2021 NACHA Rules: What you need to know

Nacha Expands Compliance Rules

Debiting funds via ACH require bank account validations.

On March 21, 2021, NACHA imposed the Supplemental Fraud Detection Rule for Web Debits. This new NACHA rule is built to help businesses protect against fraud and stop financial institutions from posting fraudulent, incorrect, or unauthorized payments. It requires businesses that debit funds via the Automated Clearing House (ACH) network implement enhanced fraud detection.

What does it mean for your business?

NACHA’s previous requirement stated that businesses accepting online debit transactions use a “commercially reasonable fraudulent transaction detection system” to screen for fraud. With the new rule extension, an “account validation” process is a necessary part of the fraud detection efforts as well.

All originators (anyone who accepts an electronic payment) are now required to validate the account number used for a WEB debit. Thus verifying that the account is a legitimate, open account that accepts ACH entries. Anytime an ACH debit payment is made online for the first time from a consumer checking account, the account number must be validated. This change also applies anytime there is an update to an account number that customers previously used to make a payment.

The road ahead

The Supplemental Fraud Detection rule for WEB Debits (aka Account Validation) officially went into effect on March 21, 2021. However, in consideration of the pandemic, NACHA made the statement they “will not enforce this rule for an additional period of one year from the effective date with respect to covered entities that are working in good faith toward compliance, but that require additional time to implement solutions.”

With an ever-changing payment ecosystem, security and fraud protection are always top priority. As online transaction volumes continue to rise, we’re all familiar with PCI requirements and compliance, but we don’t always think about online ACH payments. Online ACH is a popular option since it typically incurs lower processing costs than credit card transactions.

How does System Innovators help?

With iNovah, the necessary tools are already built-in. Our online/mobile channel platform is powered by Microbilt and performs the validation for you, without any extra effort required. iNovah’s Instant Bank Account Validation services simplify the real-time account validation process with a seamless integration to the transaction workflows used for making online or enrolled payments.

Complying with the supplemental NACHA requirement is a top priority which we help fulfill. A safer, secure payment ecosystem benefits your business and elevates the payment experience, which is key as the U.S. rapidly adopts faster payments.

Want to know how iNovah will help secure your online payments?

Fill out the form below or contact our sales team at sales@systeminnovators.com.