Companies that accept automated clearing house (ACH) payments from customers or clients are subject to the National Automated Clearinghouse Association (NACHA) operating rules. This organization’s rules and requirements apply to every ACH payment and are intended to guarantee the secure storage, access, and transmission of sensitive information. Even if businesses use third-party payment processing systems, it’s still important to understand ACH rules and ensure compliance.
What Are NACHA’s Operating Rules?
NACHA’s operating rules are updated each year. Published by a non-profit agency that works closely with the U.S. Treasury, Federal Reserve, and each state’s banking agencies, they apply to all sensitive customer information. In this case, sensitive information can include both financial data such as bank account and routing numbers and personally-identifying information like social security numbers and driver’s license numbers. Anyone interested in learning more about what types of data are subject to NACHA’s operating rules can discover more here.
The Importance of NACHA Compliance
NACHA enforces its rules through a formal system that includes both warnings and fines, but according to realtimecampaign.com, the fact that businesses can expect to be warned before being fined doesn’t mean they shouldn’t be paying attention to the rules, to begin with. The rules were implemented for a good reason, and failure to follow them can lead to not just fines but also reputational damage. With Nacha Certified Status Renewed for Paycor, for example, the company must now seek to rebuild its reputation.
Secure Transmission and Storage of Sensitive Information
The best way to ensure compliance with NACHA’s rules regarding the secure transmission and storage of sensitive information is to work with a company like TokenEx that takes NACHA compliance seriously.
Businesses should also encrypt all sensitive information being sent, received, or stored online. That said, encryption should be only one part of a multi-pronged NACHA compliance strategy.
Clear Data Security Policies
Every company that accepts ACH payments should have a clearly written set of policies that govern the protection of sensitive data. The policy should touch on how sensitive data is transmitted, stored, and accessed to protect it from unauthorized use and cyber threats. If applicable, this security policy should also include standards for storing hard copies of customer data securely.
Customer Identity Verification
NACHA requires businesses to take reasonable actions to verify customers’ identities. This rule applies to both online and phone-based transactions. Easy ways to comply with this rule include:
Using a third-party verification service
Checking driver’s license numbers
Depositing small test amounts into customers’ bank accounts
Verifying user IDs and passwords
Don’t Underestimate the Importance of NACHA Compliance
Businesses of all sizes that accept ACH payments are subject to NACHA’s operating rules and guidelines, so don’t assume that they apply only to large companies. The best way to guarantee compliance is to work with a third-party online payment optimization service, but that won’t eliminate all possible compliance failures. Companies also need to maintain clear and detailed security policies and ensure that their staff knows how to follow them. Not all of the organization’s rules have been described above, so it’s best to either read through the rules in their entirety or work with an expert.
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