We’re rolling out a new feature to keep you compliant with ACH regulations. The National Automated Clearing House Association (or if you like acronyms, NACHA) is now requiring any new, first-time payments from an account to be validated before accepting the first payment made. We’re implementing this in our system effective on September 1, 2021.
The good news? No action is needed on your part as Nelnet Payment Services keeps you compliant. We validate, in real time, any new account numbers to see if the account is open and will accept ACH entries before a payment is processed, reducing some types of returns. To help with this, we’re partnering with GIACT, a preferred validation partner of NACHA. GIACT provides real-time validation at the time a bank account is provided for payment. This allows us to process payments for you immediately without introducing friction into the payment experience.
It’s important to note that validation will help with some returns, like closed or non-transactional account, you could still see other returns, like non-sufficient funds. Also, if an account has been accepted by your organization before March 19, 2021, you won’t need to validate them again (unless they change their payment account).
The Goals of the New Rule
This new ACH validation rule seeks to accomplish two primary goals:
- To protect the integrity of transactions flowing through the ACH system
- To protect receiving banks (RDFIs) from posting fraudulent, incorrect, or unauthorized payments
It’s interesting to note that the use of online debits has been growing for the past few years. With the increase in digital payments due to COVID-19, ACH and other non-cash payments may continue to be commonplace. In 2020 there was a rise in ACH payments, with over 27 billion payments made in the calendar year. With this rule, NACHA is addressing the need for more security for online payments processed through their network. Since your organization is being paid and is the entry point to receive the account number, you are in the best position to prevent fraud.