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ACH
Nacha Rule Changes
Available Beginning Q1 2021 – Q2 2022
Nacha has approved rule changes to enhance Same Day ACH functionality and improve risk management. As a result, J.P. Morgan will be making changes to US ACH origination service and US ACH eLockbox/Receiver Services reporting.
New Third Same-Day ACH Processing Window — Effective March 19, 2021
- A third Same-Day ACH processing window is being created, expanding Same-Day ACH availability by 2 hours to provide greater access for all Originators and their customers.
- The timing of this new processing window is intended to balance the desire to expand access to Same-Day ACH through extended hours with the need to minimize impacts on financial institutions’ end of day operations and the re-opening of the next banking day.
- Specific cut-off times for J.P. Morgan U.S. Same Day ACH origination will be determined.
- eLockbox Same-Day report delivery will be extended by approximately two hours, to 8 p.m. ET instead of 6 p.m. ET.
- Non-consumer receivers subscribing to eLockbox will be required to post same day entries received by J.P. Morgan by 5:30 p.m. ET with same-day value during their normal posting schedule.
Supplementing Fraud Detection Standards for WEB Debits — Effective March 19, 2021
- As a supplement to existing requirements, Originators of WEB Debits will be required to use a commercially reasonable fraudulent transaction detection system to ensure new and changed customer receiving accounts are able to successfully receive transactions prior to origination of WEB Debits.
- U.S. ACH Originators of WEB Debits may need to make changes to their account validation processes.
- J.P. Morgan offers tools and services to complete this validation, but you can use any commercially reasonable fraud detection system.
- Please reach out to your Relationship Management team if you have questions.
Differentiating Unauthorized Return Reasons – Phase 2— Effective April 1, 2021
- Re-purposed return reason code R11 will now be covered by the existing Unauthorized Entry Fee.
- Clients will be billed on their monthly statement of charges.
Supplementing Data Security Requirements – Phase 1 — Effective June 30, 2021
- The existing ACH Security Framework including its data protection requirements will be supplemented to explicitly require large, non-FI Originators, Third-Party Service Providers (TPSPs) and Third-Party Senders (TPSs) to protect account numbers collected for or used in ACH transactions by rendering them unreadable when they are stored electronically.
- Implementation begins with the largest Originators and TPSPs (including TPSs) and initially applies to those with ACH volume of 6 million transactions or greater annually.
Increase of Same Day ACH Transaction Limits — Effective March 18, 2022
- This rule expands the capabilities of Same Day ACH. Increasing the Same Day ACH dollar limit is expected to improve Same Day ACH use cases, and contribute to additional adoption.
- Increases the Same Day ACH limit for both eligible debit and credit entries from $100,000 to $1 million USD.
- Increasing the dollar limit has been a frequently asked for change by ACH end-users. Most recently, a summer 2020 survey of corporate ACH end-users resulted in recommendations for Same Day ACH:
- Increase or remove dollar limits
- Expand processing hours and days
For more information on this rule, please refer to the formal press release on the Nacha website, here.
Supplementing Data Security Requirements – Phase 2 - Effective June 30, 2022
- The existing ACH Security Framework including its data protection requirements is supplemented to explicitly require large, non-FI Originators, Third-Party Service Providers (TPSPs) and Third-Party Senders (TPSs) to protect deposit account information by rendering it unreadable when it is stored electronically.
- June 30, 2021 - Implementation began with the largest Originators an TPSPs (including TPSs) and initially applies to those with ACH volume of 6 million transactions or greater annually.
- June 30, 2022 - A second phase becomes effective for those originators with ACH volume of 2 million transactions or greater annually
- The Rules are neutral as to the methods/technologies that may be used to render data unreadable while stored at rest electronically.
- Encryption, truncation, tokenization, destruction, or having the financial institution store, host, or tokenize the account numbers, are among options for Originators and Third-Parties to consider
For more information on this rule, please refer to the formal press release on the Nacha website, here.
Use of Micro-Entries — Effective September 16, 2022
- This Rule will define and standardize practices and formatting of Micro-Entries, which are used by some ACH Originators as a method of account validation
- This Rule will become effective in two phases:
- Phase 1 – September 16, 2022
- The term Micro-Entry will be defined, and Originators will be required to use the standard Company Entry Description and follow other origination practices
- Phase 2 - March 17, 2023
- Originators of Micro-Entries will be required to use commercially reasonable fraud detection, including the monitoring of Micro-Entry forward and return volume
- Phase 1 – September 16, 2022
For more information on this rule, please refer to the formal press release on the Nacha website, here.
Third-Party Sender Roles and Responsibilities — Effective September 30, 2022
- The overarching purpose of these Rules is to further clarify the roles and responsibilities of Third-Party Senders (TPS) in the ACH Network by
- Addressing the existing practice of Nested Third-Party Sender relationships, and
- Making explicit and clarifying the requirement that a TPS conduct a Risk Assessment
- These two rules will become effective September 30th, 2022, with a 6-month grace period for certain aspects of each rule (March 31, 2023) if any of the below are met:
- ODFIs to update TPS registrations to denote whether or not a TPS has Nested TPSs
- TPSs that have not conducted a Risk Assessment to do so
- A TPS need not wait for passage of this rule, or its effective date, to conduct a Risk Assessment
For more information on this rule, please refer to the formal press release on the Nacha website, here.
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