Posted on April 28, 2021 by Transcend Pay
Often referred to as “direct payments,” ACH payments transfer money from one bank account to another bank account electronically, without having to utilize intermediary mechanisms like paper checks, credit cards, or wire transfers. The process takes place over a financial network known as the Automated Clearing House (ACH), which connects banks across the United States to one another. In 2019 alone, there were nearly 25 billion ACH payments for a total value of $55.8 trillion – cementing ACH payment processing as a mainstay of today’s modern businesses. These payments are regulated by a nonpartisan organization known as Nacha (National Automated Clearing House Association), which recently reviewed and updated ACH network rules. Prepare your businesses for changes coming in 2021!
What is NACHA?The National Automated Clearing House Association, or Nacha (previously known as NACHA), is a 501(c)(6) not-for-profit association that regulates the development, administration, and governance of the ACH payment processing network, which is essentially the backbone of any electric movement of money in the U.S. Any ACH payments are governed by Nacha rules on processing to guide risk management. Upcoming changes for the year are announced on their website; in total, there are six upcoming changes to ACH rules to 2021.
Six ACH Network Rules Changes Coming in 2021According to the NACHA, there will be six changes coming in 2021 to ACH payment processing regulations. ACH reversals will address improper uses of reversals, including expanding permissible reasons for a reversal to include wrong date errors:
- The reversal of a debit entry that was for a date earlier than intended by the originator;
- A credit entry that was for a date later than intended by the originator.
- A willful or reckless action, and,
- Involves at least 500 Entries, or involves multiple entries in the aggregate amount of at least $500K.
- Facilitating the adoption of new technologies and channels for the authorization and initiation of ACH payments
- Reducing barriers to use of ACH payment processing
- Providing clarity and increasing consistency around certain ACH authorization processes; and
- Reducing certain administrative burdens related to ACH authorizations.