ACH gains traction, regulatory support

As ACH adoption soars in B2B and B2C sectors, Nacha plans to phase in new guidelines to encourage usage and protect against errors and fraud. The 2022 rules begin to take effect in March 2022, Nacha representatives stated.

Jane Larimer, Nacha president and CEO, confirmed same-day ACH transactions, currently capped at $100,000, will be increased to $1 million per payment on same-day credits and debits to further encourage business and consumer usage. The change will become effective in March 18, 2022.

In addition, Larimer noted ACH transactions initiated online must meet new fraud prevention criteria. The WEB Entry rule, partially implemented in March 2021, requires financial institutions initiating online ACH transactions to have fraud prevention systems. The second part of the rule, effective June 30, 2022, further elaborates on fraud prevention criteria.

Updated rulebook

Nacha representatives anticipate that expanded spending limits and processing hours will bring more traffic to existing ACH rails. They cited the following rule changes and effective dates:

• Increased same-day ACH dollar limit: Effective March 18, 2022, the dollar limit for each same-day ACH payment will increase from $100,000 to $1 million. 

• Supplementing data security requirements—phase two: Effective June 30, 2022, part two of this rule, which took effect in March 2021, requires large non-financial institution originators with annual ACH volumes of 2 million or more transactions to securely store financial data in tokenized and encrypted formats.

• Third-party sender roles and responsibilities: Effective Sept. 30, 2022, these rules clarify responsibilities of third-party senders (TPS) in the ACH Network with regard to nested third-party sender relationships and require participating TPSs to conduct risk assessments. The two rules provide a six-month grace period for certain aspects of implementation.

Community support

Scott Goldthwaite, president at Aliaswire, pointed out that Nacha's WEB Entry rule requires checking accounts to be validated. "This will improve efficiencies by ensuring ACH recipients are legitimate, viable and ready to receive transactions," he said.

Goldthwaite further noted that Nacha members originally approved the WEB Debit Account Validation rule in November 2018 and set an effective date of January 2020. Upon further review, the Nacha Board of Directors extended the deadline to March 21, 2021, he added.

"Account validation will save originating depository financial institutions (ODFIs) money by reducing data entry errors, whether accidental or intentional," Goldthwaite said. He cited the following criteria for ODFIs, receiving depository financial institutions (RDFIs) and ACH operators:

• Fraud detection systems: The originator has implemented a commercially reasonable fraudulent transaction detection system to screen WEB Entry debits.

• Verification of receiver's identity: The originator has implemented commercially reasonable methods for verifying the WEB Entry receiver's identity.

• Verification of routing numbers: The originator has implemented commercially reasonable procedures to verify that the routing numbers used in WEB Entry debits are valid.

"Credit card transaction protections, such as Mod-10 and preauthorization, have been in place for years," Goldthwaite said. "It's reasonable to apply these rules to Web Entry ACH debits to expedite transactions and reduce errors."

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