News & Resources

What Are Nacha Rules? A Complete Guide

Feb 24, 2021 MicroBilt News

What Are Nacha Rules? A Complete Guide

Unless you’re in tune with online financial dealings, you may not have heard of the Nacha rules and regulations. Whether you’ve heard of them or not, they impact a huge number of things in your life, especially if you run a business. In fact, you may be responsible for staying compliant with these rules, as they’re changing this year.

Knowing the Nacha rules is critical if you run a business that accepts digital payments. Read on to learn more about them, how they work, and what changes we can expect to see to them in the coming year.

What Are Nacha Rules?

The National Automated Clearing House Association (Nacha) is the organization in charge of handling the Automated Clearing House (ACH) Network. In essence, the ACH network is what allows us to move money and data online in the United States. If you’ve ever bought anything online or sent someone money on PayPal, you’ve used the ACH Network. 

The Nacha Operating Rules set the foundation for every ACH payment that gets processed in the United States. These rules help to ensure that all your online payments go smoothly, no matter which vendor or payment method you’re using. Without the Nacha rules in place, your bank and your mortgage lender might not play nice when it came time to pay your mortgage online each month. 

Why They Matter 

Whether you realize it or not, the Nacha rules impact a large part of our lives. In 2020, more than $61.9 trillion in payments were processed through the ACH Network. That $61.9 trillion was comprised of 26.8 billion individual payments that accounted for about 82 percent of all payments in the United States that year. 

Without the ACH Network, you wouldn’t be able to pay your bills online or order products from eCommerce businesses. You couldn’t pay your friend back for that movie ticket last year or order dinner to get delivered to your house. You also couldn’t pay for a wide variety of products and services throughout your day-to-day life.

Who Must Comply with Them?

Even though the Nacha rules impact all of us, not everyone has to comply with them. For the most part, businesses are the ones who need to worry about staying in compliance with these rules. Any company that accepts ACH payments from customers, even if they contract out their processing, must follow Nacha rules.

If you accept any form of electronic payments from consumers, you’re working through the ACH Network. This can include online sales, as well as recurring payments for subscriptions and continuing services. Any payment that’s not handled with a credit card, check, cash or wire transfer goes through the ACH Network.

Nacha Rule

New WEB Debit Rule

This year, Nacha will be implementing some new rules designed to make the ACH Network safer and more efficient for everybody. One of these is a new rule that supplements fraud detection standards for WEB debits. This rule will primarily apply to the first time a business processes a WEB debit for a consumer, or when an existing consumer is using a new account number for the first time.

Right now, companies must use a “commercially reasonable fraudulent transaction detection system” to make sure customers aren’t using fraudulent accounts. In most cases, this has meant asking customers to put in their account and routing numbers the first time they set up a new account.

Expanding Same Day ACH

Nacha has also decided to expand access to Same Day ACH transactions in the coming year. Right now, a financial institution must submit Same Day ACH transactions to an ACH operator by 2:45 p.m. Eastern Time. This means that if you’re on the west coast, no transactions after 11:45 am will be processed on the same day.

The new Nacha rule adds two hours to this Same Day ACH transaction processing window. This will allow institutions on the West Coast to submit transactions until 1:45 pm and institutions on the East Coast to submit until 4:45 pm. While this expands access for customers and institutions, it won’t interfere with banks’ end-of-day operations. 

Implement an ACH Fraud Detection Tool

If you’re running a business that handles ACH transactions, you may be worried about how you’ll handle the new WEB debit rule. First, you need to make sure that all your employees are aware of common ACH scams and how they work. There are also a variety of ACH fraud detection tools you can put in place that will keep you Nacha-compliant.

Tracking your account activity will help you catch ACH fraud before the payment processes fully. You can also use credit monitoring services that let you know when a customer with bad credit tries to use your system. And integrating digital alert tools from companies like Microbilt can help you assess the risks of consumer and vendor transactions.

Learn More About the Nacha Rules

Even if you don’t realize it, the Nacha rules impact almost every aspect of your life. And if you run a business, you need to stay up to date on the changes Nacha is putting in place this year. You’ll need to bolster your fraud detection strategies, so be sure you’re prepared to implement the tools and training you need to stay compliant. 

If you’d like to discover the most powerful alternative credit data and risk management solutions, check out the rest of our site at Microbilt. We can help you lend smarter, collect quicker, and grow your business the safe way. Test our APIs today and start getting quality data at cost-effective rates.