We Write Code Logo
We Write Code

Prepare your Platform for ACH Updates

New Nacha mandates around Automated Clearing House (ACH) fraud detection and account validation are here! If your business or platform uses ACH transfers, We Write Code can provide the technical resources and due diligence to meet and maintain compliance, reduce risk, and avoid costly fines.

About ACH and Nacha

ACH transfers are bank-to-bank money transfers, which consist of either direct deposits or direct payments. While many people today use credit cards and digital wallets, ACH offers flat rates and same-day transfers, and is a secure and economical option for consumers, businesses, financial institutions, and government entities.

The ACH network is regulated by a non-profit organization known as Nacha (National Automated Clearing House Association). These regulations are intended to increase the security and efficiency of ACH transactions, and are enforced through warnings and fines. If compliance issues are resolved within a certain time frame, fines can be avoided, but if they persist, fines can cost up to $500,000 each month until the issues are resolved.

Supplementing Fraud Detection Standards for Web Debits

This is one of several changes NACHA introduced in 2021 that stood out to us. It requires account validation on first use of an account number or when changes to an existing account occur, as part of a ‘commercially reasonable fraudulent detection system.”

We Write Code can help your company meet this requirement by building custom interfaces and integrations between your platform and other fintech services such as Dwolla, DataX (Equifax), Plaid, and Yodlee. As part of a larger replatforming effort, we recently built an account validation system using Dwolla APIs, which enables identity verification, bank account verification, an employer-to-employee invitation system, and includes a knowledge-based-authentication process and a document upload ID verification process.

The change went into effect on March 19, 2021. Nacha offers a grace period for software changes and updates to take place before penalties and fines are incurred, but fintech solutions depend on security and trust, so we recommend updating as soon as possible.

ACH, Fintech, and the Future

ACH is everywhere, but its future depends on its ability to keep up with the speed, convenience, and security of other modern fintech solutions. Regulatory bodies such as Nacha help move ACH forward by setting new standards, but it’s our responsibility to keep up with best practices and stay in compliance. Let us know if we can help!