Learn about how NACHA's new account validation rule will impact merchant's and the ACH payment system.

On March 19, 2021, the new WEB Debit Account Validation Rule went into effect, and any merchants that don’t already have a plan in place to become compliant may soon find themselves in hot water. Today, we’re diving into this rule, including why it was created and how Vesta is helping merchants comply with the requirements.

Background on NACHA’s New Rule

E-commerce has surged in popularity in recent years, and to keep up with the increase in online transactions more merchants and banks have added online automated clearing house (ACH) payments to their options. ACH payments in 2018 accounted for nearly 23 billion individual electronic transactions, amounting to nearly 82% of the value of all US payments.

However, as the popularity of e-commerce grows, so do fraud attempts. ACH debit fraud rose from 28 percent in 2017 to 33 percent in 2018, according to the Association for Financial Professional’s Payments Fraud and Control Survey Report.

To address some of the ongoing ACH fraud issues, NACHA is adding an additional layer of fraud detection, which will require merchants to validate the legitimacy of the account being debited. ACH “Originators” of WEB debit entries must use a “commercially reasonable fraudulent transaction detection system” to screen WEB debits for fraud, and the new rule makes clear that account validation is part of a “commercially reasonable fraudulent transaction detection system.”

Due to the impact of COVID-19, merchants that need more time to comply get a grace period of an additional year before the hammer comes down, but NACHA encourages merchants to work toward compliance as soon as possible.

How Vesta Stays Ahead of the Curve

The good news is that if you’re a Vesta merchant using our Payment Guarantee product, you’re already compliant. Vesta takes the hassle out of compliance with this new rule, because we already ensure merchants are compliant as part of our existing fraud protection offerings. We’ve long understood the importance of instituting fraud checks on ACH payments way before it was required, because we know it helps keep merchants safe from fraud.

Last year we announced our integration with Plaid to launch Guaranteed ACH, a payment solution that enables online ACH payments and reduces fraud and fees incurred from non-sufficient funds. Vesta’s real-time platform — built on 25 years of data science and machine learning — provides the analytics and authentication to guarantee the transaction for both consumers and merchants in real time.

E-commerce companies shouldn't have to waste valuable time worrying about whether they’re compliant with the latest rules and regulations. With Vesta, merchants can spend their time and money where it matters most: growing their business. In the background, we take care of compliance so our merchants don’t have to.

What to Do If You’re Not Compliant, or Don’t Yet Have a Plan Toward Compliance

The challenges of staying compliant with a host of rules and regulations can feel daunting. Not only is it a hassle to simply keep track of new rules, but other challenges include tracking the right data, putting intelligent checks in the system, and maintaining due diligence.

We also understand that there are merchants who haven’t implemented ACH payments out of concern about being compliant with new rules, in which case, money is literally being left on the table.

Merchants should ensure they’re in compliance well before NACHA begins to enforce this rule next year. Through a formal system of warnings and fines, NACHA’s ACH Rules compliance corrects infractions and ensures participants follow the rules.

Whether you currently accept ACH Payments but don’t yet have a plan for compliance, or are thinking about instituting ACH Payments but are worried about compliance, Vesta has you covered. Vesta assumes 100% of the cost of fraud for any transaction, so customers can scale confidently and grow their revenue without risk. Through Vesta's Guaranteed ACH, businesses can accept direct payments without worry. We're proud to have already removed for our customers a major hurdle to ACH acceptance and real-time payments.

NACHA Account Validation compliance is just one of the ways we increase approvals and protect merchants from fraud, making Vesta your one-stop shop for fraud protection and approval enhancement. We eliminate card-not-present fraud liability and chargeback fraud — reducing the costs associated with fraudulent transactions while increasing legitimate transactions and revenue.

If you’re curious to learn more about Vesta’s suite of fraud prevention products, including how we can help keep you compliant with new rules and regulations in the industry, we’d love to hear from you.