Collector - May 2020 - 38

BUSINESSOPERATIONS

Validation Tools
Starting next year, Nacha will expect you to incorporate account validation
into your identity confirmation processes. Are you ready?
By Laurie Nelson

I

n the world of payment processing,
returns from the Federal Reserve's
same-day automated clearing house
(ACH) service are often unavoidable.
And although the regulatory bodies that
oversee ACH transactions and the banks
that process them are aware of this, both
still hold an expectation that all merchants
will put procedures and policies in place to
avoid and reduce returns at all times.
As a means to assist in this endeavor,
Nacha, the steward of the ACH network,
requires merchants who accept ACH to
have "commercially reasonable" processes
to validate routing numbers and the

38

customer's identity. Effective March 19, 2021,
the "commercially reasonable method" to
confirm the identity of the customer before
processing certain ACH via the web must
include-at minimum-account validation.
This change was announced in the Nacha
bulletin, "Supplementing Fraud Detection
Standards for WEB Debits." In the bulletin,
Nacha outlines how a fraudulent transaction
detection system must, at a minimum,
validate the account to be debited. Initially,
the effective date for this change was Jan. 1,
2020, but it was pushed to March 19, 2021, to
allow companies additional time to get up to
speed. While the extra time is great and will

help ensure merchants have what they need
in place, the requirement itself should not be
a surprise. In fact, it comes after many years
of research and consideration by Nacha.
In 2012, a survey conducted by Nacha
and its Council for Electronic Billing and
Payment found that validating account
information was crucial to the future
of ACH. A follow-up survey specific to
account validation was sent to the bill
payment industry to seek a more in-depth
understanding of this issue. The results
indicated that companies needed more
education about the process of account
validation, what it was and how it worked.

ACAINTERNATIONAL.ORG


http://www.ACAINTERNATIONAL.ORG

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