NACHA Rules Simplified

Savvy AuthorACH Payments

ACH Processing, NACHA Rules, Payment ProcessorBusinesses that accept electronic ACH payments need to be aware of the rules and regulations as set forth by the National Automated Clearinghouse or NACHA. Payment Savvy’s ACH payment processing solutions are engineered to be compliant for your business and protect your customer’s senstive financial data. The following information will help you learn more about the top three NACHA rules that your business should follow when accepting ACH payments.

NACHA Rule #1- Secure Transmission

NACHA rules state that any transmission of a customer’s banking information, including the bank account and routing number, must be encrypted using “commercially reasonable” encryption technology. The bottom line is that you cannot submit a customer’s bank account or routing number through standard email.

In addition, you cannot enter a customer’s bank account information on an unsecure Internet form through an unsecure system. If your company collects or sends a customer’s financial information, only use encrypted email. The good news is that Payment Savvy includes this function as part of the ACH payment processing solution.

NACHA Rule #2- Routing Number Validation

NACHA rules state that all originators take “commercially reasonable” steps to guarantee the validity of all routing numbers they enter into the ACH network. This rule not only takes measures to prevent fraudulent activity, but also reduces errors. Routing number validation can be easily accomplished using a simple algorithmic check that helps to determine if the provided routing number uses a valid format.

Another method is to have the originator match the routing number with a database of all valid routing number.

NACHA Rule #3- Identity Verification

NACHA rules state that originators use “commercially reasonable” methods to verify the identity of the customer prior to processing ACH payment transactions that are authorized by the customer over the phone or via the web. There is a good reason for this additional security measure.The only information required to process a phone, or online ACH transaction is the customer’s name, address, routing number, and account number.

All of this information is accessible on paper checks and is stolen on a regular basis. There are some fairly simple methods to verify a customer’s identity:

  • The transaction originator can collect and verify the customer’s driver license, or other identification cards OR
  • The customer can confirm the amount of test deposits into their accounts, or you can use a third-party identity verification service.

Payment Savvy specializes in providing companies of all types and sizes with the best payment processing solutions available on the market today. Please contact Payment Savvy to review your options, apply for an ACH payment processing solution, and to obtain answers to your questions. We look forward to hearing from you and working with your company.

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