NACHA has been making some changes, and we’d like to keep you updated.

Here are the rules going into effect in 2015. Some were already initiated, and you may already know them, but here’s a quick summary of what’s already happened and what’s ahead.

#1 Risk Management for Third-Party Providers and Senders

Effective 1/1/15

Summary:

This amendment enforces rules regarding third-party service providers and senders. It will monitor, assess, and enforce limitations on their customers’ origination and return activities – much like the way rules work for ODFIs.

ODFIs will now be required to provide documentation that supports the completions of third-party service providers’ and senders’ audits to NACHA, upon request. Third-party service providers and senders will also now be required to provide the proof of completion to the ODFI.

#2 NACHA’s Enforcement Authority

Effective 1/1/15

Summary:

This amendment allows NACHA to initiate a rules enforcement action when it becomes aware of the authorization of unauthorized entries. Previously, NACAH could only initiate rules enforcement proceedings under three circumstances and had to wait for a DFI to submit a rules violation, even when NACHA knew an originator was practicing improper authorization.

Participants are now encouraged to cooperate. They are obligated to report and submit information when requested. They also should support investigations of improper practices.

#3 Clarification of POS Entry General Rule

Effective 1/1/15

Summary:

Article 2 will be updated to reflect a credit entry as a type of POS entry, now aligned with the definition of POS entries in Article 8. Usually considered only debit entry, POS entries can also be reversals, refunds, or other types of credits.

#4 Return Fee Entry Formatting Requirements

Effective 1/1/15

Summary:

This new rule revises formatting requirements for certain return fee entries to match the transaction associated with the return fee.

PPD transactions require the name field. ARC, BOC, and POP entries do not require the name field; the entry can be submitted using a reference number, identification number or specific code used by the merchant to identify transactions and customers. The return entry for transactions originally processes as ARC, PPD, and POP is PPD.

#5 Clarification of POP Entry Detail Record for Returns

Effective 1/1/15

Summary:

A footnote has been added to the entry detail record for POP return entries in order to clarify the use of positions 4-54 and the mapping of the check serial number, terminal city, and terminal state.

#6 Clarification of RDFI Obligation to Recredit a Receiver

Effective 1/1/15

Summary:

An RDFI’s obligation to recredit a receiver for an unauthorized or improper debit entry is generally limited to consumer accounts. There are certain exceptions for check conversions and international transactions. Exceptions are made for unauthorized IAT debits and improperly originated ARC, BOC, and POP entries, affecting both consumer and non-consumer accounts.

#7 Clarification on Prenotification Entries and Addenda Records

Effective 1/1/15

Summary:

With the exception of IAT entries, a prenotification entry is not required to include addenda records that are associated with a subsequent live entry. An RDFI receiving a prenoticiation entry only needs to verify that the account number is for a valid account. The RDFI may optionally validate additional information within the entry, but is not required to do so.

#8 Clarification on Company Identification for P2P WEB Credit Entries

Effective 1/1/15

Summary:

For P2P WEB credit entries, the company/batch header record identifies the P2P service provider (i.e. the consumer originator’s own financial institution or a third-party service provider) rather than the consumer originator.

#9 Person-to-Person Entries

Effective 3/20/15

Summary:

ODFIs and third-party service providers are now required to use credit WEB entries for all P2P transactions sent via ACH.

#10 Dishonored Returns and Contested Dishonored Returns Related to an Unintended Credit to the Receiver

Effective 3/20/15

Summary:

An unintended credit to the receiver may be caused by 1) an erroneous debit entry and subsequent credit reversing entry, or 2) an erroneous credit entry and subsequent debit reversing entry. Either the debit is returned, but the credit is posted OR the credit is posted, but the debit is returned.

An ODFI can dishonor the return using the new return reason code R62. An RDFI can contest this dishonored return using the new return reason code R77, if the RDFI returned both the erroneous entry and reversal, or if the RDFI is unable to recover funds from the receiver.

#11 Removal of Change Code C04

Effective 3/20/15

Summary:

Change code C04, which refers to the incorrect individual name/receiving company name), has now been removed from the NACHA operating rules.

#12 ACH Operator Edit for Returns

Effective 9/18/15

Summary:

An ACH operator edit has been added to the listing of ACH operator file/batch reject edit criteria in Appendix Two. This edit requires ACH operators to reject any batch of return entries where RDFI and ACH operator returns are comingled.

#13 ACH Network Risk and Enforcement

Effective 9/18/15

Summary:

For returns under reason codes R05, R07, R10, R29, and R51, this change aims to reduce the return rate threshold from 1% to 0.5%.

Now, if administrative debit returns reach 3%, or overall debit returns hit 15%, an inquiry of the originator’s or third-party sender’s origination activity will be initiated. This inquiry process is used before any enforcement activity and would not automatically correspond to a rules violation resulting in enforcement activity. This inquiry process allows the originator and ODFI to respond. NACHA and the rules enforcement panel will determine if a reduction in return rate is necessary for the originator.

This rule doesn’t change any existing investigation or enforcement processes related to the authorized return rate threshold. There is also an exclusion to this rule for low volume originators.

#14 Reinitiation

Effective 9/18/15

Summary:

“RETRY PMT” must now be included in the company entry description field. Modification to other fields is only allowed as it is necessary to correct an error or to facilitate the processing of an entry. The RDFI will use the return code R10 for reinitiation rule violations.

#15 Recredit Receiver for RDFI Returns

Effective 9/18/15

Summary:

A receiver must be recredited when an RDFI initiates a return.

#16 ODFI Statement Requirements for CIE and WEB Credits

Effective 9/18/15

Summary:

The ODFI must make the description on the receiver’s statement clear enough that the receiver recognizes the debit as related to either the CIE or WEB credit entry.

#17 Encryption

Effective 9/18/15

Summary:

Outdated language regarding the 128-bit RC4 encryption minimum will be removed. Rule language will be updated to commercially reasonable encryption methods with a definition of this term.

#18 Zero Dollar Entry

Effective 9/18/15

Summary:

A definition will be added for a zero dollar entry.

These eighteen rules summarize what NACHA has in store for this year’s rule changes and updates. For more information, visit www.nacha.org. If you have any questions, be sure to leave them in the comments.

Photo credit: Michael Cory

 

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