The deadline for NACHA ACH compliance is fast approaching (March 19, 2022) and we want to make sure you have all the information you need regarding the WEB Debit Rule to understand the impact it may have on you and your business.
Spoiler alert: if you’re a Biller Genie subscriber, this will have no impact on the ACH transactions being processed through our platform.
NACHA in a Nutshell
The National Automated Clearinghouse Association (NACHA) is the organization that oversees the global ACH network. And in 2021 alone, they processed more than 29.1 billion ACH transactions, valued at approximately $72.6 trillion. This is a considerable jump from the 24 million transactions processed in 2019, so it’s no surprise that the recent compliance mandate is up to bat and accepting nothing less than a homerun.
So, why is our ecosystem such a fan of ACH payment remittance? In a nutshell, these transactions are fast, typically minimal cost, and are usually more user-friendly and less cumbersome or risky than writing checks or paying via credit/debit card.
What You Need to Know
The upcoming mandate revolves specifically around WEB transfer transactions, which means this is applicable to online transactions initiated via bank transfers using someone’s routing and account number. Pre-mandate, ACH originators of WEB debit entries were required to use a “commercially reasonable fraudulent transactions detecting system.” Post-mandate, NACHA will also be requiring an approved account validation system as part of the payments cycle.
In order to accomplish this, NACHA is imposing several different options that represent an approved account validation system:
- The first option is a zero-dollar auth. Also commonly referred to as ACH prenotification or prenote, this is helpful because it confirms the account number, but that’s about it. It doesn’t get any other information and can also take up to three days to complete the validation. So, with this scenario, money could still technically be sent to the wrong account.
- Next in line is the trial deposit, or micro deposit, option. In this scenario, the ACH originator would make a small deposit into the recipient account before the actual transaction is made in order to verify the account. This option can take anywhere from 24 to 48 hours, which makes it a bit counterintuitive when it comes to the expedited benefit of ACH. It also doesn’t validate the owner of the account, which could set up the same error of inaccurate account deposit that we specified with the zero-dollar auth option above.
- And finally, we have the account aggregator option. This employs a third party to verify the account using the username and password from the account to log into the system. However, while this method confirms an account is open, it also puts the consumer at risk as they are required to entrust their sensitive information to a third-party facilitator.
NACHA typically enforces their rules through a system of warnings and fines. This means that should any violation be ignored or escalated for any reason, the offending organization can be fined up to $500,000 per month until the issue is resolved or may even face suspension of originating entries.
The Biller Genie Benefit
So, how does the Genie ensure you’re compliant?
Biller Genie makes it easy to collect signed authorization forms before any transactions are initiated on the platform. As a result, our ACH activity is classified as something called a Prearranged Payment and Deposit (PPD) or Corporate Credit or Debit (CCD) transaction, versus a WEB transfer for ACH.
While both of these transaction types still fall under the NACHA umbrella, they are classified differently. CCDs are used to pay or collect from other corporate business accounts, while PPDs are used to pay or collect from personal or consumer accounts. And given the fact that the customer must be authenticated in our system in order to sign the authorization form, the Genie already has the proper protocols in place to perform account validation and the subsequent protection against customer disputes.
What This Means for You
Basically, this means we already have you covered! Nothing will be required on your end for compliance with this mandate as the Genie has already been satisfying these upcoming requirements for quite some time now.
So, you can keep doing what you do best (growing your business), and we can keep doing what we do best (supporting your success).
The Best Part?
Since we already had this covered, you didn’t even have to use one of your wishes!