More ACH Rule Changes This Year Than Ever

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The year 2000 is a big year for changes to the ACH rules. Four rule amendments will introduce four new standard entry class (SEC) codes, seven return reason codes and 16 transaction codes. These changes require all ACH participants to complete major software and programming modifications so their systems recognize these new codes. NACHA modifies the ACH operating rules every year, so amendments are nothing new to financial institutions. But these changes are extensive and require more preparation from all ACH participants compared with previous years. "This is a very significant year for financial institutions and corporate users in regard to rule changes," says Wendy Wishon, senior director of education services for Mid-America Payment Exchange (MPX), a regional ACH association. "I can't remember a past year that required such significant operational and procedural changes for all of the ACH network participants." Are you ready for what's ahead in 2000? Here's an overview of the rule amendments effective Sept. 15. More Accounts for ACH Transactions This amendment expands the types of accounts to which ACH entries may be directed. It allows ACH debits and credits to financial institution general ledger accounts, and ACH credit entries (and reversals) to all types of loan accounts. Page OR 62 of the 2000 ACH Rules describes the two new sets of transaction codes and the new operator reject (return) code for these settlements. Cross-Border Payments To help financial institutions readily identify cross-border transactions to Canada, CBR (corporate cross-border) and PBR (consumer cross-border) will be added to the repertoire of SEC codes. These new codes will enable ACH participants to transmit and receive detailed information unique to cross-border payments. The new return reason codes for cross-border payments are listed on page OR 88 of the 2000 ACH Rules. RCK Becomes Final At last! After a two-year interim rule period for represented check entries, financial institutions can start using the new RCK SEC code when the rule becomes final on Sept. 15. After this date, the PPD format will no longer be permitted for these transactions, and receiving financial institutions will be required to print the check serial number on their customers' statements. In addition, three new return reason codes will supersede the R08, R10 and R11 codes currently used (see page OR 88 in the 2000 ACH Rules). Point-of-Purchase Entries The final rule for point-of-purchase entries marks the beginning of the new POP SEC code. Currently, financial institutions use PPD for point-of-purchase transactions. When the final rule is implemented on Sept. 15, including information in the Individual Name Field becomes optional, and the $5,000 limitation is removed. Also, receiving financial institutions must print the check serial number on their customers' statements. ACH Audit Reminder Last but not least, don't forget your ACH audit! Last year a new rule was passed requiring all ACH participants to conduct an ACH rules compliance audit every year, including third-party service providers. You should finish your first annual audit by Dec. 1, 2000. Training Is Available If you need training to prepare for these rule changes, you can attend the Advanced ACH Rules Review seminar offered by Southern Financial Exchange (SFE) on Sept. 12 in Baton Rouge, La., or Sept. 13 in Grenada, Miss. Check out MPX's and SFE's third and fourth quarter training schedules to scope out seminars that cover numerous other ACH topics.