The Electronic Payments Association (NACHA) recently announced its approval of two amendments of its operating rules intended to improve ACH network quality. The first change would reduce by half the number of unauthorized debit entries from 1.0 percent to 0.5 percent. According to NACHA, this reduction in the ACH Network Risk Enforcement rule strengthens NACHA’s ability to target and implement its operating rules regarding “outlier originators” of exceptions and returns. However, concerns had been raised that lowering the return threshold by such a large amount would make it difficult for higher-risk merchants to do business, and for any merchants to offer “no questions asked” returns and other consumer-friendly policies. The second amendment, the ACH Network Quality rule, provides for a methodology for establishing an Unauthorized Entry Fee that Originating Depository Financial Institutions (ODFI) will pay to a Receiving Depository Financial Institution in the case of an unauthorized transaction return. The fee is intended to provide an incentive for ODFIs to implement processes in conjunction with their originators to reduce the number of unauthorized transactions. Furthermore, the fees will provide some cost recovery for RDFIs for the costs incurred in processing unauthorized transactions.
While there are good justifications for these changes, they will certainly impact banks serving as ODFIs, and will make it more difficult for some businesses to access the ACH system.
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