The Ins and Outs of the NACHA Rule Making Process

NACHA- the Electronics Payments Association, is one of the largest, and most secure payment systems in the world.  It is the governance of the ACH Network for the United States and moves over 20 billion payments annually. In order for a network of this scale to function properly, it requires a standard set of rules and regulations.  The NACHA Operating Rules provide the legal base for the exchange of ACH payments and define the roles and responsibilities of financial institutions and other participants in the ACH Network.  The process of proposing rules and amendments involves a standard procedure with the final decision made by the NACHA voting membership, the decision makers for the NACHA Operating Rules.

The first step to proposing a new or editing an existing rule is to complete the Business Idea Submission Form.  The submission should include the business idea, define its objectives, and identify a project sponsor, potential participants, and a primary NACHA staff contact.  This streamlined process was created to encourage new business ideas and ensure that each proposal is given equal thought and consideration.  For more information about this process or to view the status of your submitted ideas, visit the NACHA Website.

When an idea is submitted, it then follows the standard NACHA Rulemaking Process.  The idea first goes through the steps shown below and if it passes through each committee it reaches the Request for Comment (RFC) stage.  This stage allows the proposal to be posted on the NACHA website and members are able to give their opinions on whether or not they think it should be made an official rule. 

Members’ comments are then compiled by NACHA staff and provide the Standard Rules Group (SRG) with an analysis. The SRG is a committee of appointed NACHA members that decide whether or not proposal is worth pursuing.  Once a few legal and administrative steps are taken, a ballot is created and sent to voters who make the final decision on whether or not the rule is passed. 

NACHA allows every member’s voice to be heard and ensure that all rules are focused on making the ACH system as efficient and safe as possible.  There are many ways to get involved in the rule making process, check on the NACHA website to learn more for details and open committee positions.

Material in this article was found on the NACHA website.  Please refer to the NACHA website directly for more information.

Best Practices for Dealing with an ACH Processing Error

Cachet has put together some best practices for handling an ACH processing problem.

This week, Cachet has been assisting several frantic payroll providers with their ACH processing needs due to an issue with their current provider.  We understand that no company is perfect and sometimes ACH processing errors can occur; being prepared by having a contingency plan can help your staff and your clients in case of emergency. The following are several best practices suggestions that Cachet recommends every payroll provider consider in the event of a problem with their ACH transactions.

Keep the lines of communication open.

This is probably the most difficult item, you will want to respond to each client inquiry immediately but may not have the staff to do so. Make sure to have a method of mass-communicating the most recent information available and assure your clients that you will respond to individual requests as quickly as possible.

Know your ACH provider’s policy for missed transactions.

What are your options and deadlines for your preferred solution? There are usually three options for dealing with a missed or delayed transaction;

• Wait. Your ACH provider likely re-submitted or has already pushed the ACH file through and it will clear the following business day. If you can wait, this is usually the preferred option as it will cause less manual work and is less costly in the long run.
• Run Paper Checks. If you require a same day resolution, run paper checks for all paychecks/direct deposits. Make sure to notify your ACH provider that you are running paper checks so they can stop those transactions from going through.
• Wire Transfer. Another same day resolution is to wire the funds, though wire transfers will require a considerable amount of manual work which you may not have enough time to complete depending on your processor’s wire deadlines. Wires also tend to be the most costly option overall.

Know your clients’ preference.

Keep a record of each client’s preferred resolution in the event of an ACH error on file. It is also a good idea to include legal language in your Employee Direct Deposit Authorizations and/or Client Service Agreements that addresses how a missed transaction or payroll will be handled. Cachet suggests including clauses regarding liability, reversals, and direct deposit timelines for late deposits to your client and employee level agreements. These are suggestions only and should be reviewed by your attorney for your specific needs and situation.

Try to be patient.

Patience is always easier said than done, especially when you have furious clients pounding on your figurative door with questions that you can’t answer. In the event of a missed or delayed ACH transaction, your ACH provider will also be experiencing a higher than normal volume of correspondence and may take some time to respond to your specific inquiry. Be prepared to wait for a response.

Understand your clients’ frustration.

While your ACH processor, their employee(s), their bank, or whomever may have been the root cause of the issue, your clients’ relationship is with you and you alone. They will expect you to have all of the answers and unfortunately you may not have the information they want, do your best to provide all of the information that you do have, explain their options, and listen to their frustrations. Sometimes a sympathetic ear can go a long way.
Cachet has a history of assisting clients who have encountered issues with their current ACH processors. With expedited implementation options and wire services, Cachet offers payroll providers the ability to continue offering direct deposit services for their clients even during uncertain times with their existing ACH provider. Our annual SSAE 16 and financial audits ensure that we adhere to strict internal operational standards, while our $50 million dollar crime bond adds an additional layer of protection for our client’s payroll transactions.

Social Security Recipients Must Switch to Direct Deposit by March 1, 2013

 In 2011, the government found that 85 percent of the Social Security beneficiaries received their payments electronically. Direct deposits greatly decrease the risk of financial crime, it is more convenient, and it allows for more control over your own money.  Additionally, the switch eliminates the $120 million cost from taxpayers associated with the printing, shipping, and replacing of paper checks.

According to The Official Website of the U.S. Social Security Administration, a new law will go into effect on March 1, 2013 that requires everyone who receives federal benefit payments from the government – including, but not limited to VA, Supplemental Security Income (SSI), and Social Security checks - must switch to an electronic payment system.  Those who do not change to an electronic payment option by the March 1^st deadline may start receiving their money via a Direct Express® Debit MasterCard®.

If you receive federal benefit payments from the government and would like to find more information about the change or start making the switch today, you can either go online at GoDirect.org or call (800) 333-1795.