, and Third-Party Sender to verify, as part of its annual ACH Rules Compliance Audit, that it has established, implemented, and updated the data security policies, procedures and systems required by the Rules.

2013-September 20—Stop Payment Effective Period for a Non-Consumer Account

This Rule recognizes that a stop order on a business account will lapse at the earliest of one of three conditions: (1) six-month expiration (2) withdrawal of the order (3) return of the debit Entry.

2013-September 20—Healthcare Payments via ACH

This Rule establishes standards to support health plans’ and healthcare providers’ use of the ACH Network for healthcare claims payments and payment-related information. This Rule includes processing enhancements and transaction identification and formatting requirements specific to healthcare claim payments. The following are major components of the Rule:

  • Originators of healthcare EFT Transactions are required to populate the Company Entry Description of the CCD Entry with the value “HCCLAIMPMT”.
  • Originators of healthcare EFT Transactions are required to include an addenda record with each CCD Entry and populate the Payment Related Information field to include the TRN (Reassociation Trace Number) data segment. The TRN information is needed by healthcare providers to re-associate Healthcare EFT Entries with the electronic remittance advice (ERA).
  • A Receiving Depository Financial Institution must make available, upon request by the healthcare provider, all information contained within the Payment Related Information field of an addenda record transmitted with a CCD Entry that is a Healthcare EFT transaction.
  • The tilde ~ data segment is defined as a valid data segment terminator within the addenda record for a CCD Entry Healthcare EFT Transaction.
  • The National Automated Clearinghouse Association (NACHA) Operation Rules are expanded to include healthcare terminology.

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2013-September 20—Notifications of Change—Originator Obligations for Single Entries

This Rule makes the response to Notifications of Change (NOCs) for Single Entry payments optional. Single Entry payments can be originated using the following Standard Entry Class Code: Accounts Receivable, Back Office Conversion, Point-of-Purchase Return Check, Telephone–Initiated and Internet/Mobile Initiated entries.

2013-March 15—Incomplete Transactions

This Rule will allow the return of a debit Entry to a Consumer Account within 60 days of the Settlement Date for an “Incomplete Transaction,” which is defined as a transaction for which a Third-Party Sender debits a consumer’s account to collect funds, but does not complete the corresponding payment to the party to which payment is owed.

2013-March 15—Return Rate Reporting

This Rule reduces the Return Rate Reporting period from 60 days to 30 days during which an Originating Depository Financial Institution is required to reduce its Originator’s return rate below the threshold before the initiation of a Rules enforcement proceeding.

2013-March 15—Data Passing

The Data Passing Rule will prohibit sharing of certain customer information by Originators, Third-Party Service Providers and Originating Depository Financial Institutions for the purpose of initiating debit Entries that are not covered by the original authorization.

2013-March 15—Originating Depository Financial Institution Warranties—Compliance with Foreign Payment System Rules

This Rule revised the warranty of compliance with foreign payment system rules for Outbound International ACH Transactions (IAT) Entries, narrowing its scope to focus only on authorization of the Entry when such authorization is required by the laws or payment system rules of the receiving country.

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