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NACHA adopts new rules to improve ACH network quality

Amendments deal with outlier originators, unauthorized transactions

NACHA adopts new rules to improve ACH network quality

NACHA—The Electronic Payments Association announced its voting membership approved two new amendments to the NACHA Operating Rules that will further improve ACH network quality by reducing the incidence of ACH transactions that result in exceptions and returns.

As components of NACHA’s long-term Risk Management Strategy, updated in 2012, the Rules amendments are part of NACHA’s ongoing efforts to maintain and improve the strength of the ACH Network for the consumers, governments, businesses, and financial institutions that move their money via ACH.

The “ACH Network Risk and Enforcement Rule” improves NACHA’s ability to identify and enforce the rules against “outlier” originators that may be responsible for the highest, and most disproportionate, levels of exceptions and returns, which impose costs on Receiving Depository Financial Institutions and can impact their customers.

This rule establishes an inquiry process that allows NACHA to research the facts behind an originator’s ACH activity. The rule also lowers the existing return threshold for unauthorized transactions, and expands NACHA’s authority to enforce the Rules related to unauthorized transactions.

Additionally, the rule defines permissible practices for use of the ACH network to collect transactions returned for insufficient funds and other reasons. Standard information required to be included in a “reinitiated” transaction will better enable financial institutions’ stop payment systems to work efficiently.

The rule defines the methodology for establishing an unauthorized entry fee to be paid by an originating depository financial institution to an RDFI for the return of an unauthorized transaction. An unauthorized entry fee will provide an incentive for ODFIs to implement processes and tools with their originators that reduce the number of unauthorized transactions. The fee also will provide partial cost recovery to RDFIs for their costs in handling unauthorized transactions.

In preparation for implementation of these rules, NACHA will provide education and resources to help ACH network participants better understand the impact of the rules.

“These rules show that financial institutions can come together through private-sector rulemaking to address practices that may result in harm to consumers,” says Janet Estep, president and CEO of NACHA. “In developing these rules, NACHA incorporated broad industry feedback and balanced differing perspectives from many parties. The rules represent workable solutions that can be implemented by financial institutions.”

For more information about the ACH Network Risk and Enforcement or ACH Network Quality Rules, visit the organization’s updates page.

For more information about NACHA’s rulemaking process, visit the rules page.

John Ginovsky

John Ginovsky is a contributing editor of ABA Banking Journal and editor of the publication’s TechTopics e-newsletter. For more than two decades he’s written about the commercial banking industry, specializing in its technological side and how it relates to the actual business of banking. In addition to his weekly blogs—"Making Sense of It All"—he contributes fresh, original stories to each TechTopics issue based on personal interviews or exclusive contributed pieces. He previously was senior editor for Community Banker magazine (which merged into ABA Banking Journal) and was managing editor and staff reporter for ABA’s Bankers News. Email him at jginovsky@sbpub.com.

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