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The Guide to NACHA ACH Authorization Requirements

January 11, 2018
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The National Clearinghouse Association, otherwise known as NACHA, is responsible for providing customers and businesses with education, communication, and regulations for electronic payments. As a not-for-profit association, NACHA’s big focus is giving companies the tools needed to process ePayments quickly and safely.

There’s a lot of buzz around payments and processes. Technology is giving businesses the power to run the business better than before. SMBs are slowly transitioning from paper checks to faster payment processing options that require less time and money. Today, Paystream Advisors reports 56 percent of enterprise payments are ACH and steadily rising.
ePayments, specifically EFT payments and ACH payments, come with big benefits. There’s less worry about misplaced paper checks, lower processing costs, and faster disbursement.

Thankfully, when it comes to ePayments, there’s national governance and guidance in place – better known as the NACHA.

Your company probably knows the NACHA best for governing the process of replacing the need to send paper checks with ACH. These payments are sent directly from your bank account to your vendor’s bank account. To ensure fast, secure EFT and ACH for both businesses and consumers, the National Automated Clearinghouse Association has a standard set of rules and processes each ACH sender must follow.

However, there are a few NACHA requirements and updates your business needs to know to stay ahead.

NACHA is speeding up Same-Day ACH

To keep up with the speed of B2B payment processing, NACHA implemented Same-Day ACH. Most standard ACH methods can take one to two days to process. With Same-Day ACH, NACHA has the power to process ACH debit and credit transactions on the same day.

Thankfully, there’s no additional action required on your company’s behalf to enable Same-Day payments. Your organization can send same day payments for a small fee of a little more than 5 cents per transaction and will be billed monthly.

The NACHA saw the immediate success of Same-Day ACH after launching in 2017. At the end of Q2 2018, the NACHA reported Same-Day ACH payments increased by 243 percent since Q2 2017.

This September, NACHA announced new requirements and updates for companies and customers planning to use Same-Day ACH.

Updated NACHA Same-Day ACH Rules

  • The new NACHA rule extends the payment submission time by two hours on business days. When Same-Day ACH first launched, requests received by 10:30 A.M. (EDT) appeared at 1:00 P.M. (EDT), and payments received by 2:45 P.M. (EDT) were disbursed at 5:00 P.M (EDT).
  • The NACHA is increasing Same-Day ACH transaction caps to $100,000. Currently, the limit is $25,000.
  • The receiver will have access to funds faster. Payments will be available for both same-day and next-day ACH users. Transactions processed in the morning window will be available at 1:00 P.M. local time.

The updates will go in to effect at various times between 2019 and 2020. These three significant updates increase speed and savings for both buyers and suppliers when handling payroll and payments. For additional Same-Day ACH rules, check out the most recent NACHA news.

NACHA Expanding Partnerships = Better Payment Processing

The New England Automated Clearing House (NEACH) is teaming up with NACHA for an upgraded Payments Playbook. What does this partnership mean for your business and payments? Simply put, NEACH and NACHA are working together to provide your company with new tools and information to support your journey for faster payment processing. According to a recent press release, the Payments Innovation Alliance is currently creating a few tools focusing on security threats, ACH knowledge, and ISO 20022 functionality and tips to improve efficiency.

Afinis is also working closely under NACHA to provide APIs for financial institutions to continue innovating processes. The improved APIs focus on security and improving automation solutions for financial institutions. For businesses, it’s merely another piece of the process that’s being improved for faster payments.

“Businesses gain consistency and continuity across multiple bank ACH relationships, improved reporting, and access to faster payments.”

With Afinis’ APIs, organizations also have the power to eliminate multiple systems and processes when accessing historical payment details or paying another business via ACH.

NACHA Rules and Requirements Your Business Needs to Know

As much as things are changing, there are some NACHA requirements that will remain the same for you and your business. Here are the top three:

  • You’re still responsible for verifying your account information. Checking your account information ensures your company’s proprietary and payment information is correct and protected. There are several ways to verify your company before processing payments. One of the most popular options is the ACH Validation Test by sending a negative transaction to the bank to confirm your company’s account information. Other options include using a third-party validation service, customer sign-in, or testing with micro-deposits for the receiver to verify the transaction.
  • Build your company’s trust with NACHA certification. NACHA certification gives your business the authority and confidence in knowing that its payments and information are in good hands. The NACHA certification lets other companies know your company is committed to payment security. The program is for third parties who complete a number of steps including company background, compliance with rules, and risk management guidelines. If a third-party is handling the payment of bills or vendors, ask about the NACHA certification, and gain trust by knowing your payables are in good hands. If your business is considered a third-party sender, you’ll take pride in knowing the right procedures are in place for secure payments. If you’re not sure whether or not your company is an originator or third-party sender, use the NACHA tool.
  • Continue to abide by the standard rules and requirements. Any ACH account must be verified by the National Automated Clearing House Association (NACHA). Verification comes with rules and regulations that any participating party must follow. As technology and the payment world change, rules are subject to change annually with suggestions and feedback from ACH account users. All rules should be reviewed on the ACH Rules microsite. Membership is required.
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