Raise your hand if you’ve heard of the Faster Payments movement! If you’re in the payments industry, it’s a good guess you’ve not only heard of it, but are actively preparing your organization for the second and third phases of the National Automated Clearing House Association’s (NACHA) Faster Payments Initiative. This program was created to help address the “lack of a real-time, or faster payment system,” to improve the payments experience for both consumers and businesses.
The NACHA rule change has been broken into three phases to help financial institutions and businesses acclimate to a faster processing environment and ease into the implementation effort: Phase 1 became effective on September 23, 2016, and included making credits available at the end of the receiving institution’s processing day. The deadline for Phase 2 was September 15, 2017 and ensures debits as well as credits are made available at the end of the receiving institution’s processing day. Finally, Phase 3 dictates that credits and debits will be made available by 5:00 PM local time (rather than end of the processing day) and goes into effect on March 15, 2018.
As Phase 2 of the NACHA Same Day ACH rule approaches, certain use cases like P2P transfers, same-day payroll, or expedited bill payment, will redefine how consumers and institutions interact with money. As the pace of payments, processing and clearing move to same day, financial institutions, payments providers, corporations, consumers and the entire payments industry must adapt to protect consumers and institutions. Given the nature of these payments, existing fraud and account validation tools need to be evaluated and potentially enhanced to provide appropriate safety and soundness controls.
Having the tools to validate account ownership and status in real-time, and before the debit is processed, should be a main priority for any organization wanting to protect themselves and their customers. The solution selected should utilize the industry’s most current and accurate source of collaborative financial data to authenticate Demand Deposit Account (DDA) ownership, account signatory and account status. This will ensure that merchants and billers can validate accounts in real-time to mitigate insufficient funds, reduce administrative and unauthorized ACH returns and account takeover fraud while reducing costs and better enabling a positive experience for both consumers and businesses.
Watch the free webinar, presented by NACHA’s Jane Larimer discussing the direction of the industry, the driving forces behind the changes and some ways to stay ahead of the challenges facing your business. Additionally, she provided account validation best practices and explained how Early Warning is changing the payments industry with the Zelle Network® for person-to-person payments and corporate/government disbursements.
NACHA’s Preferred Partner program identifies leading providers and innovators that work with NACHA to advocate for and educate the industry on technology and best practices in support of the ACH Network and ACH payments. Early Warning was selected as the first Preferred Partner for its account validation service to validate the Demand Deposit Account (DDA) ownership, account signatory and account status.