ACH Network Rule Changes Merchants Need to Know for 2024

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The Automated Clearing House (ACH) Network facilitates millions of daily electronic payments and money transfers. As businesses increasingly rely on this system for their transactions, merchants must be familiar with the rules governing the ACH Network, and 2024 brings several essential changes businesses need to be aware of. This article will highlight the most relevant ACH Network rules for merchants this year. 

Micro-Entries Phase Two

With an effective date of March 17, 2023, Phase Two of Micro-Entries is centered around securing these test transactions and fighting against potential fraud. 

A Micro-Entry is "a credit or debit Entry used by an Originator to verify a Receiver's account or an individual's access to an account."

Credit unions use commercially reasonable fraud detection to minimize the incidence of fraud schemes using Micro-Entries. By monitoring the volumes of forward and return transactions, credit unions can establish a baseline of regular activity, which can then identify any abnormal activity and potentially indicate fraudulent behavior.

Read more about the rule here.

Nacha Risk Management Framework

Nacha is developing a risk management framework to combat credit-push fraud. Credit unions may encounter this in business email compromise, vendor and payroll impersonation fraud, and account takeover fraud.

In the past, their strategies focused on unauthorized debits, but their new framework is designed to identify current fraud threats that lead to credit-push payments through the ACH Network and other payment rails. The framework aims to highlight significant challenges that credit-push fraud scenarios pose, identify opportunities to enhance fraud detection and prevention and assist in the recovery of funds.

As such, the new framework has three main objectives and three areas of focus:

Main Objectives:

  1. Increase awareness of fraud schemes that utilize credit-push payments.
  2. Reduce the incidence of successful fraud attempts.
  3. Improve the recovery of funds after fraud has occurred.

Areas of Focus:

  1. Define the role of the receiving account-holding institution.
  2. Enable and provide information sharing among financial institutions.
  3. Expand and improve end-user awareness and education.

Read more about the new risk management framework here.

Same-Day ACH Expansions

As of the updates in previous years, the Same Day ACH has become more accommodating, allowing more significant transactions to be processed on the same day. In 2024, merchants should be aware of:

  • Higher Per-Transaction Limits: Initially, the Same Day ACH had limits on the size of transactions. Recent changes have increased these caps, allowing merchants to process larger payments more quickly.

  • Expanded Processing Windows: There are now more windows during the day when Same Day ACH transactions can be submitted, providing merchants greater flexibility.

Learn more about same-day ACH Expansions here.

Upcoming Changes

Regulation J 

This regulation outlines the legal guidelines for depository institutions to gather checks and other items and settle balances through the Federal Reserve System. The regulation also defines the terms and conditions under which Federal Reserve Banks will process funds transfers via Fedwire. The updated regulation includes a new Subpart C, which details funds transfers through the FedNow Service. 

Operating Circular 8 

With the upcoming launch of the FedNow Service, Operating Circular 8 has been released to define the terms and conditions for funds transfers made through the service. The circular refers to the FedNow Service Operating Procedures, which provide detailed information on essential topics such as service availability, participant expectations, connection profiles, fraud prevention and reporting, and the ISO® 20022 messaging used in the FedNow Service.

How to Help Mitigate Fraud

Each year, NACHA is placing a greater and greater emphasis on the importance of mitigating fraud through the ACH network. Finding a reliable account validation partner will go a long way towards ensuring all financial transactions process smoothly. Be sure to check out what more MicroBilt can offer here. 

The ACH Network remains a pivotal tool for merchants across the U.S., offering an efficient, reliable method for handling electronic transactions. By staying informed about the rules and updates, merchants can avoid potential pitfalls, reduce risks, and ensure smooth business operations in 2024 and beyond.