Nacha Ruling Modernizes ACH transactions

Nacha published new guidance on authorizations on September 17, 2021, expanding ACH acceptance into new technologies and channels. The ruling, termed "Meaningful Modernization," enables consumers to authorize future non-recurring ACH transactions by voice or in writing, Nacha representatives stated. Specialists from across the payments industry expressed support for the new ruling.

"Meaningful modernization seeks to improve and simplify the ACH user experience by facilitating the adoption of new technologies and channels for the authorization and initiation of ACH payments; reducing barriers to use of the ACH; providing clarity and increasing consistency around certain ACH authorization processes; and reducing certain administrative burdens related to ACH authorizations," read Nacha's description of the recently implemented rule.

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Nacha representatives further noted that the ruling allows transaction originators to use telephone or web codes for transactions initiated in other channels regardless of how the original authorization was obtained.

"In such cases, the Originator will not need to meet the authorization requirements of TEL or WEB but will need to meet the risk management and security requirements associated with those codes," Nacha administrators wrote.


Omnichannel ACH

Fintechs that operate in multiple channels expect the extended ACH guidelines and authorizations to drive ACH transaction growth. For example, Semafone provides payment solutions that protect personal data across phone, webchat, social media, email, SMS, QR codes, and other emerging technologies.

Gary Barnett, chief executive officer at Semafone, called the Nacha rule amendment a pivotal advancement that addresses consumer demand for digital commerce.

"The challenge is that consumers also expect security and a frictionless experience," he said. "Nacha's focus on meaningful modernization is ensuring the industry holds itself accountable to operate in these new channels while adhering to industry standards."

Barnett pointed out that allowing oral authorizations is one of the most notable aspects of Nacha's update because consumers can now verbally authorize a payment over an internet session or via another communication channel.


Flexible, Modernized Commerce

CrossCheck, a payment technology provider offering ACH processing as part of its suite of products and services, expects the Nacha ruling to impact ACH transaction volumes positively.

Travis Powers, vice president of partner acquisitions at CrossCheck, called Nacha's Meaningful Modernization ruling a great step forward in leveraging ACH as payments evolve in today's environment. 

"I think the key here is getting the new rules in place that give more flexibility to make payments happen with TEL and WEB codes for Subsequent Payments," he said.

Powers additionally noted that he appreciates the flexibility around Oral authorization.

"These rule changes and clarifications provide a great deal more direction and consistency for those processing and providing solutions to merchants," he stated.


Value, Opportunity (iCG), a payment technology solutions provider and preferred Nacha partner, is also highly supportive of the Nacha ruling and its potential impact on the payments value chain.

Jason Estes, chief executive officer at iCG, stated the Nacha ruling will drive value for acquirers, ISOs, ISVs, merchants and consumers by offering a wide variety of seamless and complementary use cases in the marketplace, especially in online, mobile, and telephone market segments.

Estes said that Nacha's continued commitment to expanding usability while elevating operational quality through rules like the meaningful modernization projects would further fuel adoption and technological sophistication for all entities across the network.


This article was originally published in The Green Sheet:

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Date Originally Published: September 21, 2021

Date Updated: August 1, 2022

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