New ACH Rules for Unauthorized Returns

New ACH Rules for Unauthorized Returns

Changes to ACH Rules Move Merchants to Echecks

An essential indicator for ACH payments is that it requires constant monitoring is the unauthorized return rate. An unauthorized return occurs when an Originating depository financial institution (ODFI) debits the Receiving depository financial institution (RDFI). In some cases, the transaction may indeed be unauthorized, but system errors caused by the ODFI frequently result in an unauthorized debit.

The first important change with respect to the unauthorized return rate is due to occur on September 18, 2015 when the current 1 percent threshold will be lowered to 0.5 percent. Since the average Network unauthorized return rate is around 0.03 percent, the change is enforced solely to allow closer monitoring of institutions that have a poor performance.

The same concern for performance led to the development of the ACH Network Quality rule which intends to provide an incentive to ODFIs to decrease the number of unauthorized debits, especially the ones that occur because of system errors. In time, this policy will produce a decrease in the unauthorized return rate, thus reducing the costs for all entities part of the ACH network.

In short, the ODFI will be charged a fee ranging from $3.50 and $5.50 for each unauthorized debit. The fee will be transferred in full to the RDFI. The association decided to place more liability on the ODFI because this will motivate the institution to innovate and reduce the situations in which a transaction has to be returned due to incorrect data.

In addition, claims the association, even if the transaction is indeed reported as unauthorized, it is up to the ODFI to handle the situation with its own customer. The RDFI, on the other hand, does not have any power in preventing or solving the problem, yet it incurs losses and spends resources each time an unauthorized debit is made. The fee will be implemented starting with October 3, 2016. Until then, all ACH operators will have to put a system into place that will allow the transfer of the fees from ODFIs to RDFIs. In the long term, the ACH Network Quality rule will improve the services delivered through the ACH network


The changes in ACH processing rules are causing many merchants to switch to echecks based on Check 21 technology.

Since echecks are processed outside of the ACH network, you have far greater flexibility on returns and revokes. Giving you the benefits of electronic check processing.  Without the worries of ACH processing.

Are you a high risk merchant seeking an alterntive to ACH echecks?

Contact today.

ACH Statistics Show Fast Internet Growth

ACH Volumes Continue to Rise

According to NACHA, there were 20.2 billion ACH transactions totaling $33.91 trillion processed in 2011.  This represents an increase of 4.35% compared to 2010.

Three types of transactions were responsible for most of the growth volume.  First are “native” electronic payments, which are end-to-end electronic transactions.  These increased 5.31% in 2011 over 2011.  Secondly, consumer online payments (WEB transactions).  Thirdly, B2B transactions, such as vendor payments and other business transactions.

Even though there are thousands of banks in the US, just 50 financial institutions handled 56% of ACH transactions.  Online bill payments grew 13.35%, as the number of consumers who pay bills through online banking continued to increase.

Overall rate of return on ACH transactions was less than 1% in 2011, compared to 2% in 2010.  Unauthorized debits decreased to 0.03% in 2012, a major drop from 3.14% in 2010.  Further demonstrating the safety and security of the ACH processing network.

More Internet Sites Accept Checks Online

Online consumer payments accounted for a whopping 16.67% of ACH transactions in 2011.  Although most of these where for online bill payments, it clearly shows that consumers are quite comfortable paying with direct bank debits online.

One can expect this will translate into even more e-check sales on websites.  As more consumers pay bills online, the behavior of using bank debits becomes habitual.  30% of online merchants already offer electronic checks as a payment option at checkout. 


More & more, internet retailers are offering echecks as a payment option on the checkout page.

Online sites, including those classified as high risk merchants, are taking advantage of habitual consumer payment behaviors by providing customers the ability to pay with an electronic check.

Are you a high risk merchant that wants to accept checks online to increase sales & profits?

Contact today

ACH Electronic Funds Transfer

ACH Processing for Electronic Funds Transfer

ACH payments and wire transfers are the most commonly used methods of transferring funds electronically within the United States.

Wire transfers are best suited for high dollar transfers must which must be sent or received quickly, within the same day or by next banking day. ACH payment processing is best method for transmitting high volumes of lower value electronic funds transfers.

