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 of mind. With online transaction volumes continuing to rise, we’re all familiar with PCI requirements and compliance, but we don’t always think about online ACH payments. They are a popular payment option since they typically incur lower processing costs than credit card transactions and it’s important to keep them in mind – particularly regarding security.

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 financial institutions from posting fraudulent/incorrect unauthorized payments.

What does it mean for your business?

Nacha previously required that businesses accepting online web debit transactions use a “commercially reasonable fraudulent transaction detection system” to screen web debits for fraud. The new rule extension requires that “account validation” 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 also applies to any updates to account numbers 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 although Nacha won’t enforce the rule until next year, it is important to start moving towards compliance now to better protect your business and your customers.

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 required validation for you. Our Instant Bank Account Validation services simplify the real-time bank account validation process with seamless integration to the transaction workflows linked with making online or enrolled payments.

Compliance 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 for citizens, which is key for success as the U.S. rapidly adopts faster payments.


Learn more about how System Innovators can help.

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