New 2021 Nacha Rules: What you need to know

New Nacha Rule Extensions

Companies that debit funds via ACH are now required to validate customer bank accounts. Find out how you can become compliant.

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. It’s important to keep it in mind – particularly regarding security.

So what’s new with Nacha? On March 21, 2021, Nacha imposed the Supplemental Fraud Detection Rule for Web Debits, requiring businesses that debit funds via online ACH to implement enhanced fraud detection. Nacha’s new rule is built to help businesses protect against fraud and stop financial institutions from posting fraudulent/incorrect unauthorized payments.

What does it mean for your business?

Nacha previously required that businesses accepting online debit transactions use a “commercially reasonable fraudulent transaction detection system” to screen web debits for fraud. With the new rule extension, the “account validation” process is required to be part of 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, verifying that the account is a legitimate, open account that accepts ACH entries. This means that 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 (Account Validation) officially went into effect on March 21, 2021. However, in consideration of the pandemic, Nacha says 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.” But don’t let the leeway delay your adoption. Even though Nacha won’t enforce the rule until next year, it is important to start moving towards compliance now to protect your customers and your business.

How can System Innovators help with compliance?

With iNovah, these 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 should be a top priority this year and we can help. A safer, secure payment ecosystem benefits your business and elevates the payment experience, which is key as the U.S. rapidly adopts faster payments.


Learn more about how System Innovators can help.

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