Instead of sending transactions separately, ACH payments are batched together in a file to be cleared through the Federal Reserve. ACH processing is much less expensive than wire transfers.

The ACH network is not a real time system.  Files are cleared through the Federal Reserve at midnight of the day following file submission.  Merchants that ship goods are well-advised to wait until the transaction is cleared to mitigate the risk of returns for non-sufficient funds.

Participants in the ACH  Network

There are 5 participants in the ACH network.

1)  Originator

An Originator is a person or entity that initiates the ACH payments Originators are a companies or individuals that direct a transfer of funds to or from consumers’ or companies’ accounts.

2)  Originating Depository Financial Institution (ODFI)

An ODFI is a financial institution that receives payment instructions from Originators and forwards the entries to the ACH network.

ODFI responsibilities include:

  • Authorization of all entries
  • Transmitting the entries to the ACH Network in a timely manner
  • Terminating the origination of entries if required
  • Keeping data and personal information secure
  • Ensuring that the entries contain the appropriate information and information is accurate
  • Complying with audit and rules requirements as defined by National Automated Clearing House Association (NACHA)

3)  Automated Clearing House Operator

An ACH Operator is a central clearing facility to or from which participating financial institutions send or receive ACH entries.

4)  Receiving Depository Financial Institution (RDFI)

A RDFI is a participating financial institution which receives entries for debit or credit to the accounts of its customers as Receivers.

An RDFI’s responsibilities include the following in regard to receipt of ACH files:

  • Receipt and validation of ACH entries
  • Timely posting to Receivers’ accounts
  • Validation of pre-notifications
  • Timely return of entries and pre-notifications not posted
  • Notifying Originators of incorrect information on accepted entries
  • Timely handling of remittance data as required by NACHA ACH Operating Rules

5)  Receiver

A Receiver is an individual or an organization which authorized an Originator to initiate an ACH entry to the Receiver’s account with the RDFI.

ACH payments are a safe, secure, and inexpensive method for sending and receiving money.


ACH credits give you the ability to direct deposit funds to bank accounts. ACH debits automatically deduct funds from consumer or business bank accounts. The funds are then electronically deposited to your bank account.  

The ACH network is one of the oldest and most secure methods for electronic funds transfer in the world. Millions of US business and consumers regularly use the ACH network to send and receive money.

Interested in establishing an ACH processing account?

Contact today

ACH Payments Statistics Confirm Power of ACH Processing

b7977620-5602-4a3d-9c03-66b2b4bf6740If you have any questions that ACH payments are being embraced by US businesses and consumers, consider these facts from NACHA:

  • The number of Automated Clearing House (ACH) Network payments exceeded 19.4 billion in 2010, an increase of 3.44% compared to 2009
  • More than $37.4 trillion in ACH payments were processed last year.
  • The number of ACH payments transmitted by ACH operators was more than 15.61 billion transactions. Of these 9.26 billion were debits and 6.36 billion were credits credits.
  • If you include “on us” transactions made by the banks, the number of transactions increases to 19.4 billion
  • Business-to-business transactions increased by 3.9%
  • Online bill pay transactions grew by 11.2%
  • WEB tranaactions increased by 7.4%
  • TEL transactions grew by 3.1%


If you are in business, you are missing the boat if you are not accepting ACH payments.  More than 90% of US households have a bank account and can pay you with ACH.

Less than 70% of Americans have credit cards.  Of the ones who do, more than 25% are maxed out on cards and are unable to use them to purchase more goods or services.

Isn’t it time you jumped on the band wagon?  Take advantage of one of the biggest migrations to electronic payments in history.

Get more orders.  Save money on payment processing expenses.  And give your customers another easy way to buy from you.

Want to increase sales & profits with ACH processing?

Contact today

3 Ways to Profit from Echecks

Accept Checks Online & Watch Your Sales Grow

Get orders from buyers that are maxed out on cards or don’t have cards. And many shoppers simply prefer to pay you with an echeck rather than a card.

Here’s 3 more ways that high risk merchants wring out more profits with electronic check processing.

Echeck Processing for Recurring Payments

Many high risk merchants have recurring billing models.  For example, it is common for adult webmasters to offer subscription billing options to customers.

Echecks trump cards in protecting profits from recurring billing.  Payments made from bank accounts are infinitely more stable than those made with cards.  People rarely change bank accounts.  Recurring payments from bank accounts can continue for years without interruption.

