NACHA Web Debit Account Validation Rule Preparedness 

 

On March 19, 2021, the National Automated Clearing House Association (NACHA) rule for ACH debit authorizations received over the web will become effective. This ruling will require bank account number validation to be a mandatory part of fraudulent transaction detection when processing ACH payments. Moving forward, validation will apply to both newly created and modified bank account numbers.

At Transact, we are taking the steps to stay ahead of compliance by incorporating features for the new NACHA ruling to the Transact Payment system. You may have seen a reference to this in release 2020.7. While we are working in the background to add this feature to your instance, expect global deployment to production environments in March 2021.

 


 

Web Debit Account Validation Rule FAQ

 

Does the ACH account validation check other criteria such as sufficient funds or account owner details?

No, only the account number at this time.

What happens if the ACH account is not found in the validation database? Will a response be provided in real-time?  

If an account is not found in the validation database, users will receive a notification of “Unable to Verify” in real-time.  From there, they will have the choice to cancel the transaction or continue as normal.

If a student/parent sets up an eRefund account and a refund has been made, will that be considered sufficient validation to allow the user to enter the same account number for payment subsequent to the refund?  

NACHA considers a previous WEB debit to be sufficient validation, but unfortunately, an eRefund (i.e., credit) does not qualify.  

We have a lot of new international students every year who sign up for credit union accounts and make ACH payments on Transact Payments Powered by Cashnet the same day.  If the validation service does not return an acceptance, can a pre-note be initiated?  

Good question!  If an account is not found in the validation database, users will receive a notification of “Unable to Verify” in real-time.  From there, they will have the choice to cancel the transaction or continue as normal.

What methods of account validation does NACHA deem as sufficient? How is Transact conducting account validation?

Nacha has stated that they do “ not consider a fraudulent transaction detection system that does not include an account validation component as sufficient.”

Recognized means of account validation include ACH micro-transaction verification, commercially available services, API supported services, prenotification entries, and other commercially viable means.

Transact utilizes commercially available services via Microbilt.

Do Originators need to verify accounts for existing web debit customers?

No, this rule only applies to new web debit account numbers.

Each institution is responsible for the NACHA standards, this will not be validated by Transact, correct?

Account validation will be provided for both SmartPay and Non-SmartPay clients.

Do these new requirements also apply to eRefunds or just payments that the school receives?

The current requirements apply only to web debits from a bank account. eRefunds will not apply to the ruling.