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Upcoming Nacha Rule Changes You Should Be Aware of

Learn about ACH process and security changes Nacha has coming in 2021 so you can make sure you're ready.

In 2019, transactions processed through the Automated Clearing House (ACH) exceeded $55.8 trillion, increasing 8.9% over 2018, and same day ACH transactions reached $247 billion—an impressive increase of 55% over the prior year.[1]

With this many payments passing through the system, Nacha, the organization that administers the Automated Clearing House, is making changes to guarantee processes that are both friendlier and more secure.

While a full list and with detailed descriptions of all rule changes being made by Nacha is always available on their website, below is a quick breakdown of changes being implemented across 2021:

Expanding Same Day ACH
The first new rule simply adds two hours to the window during which Same Day ACH transactions can be submitted to the network for processing. Currently, the latest an Originating Depository Financial Institution (ODFI) can submit Same Day ACH transactions to an operator is 2:45pm Eastern, but starting March 19, 2021, that time will extend to 4:45 pm Eastern.

Nacha has indicated the new window was carefully selected after getting input from ACH end-users and financial institutions alike. The time was chosen for balance it strikes between the desire to expand Same Day ACH access and the need to minimize impacts on financial institutions.

Supplementing Fraud Detection Standards for WEB Debits
Originally scheduled for implementation January 1, 2020, Nacha approved an extension to allow more time and education within the financial and fintech industries. This new change now goes into effect March 19, 2021 but won’t be enforced by Nacha for an additional year if covered entities can demonstrate they’re working toward compliance.

This rule updates language in an existing section of Nacha’s requirements, making it clearer that financial organizations’ fraudulent transaction detection systems must provide for account validation during the first use of an account number or when changes are made to an account number.

Differentiating Unauthorized Return Reasons (second phase)
The third update of 2021 utilizes updated reason codes to show when a transaction is being returned not for “no authorization” (code R10) but because of an “error” (a little used, repurposed code, R11). This clarity should allow organizations to correct transactions with minor problems, like a wrong date or an incorrect amount, rather than resubmitting a new transaction that requires fresh authorization.

The new code was added April 1, 2020. But on April 1, 2021, transactions returned with code R11 become subject to the Unauthorized Entry Fee, to be billed on their monthly statements of charges.

Supplementing Data Security (two phases)
Nacha’s final rule change for 2021 updates security requirements such that large ACH originators and third parties must protect deposit account information by encrypting it in their databases and other places where it’s stored electronically.

Implementation of this update is separated into two phases. Phase 1 establishes an implementation deadline of June 30, 2021 for entities who submit more than six million ACH payments annually. Phase 2 does the same for entities who submit more than two million ACH payments annually and has an implementation deadline of June 30, 2022.

Implementing changes like these can be a demanding process for insurers, and many are finding it easier and more cost effective to partner with experts in the fintech industry rather than building or updating their own claim payment platforms. Outsourcing these processes makes it possible to adopt new and update existing electronic payment options while easily maintaining compliance with requirements from Nacha and other entities that manage the standards and legal requirements of the industry.

To learn more about Optum Financial and how our platform can keep you compliant, contact us.

Learn more on Nacha’s website

[1] “ACH Network Volume Statistics,” 2019 ACH Network Volume & Value Infographic, https://nacha.org/content/ach-network-volume-statistics

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