But, 20% of all credit and debit cards are reissued every year.  Every time a card is reissued, a high risk merchant has to update card information in order for a recurring payment to be approved.  This interrupts cash flow from recurring billing.  And contacting customers gives them an unnecessary opportunity to cancel the subscription.

High risk merchants often offer customers incentives when recurring payments are made through a bank account rather than a card to help stabilize cash flow.  Companies discover that customers are comfortable with echeck payments for recurring billing because monthly household bills are regularly paid with electronic checks. 

High Risk ACH Reduces Payment Processing Expenses

Echecks save you 50-80% compared to card processing.  Sometimes rates for echecks are priced on a flat fee per transaction.   Other times, a discount rate will be assessed. 

In any event, rates for electronic check processing will always be less than cards.

Rescue Sales with Echecks

Card transactions are frequently declined at checkout.  Sometimes a card is expired.  Other times there is not enough money on the card to cover the payment.

When a card is declined, give your customer the option to pay by check online.  You’ll be amazed at the number of sales you will save.


Electronic checks are the most popular alternative payment method for US consumers. Millions of Americans purchase goods & services online with echecks.  

When you accept checks online, you get sales from shoppers that are maxed out on cards or who do not have cards. And many buyers prefer to purchase online with an echeck rather than a card.

It’s simple. The more ways customers can buy from you, the more orders you get.

Interested in an echeck account to increase your sales & profits?

Contact today


ACH Merchant Accounts

What is an ACH Merchant Account?

ACH merchant accounts use the US Electronic Funds Transfer (EFT) network to process payments.  NACHA is the governing body of the ACH EFT network.

ACH debits give you the ability to electronically debit funds from a buyers’ bank accounts to pay for goods or services. The money is automatically deposited to your business bank account. 

ACH debits can be deducted from both business or individual bank accounts. Checking, savings, loan, and financial institution general ledger accounts can all be debited with ACH.

ACH merchant accounts  are commonly used by ecommerce companies to increase sales.  ACH echecks are the are the most popular alternative payment method for US buyers.

Accept checks online. Accept check by phone, mail or fax orders.

Companies that offer ACH echecks on the checkout page report sales lifts up to 29%.  Echecks let you capture sales from buyers that do have cards, are maxed out on cards, or simply prefer to pay by you with an electronic check.

Benefits of ACH Payments

  • Increase Sales. ACH merchant accounts are the fastest growing alternative payment method for internet sales. Millions of Americans regularly purchase goods & services online with ACH electronic checks.
  • Decrease Shopping Cart Abandonment. If a credit card is rejected, offer an an electronic check payment option. Rescue sales that otherwise would have been lost.
  • Reduce Payment Processing Expense. Echeck processing saves money over cards. Processing fees are often 50-80% less than credit card merchant accounts.
  • Increase Cash Flow. Get rid of payment-delaying tactics and eliminate the wait for a check to arrive by mail.
  • Boost Revenues.  Accept checks online to generate more sales and boost profits.
  • Lower Administrative Costs. Eliminate preparing and mailing customer invoices. Automation of payments for your accounts receivables means you get your money faster, with less work

ACH eChecks for Ecommerce

An ACH merchant account can be used across multiple sales channels. You can accept checks online and check by phone, mail and fax orders.

ACH echecks are integrated to your website through an API.  The API connects the site to secure banking networks for safe transaction processing.   

You view and mange your account through a “dashboard” through which you can view transactions, create reports, and modify the parameters of the system.  You can search, sort, and track the status of any transaction.  A large variety of reports are readily available to provide data to management.

At checkout, buyers chose to pay with an electronic check. The transaction is processed through the API. Check by phone orders are processed through a virtual terminal.

ACH echecks are cleared through the United States Federal Reserve Bank. Cleared funds are settled to your business bank account.


ACH merchant accounts automate payments, increase cash flow, and reduce expenses. 

With an ACH account, you can

  • Initiate ACH debits & ACH credits
  • Accept checks online
  • Accept check by phone, mail & fax orders

Adding echecks as a payment option at check out is the fastest way to get more sales. The more ways customers can pay you, the more money you make.

Interested in applying for an ACH merchant account?