News

NACHA Adopts Rules on Third-Party ACH Processing

Thursday 22 January 2004 18:19 CET | News

The voting members of NACHA - The Electronic Payments Association have approved an amendment to the NACHA Operating Rules governing third-party processing of automated clearing house (ACH) payments.

The new rule will require agreements that specifically bind third-parties to the NACHA Operating Rules when a third-partys customer does not have such an agreement with the originating financial institution (ODFI). The rule becomes effective December 10, 2004. It is a widespread practice in the ACH Network and other payment systems for third parties to process payments between companies and financial institutions. In the ACH Network this is commonly done by payroll processors with Direct Deposit, and by other service companies with consumer bill payments. However, not every company that uses a third-party processor has an agreement with the ODFI that binds the company to the Rules; instead the company has an agreement with the third party. The new rule requires that, in such cases, the companys agreement with the third party, and the third partys agreement with the ODFI, specifically require adherence to the NACHA Operating Rules, among other responsibilities. The NACHA Operating Rules standardize payment formats for the ACH Network, and define the rights, obligations and warranties of parties involved in ACH payments. Operating rules provide a uniform business and legal framework for the exchange of payments, which enhances participants confidence in the safety and reliability of the payments system.


Free Headlines in your E-mail

Every day we send out a free e-mail with the most important headlines of the last 24 hours.

Subscribe now

Keywords: ,
Categories: Payments & Commerce | Payments General
Countries: World
This article is part of category

Payments & Commerce