Automated Clearing House (ACH) Payment and Solutions
This page provides a summary of ACH Payment and Solution topics. For questions, please call FMFCU’s Treasury Solutions Department at 484-259-1000 ext. 58148.
NACHA Rule Changes for 2020
National Automated Clearing House Association (NACHA) manages the development, administration, and governance of the ACH network and periodically releases rule changes, which FMFCU provides here:
- March 20, 2020: Same Day ACH Dollar Limit Increase — The per-transaction dollar limit will increase from $25,000 to $100,000 per entry. This applies to both credits and debits.
- April 1, 2020: Unauthorized Return Reason Codes — Return Reason Code R11 is being repurposed to “Customer Advises Entry Not in Accordance with the Terms of the Authorization.” This applies during the return of a debit in which there is an error, but also an authorization. As an Originator, if the error is corrected a new authorization must be obtained. R11 returns will be included within the definition and calculation of the Unauthorized Entry Return Rate. Return Reason Code R10, “Customer Advises Originator is Not Known to Receiver and/or Originator is Not Authorized by Receiver or Debit Receiver’s Account” will continue to be used when a consumer claims not to have a relationship with the Originator, does not know the Originator, or did not give authorization.
For a summary of 2020 NACHA Rule Changes: FMFCU’s ACH Originator Guide.
To purchase a full list of NACHA Rule Changes: www.nachaoperatingrulesonline.org.
Online Banking ACH Guide
For instructions completing common tasks: FMFCU’s Online Banking ACH Guide.
Benefits of ACH
- Maximize cash flow and improve forecasting
- Pay employees and vendors as soon as the next business day
- Schedule recurring payments
- Easy-to-use online banking
- Reduce risk and human error
- Potential cost-savings
Definitions and Acronyms
- ACH: Automated Clearing House, is a U.S. financial network used for electronic payment and money transfers. Also known as “direct payments,” ACH payments are a way to transfer money from one bank account to another without using paper checks, credit card networks, wire transfers, or cash.
- Effective Date: The date an Originator intends for entries to post to a receiver’s (customer’s, vendor’s or employee’s) account. When the ACH operator processes an ACH file, the effective entry date is read and settlement date is assigned. Entries are settled by the ACH operator on settlement date.
- NACHA: National Automated Clearing House Association manages development, administration, and governance of the ACH Network, the backbone for the electronic movement of money and data in the United States. It is a not-for-profit organization funded by the financial institutions it governs.
- Originator: Any entity or person creating an ACH transaction.
- SEC Code: Standard Entry Class Code are all the valid payment methods as prescribed by NACHA. Each SEC code defines the type of transaction (debit or credit), type of account (corporate or consumer), and any information specific to the format (such as single/recurring, terminal location, or check number).
Franklin Mint Federal Credit Union will close the following holidays observed by the Federal Reserve Bank and will not accept files for processing on these days. Entries should not have an effective date on these days.
- New Year’s Day (January 1)
- Martin Luther King, Jr. Day (Third Monday in January)
- President’s Day (Third Monday in February)
- Memorial Day (Last Monday in May)
- Independence Day (July 4)
- Labor Day (First Monday in September)
- Columbus Day (Second Monday in October)
- Veterans Day (November 11)
- Thanksgiving Day (Fourth Thursday in November)
- Christmas Eve (December 24)*
- Christmas Day (December 25)
*Early processing — 12:30 p.m. cutoff
Note: If January 1, July 4, November 11, or December 25 fall on Sunday, the following Monday is a standard Federal Reserve Bank holiday.
Processing Dates/Times/Delivery Times
Processing Days — Franklin Mint Federal Credit Union will accept files for processing on all business days (excluding holidays listed above). Files are not accepted on Saturdays, Sundays, or standard holidays. Entries should not use these days as an effective date.
File Cut Off — Files can be approved and transmitted via online or mobile up until 3:00 p.m. ET on each processing day, with exception of the cutoff time of 12:30 p.m. ET on Christmas Eve.
Timing of Delivery — Companies can deliver files up until XX days before the effective date.
- Credit entries until 3:00 p.m. ET — allow two (2) business days prior to the effective date of entry.
- Debit entries until 3:00 p.m. ET — allow one (1) business day prior to effective date of entry.
The Uniform Commercial Code (UCC 4a) requires that “commercially reasonable” security procedures be utilized to guard against loss. An originating company should establish, maintain and enforce reasonable physical and logical security practices with respect to access and transmission of ACH files.
Although each business is unique, the following suggestions should be utilized when originating electronic transactions:
- Request file limits that align with the business need. Having appropriate limits can help prevent keying errors resulting in unintended amounts.
- Utilize an encrypted electronic method (such as Online/Mobile Banking) to deliver files to FMFCU.
- Utilize a multi-factor authentication such as Secure Access Codes to access online ACH services each time. Do not save credentials or the browser.
- Have the Secure Access Code delivered by SMS text or telephone. Email should be used as a last resort.
- Utilize dual control for creating and approving files. Allowing one person to create and a second to approve will help minimize errors and prevent potential fraud.
- Maintain a standard schedule as much as possible so anomalies are more likely to be identified by staff reconciling the account(s).
- Immediately notify FMFCU if suspecting someone has gained unauthorized access to your Online/Mobile Banking.