Connect ► twitter| youtube|  Log In ► Members Only  |  Corporate One Safekeeping  |  Search

How will the new ACH return rates affect you?

By Jen Kirk, AAP, EPCOR’s Director of Industry Relations


Register now for an ACH webinar presented by EPCOR

Impact of New ACH Return Rates on Originating Companies

Date: August 25, 2015

Register Here


 

August 19, 2015 -- One of NACHA’s main strategic focuses is to limit the amount of unnecessary returns in the ACH network. The thought process is that if we reduce unnecessary returns we also decrease unnecessary risk incurred by financial institutions that process ACH. Several new rules have been passed to address this risk mitigation, including:

Lowering Threshold for Unauthorized Returns: For years, NACHA considered it unacceptable for an originator to receive back more than 1% of its forward entries as unauthorized. This return rate is being lowered to .5% in September 2015. Here are some questions your financial institution should be able to answer:

  • What is the return rate of unauthorized returns for each of your business client ACH originators?
  • What do you do if your business client ACH originators exceed the .5% threshold?
  • Do you include unauthorized returns as part of your risk assessment for each business client ACH originator?
  • Does this affect your decision to grow your origination?

Creating an Inquiry Process for Excessive Administrative and Overall ACH Returns: This is a brand new risk consideration for the ACH network. Effective September 2015, NACHA has established an inquiry process to review originators who are receiving 3% of their forward items returned for “wrong account” or “account closed.” This same inquiry process applies to originators who are receiving 15% of their forward items returned for ANY reason (including NSF). Here are some items for discussion:

  • Is your senior management aware of NACHA’s new investigation process?
  • What is the return rate of administrative returns for each of your business client ACH originators?
  • Do you currently have an acceptable administrative return rate for your business client ACH originators?
  • What is the return rate of overall returns for each of your business client ACH originators?
  • Do you currently have an acceptable overall return rate for your business client ACH originators?
  • Do you include administrative and overall returns as part of your risk assessment for each business client ACH originator?
  • Does this affect your decision to grow your origination?

Establishing an Unauthorized Return Fee: Effective October 2016, ODFIs will be assessed a per item fee for any ACH entry that is returned as unauthorized. This fee is a monetary incentive to ensure that ALL ACH entries are properly authorized.

At the same time, the RDFI that sent the return for unauthorized will be reimbursed the amount that was charged to the ODFI to help offset the cost of obtaining the WSUD (Written Statement of Unauthorized Debit) and working the ACH return.

Getting prepared

Now is the time to prepare for the reduction in the return rate threshold for unauthorized entries to .5% and new return rate levels for administrative and overall returns. Join EPCOR for a webinar on August 25 titled “Impact of New ACH Return Rates on Originating Companies.” See the box to the right for additional details and a registration link.