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This rule is intended to improve ACH Network quality by reducing the incidence of ACH debits that are returned as unauthorized. Under this Rule, an ODFI would pay a fee to the RDFI for each ACH debit that is returned as unauthorized (return reason codes R05, R07, R10, R29 and R51). Under the Rule, ODFIs will have an economic incentive to improve the quality of the ACH transactions they originate. RDFIs will be compensated for a portion of the costs they bear for handling unauthorized transactions, and will experience reduced costs due to a reduction in unauthorized transactions over time.

Detailed Information

This Rule is intended to improve ACH Network quality by reducing the incidence of ACH debits that are returned as unauthorized. Under this Rule, an DFI will pay a fee to the RDFI for each ACH debit that is returned as unauthorized (return reason codes R05, R07, R10, R29 and R51). ODFIs will have an economic incentive to improve the quality of the ACH transactions they originate. RDFIs will be compensated for a portion of the costs they bear for handling unauthorized transactions, and will experience reduced costs due to a reduction in unauthorized transactions over time.The Rule will not apply initially to international ACH transactions (those bearing the IAT SEC Code). While conceptually the rationale for the Unauthorized Entry Fee applies to IATs, the operational, technical and business process changes that would be necessary to include IAT within the scope of the fee would not be feasible within the implementation time period of the rule. Therefore IATs will not be included initially, but could be added within the scope of the fee at a later date.

The Rule defines a methodology by which NACHA staff would set and review every three years the amount of the Unauthorized Entry Fee.

NACHA and the two ACH Operators will arrange for a system to collect and distribute the fees; the charges and credits for these fees will be reflected on a Participation DFI’s statement from its ACH Operator.

For the full posting on NACHA.org, Click Here.

*All information contained in this posting is from the article “Improving ACH Network Quality – Unauthorized Entry Fee” from https://www.nacha.org/rules/improving-ach-network-quality-unauthorized-entry-fee