Understanding Payments: What is Nacha and ACH?

Can the payments industry possess more fun methods to teach businesses how to stay in compliance and follow regulations? All those acronyms can get overwhelming for a sales rep, much less remembering them to pass on when creating a merchant account for ACH and credit cards.

• ACH: That’s a fancy way of saying a check, standing for Automated Clearing House
• Nacha: This is the organization, National Automated Clearing House Association, which governs the thriving ACH Network.
• ACH Network: This is the payment system that drives safe, smart, and fast Direct Deposits and Direct Payments with the capability to reach all U.S. bank and credit union accounts. It electronically moves money and related payment information quickly and securely from any financial institution account to another.

So, maybe you thought those zillion phone calls from payment processors to get you a low rate to accept money included ACH. No, not always.

Let’s be clear in the defining efforts to educate on this financial matter; I won’t spam you, nor will any other payment gateway provider.

Suppose you want efficiency, cost savings, security, and the ability to utilize ACH within the same terminal as your credit card processor. In that case, you have to ask your merchant sales provider for tips. Nacha develops and administers the private sector Nacha Operating Rules for ACH payments, which define the roles and responsibilities of ACH Network participants.

For example, you may have heard account verification floating around.

• Account verification: ACH Originators of WEB debit entries must use a “commercially reasonable fraudulent transaction detection system” to screen WEB debits for fraud.

Nacha supports businesses by keeping up with the threats that can occur with the ACH WEB DEBITS, providing the regulation you need to have some extra security in place to make extra effort not to get a chargeback or returned check fee for a myriad of reasons. With this rule, business owners know the account of the customer making the payment is actually attached to the bank they are paying from this transaction.

Is there enough money in the account to avoid that returned check notice? Well, ask your payments provider about other tools not included in this rule change, but solutions are available to get the job done for your comfort.

Have more questions? Reach out, and don’t let acronyms hold you back. 

This message was originally posted on LinkedIn by Nikki Estes, DMM.

Date Originally Published: September 30, 2021

Date Updated: August 1, 2022