Although there are no specific mandated scripts to follow, Nacha has spelled out the essential guidelines requiring authorizations for online transactions across the ACH network. At first glance, the guidance on obtaining approval when debiting a customer’s account looks too complex. However, proper support dramatically simplifies the authorization collection process.
In a previous blog, we discussed the sample PPD authorization for ACH transactions. This second post focuses on the best practices for collecting authorization via Telephone-Initiated (TEL) Entries for debiting a customer’s bank account.
What are TEL Entries?
A TEL entry allows a merchant to debit a customer’s account after receiving the customer’s consent orally over the telephone. This type of authorization for payment can only occur when there is already an existing relationship with the customer or if the customer contacts the merchant first. The merchant cannot receive a TEL authorization if they are the ones who initiated the communication (i.e., telemarketers). We recommend storing audio recordings of the consent to document authorization for one-time transactions. However, if an audio recording is unavailable, the merchant should collect a written notice (on paper or email) before the settlement date of the one-time transaction.
According to Nacha regulations, a merchant must keep all copies (audio and written) of the authorization record for two years should a customer’s bank require proof of authorization in a disputed transaction.
Elements of a TEL Authorization
A TEL authorization includes the following details:
- Date, the customer gave the authorization
- Date, on or after which the transaction will be processed
- Amount of transaction
- Customer’s name
- Customer’s account information
- Telephone number that the customer can call with questions
- Guide on how a customer can revoke the authorization
- Statement from the merchant that this authorization is only for a single, one-time ACH transaction
With all that said, how exactly should a TEL authorization sound?
Sample Authorization for One-Time Debit TEL Transaction
“Customer First & Last Name, Merchant Name is requesting your authorization to electronically debit your checking/savings account in the amount of $ amount on or about date of ACH debit. The account information you’ve provided is as follows:
- Bank Routing Number: routing number of customer’s bank
- Bank Account Number: customer’s bank account #
Is this information correct?
This authorization will be used to originate a single entry, a one-time ACH debit entry to your account. At any time prior to processing, you may revoke this authorization by calling our customer service department at ###-###-####. Do I have your authorization today, today’s date, to process this transaction?”
Essential Details for Recurring Debit TEL Transactions
It’s important to note that when dealing with recurring TEL transactions, the merchant requires both written AND verbal authorization to remain NACHA compliant.
In addition to including the customer’s name, account, revocation method, the merchant’s telephone number, and the date authorization, a recurring TEL entry authorization must also contain details on:
- Amount of the transactions or a method to determine for debits
- Start date and frequency of such transactions
Again, the merchant can collect a written notification in the form of an email to the customer or a “snail mail” via postal services.
Are you a business owner that wants to get started with ACH payments and IVR technology? Speak with our relationship managers to discuss your requirements today!
Date Originally Published: September 16, 2016
Date Updated: July 26, 2022