Rules for ACH Origination
- ACH stands for Automated Clearing House, which is a payment processing system used by various businesses and financial institutions to process transactions each day. The National Automated Clearing House Association (NACHA) oversees the rules and regulations for all ACH payments in the U.S., including the rules for ACH Origination.
- The receiver in ACH processing is the person who purchases goods or services from a merchant or business. She must give verbal or written permission to the Originator of the transaction, otherwise the ACH Origination will be deemed unauthorized. If ACH Origination is unauthorized, that consumer has the right to dispute the transaction within 90 days from seeing it on their financial institution's billing statement.
- The originator in ACH processing is a company or person who submits a debit or credit transaction to their financial institution. According to ACH Origination rules, the bank must be an Originating Depository Financial Institution (ODFI) recognized by NACHA. Once the Originator has received authorization on the transaction, they must create an ACH entry for that item. Originators must keep a log of all ACH entries for each business day and keep this information on file for auditing.
- The authorization of the ACH transaction, if verbally given, must be recorded on audio. Otherwise, a written summary of the ACH transaction must be sent to the OFDI on the same date of the transaction. Written authorization must include a signed receipt along with the amount and date. Furthermore, if the transaction originated via electronic interface, then the consumer must be shown the terms and conditions along with an "I agree" statement. This latter transaction type is the most common among Internet purchases.