NACHA Rule Updates 2015-16

NACHA Rule Changes – 2015 and 2016

The following changes to the National Automated Clearing House Association (NACHA) Operating Rules ("Rules") are effective in 2015 and 2016.

Many of the existing and upcoming Rules changes are addressing improvement in ACH network quality by reducing the incidence of debit return Entries.

Effective January 1, 2015

NACHA Enforcement Authority

This Rule adds more options for which NACHA may begin an initial investigation or Rules enforcement proceeding when an entity originates an excessive number of unauthorized Entries. This could result in increased investigations of Originator activity, and could ultimately result in fines passed on to those Originators.

Third Party Senders (TSPs) – Originator and Third Party Service Provider (TSPSs) audits required upon request by NACHA

  • This Rule makes explicit a Third Party Sender's existing obligation to monitor, assess and enforce limitations on their customer's origination and return activities in the same manner as the Originating Depository Financial Institution (ODFI) does today.
  • The Rule also requires that a Third Party Service Provider or Third Party Sender provide proof of completion of its Rules compliance audit to its ODFI upon request, in order to fulfill a request from NACHA. Failure to comply with this requirement may result in a NACHA Class II Rules violation, and fines up to $100,000 per month until resolved.

Clarification on Prenotification Entries and Addenda Records

  • This Rule revises the NACHA Operating Rules to clarify that, with the exception of an IAT (International ACH Transaction) Entry, the Prenote Entry does not need to include addenda records that are associated with the subsequent live Entry.
  • The Rules require that the format of a Prenote Entry be the same as the live Entry. There are, however, some differences between Prenotes and live Entries to which the Prenote relate:
    • The dollar amount of a Prenote Entry must be zero;
    • A Prenote Entry is identified by a unique transaction code; and
    • Addenda records associated with a live Entry are not required with a Prenote (unless the Prenote relates to an IAT Entry).

NOTE: While the Rules do not prohibit an Originator from transmitting addenda records with a Prenote Entry, an Originator should have no expectation that a Receiving Depository Financial Institution (RDFI) will do any processing or verification of remittance data contained within. Originators wishing to validate proper formatting of remittance data for future entries to a non-consumer account should, instead, transmit a zero dollar Entry using the appropriate zero dollar transaction code.

Effective March 20, 2015

Dishonored Returns and Contested Dishonored Returns Related to an Unintended Credit to a Receiver

This Amendment provides Originators and ODFIs with two additional Return Reason Codes to use the automated return process to rectify situations in which use of the reversal process has resulted in, or not resolved, an unintended credit to a Receiver. The two new Return Reason Codes are R62 (Return of Erroneous or Reversing Debit) and R77 (Non-Acceptance of R62 Dishonored Return).

Notification of Change (NOC) – Removal of Change Code C04 (Incorrect Individual Name/Receiving Company Name)

This Amendment eliminates the use of change code C04 (Incorrect Individual Name/Receiving Company Name) on NOC Entries to mitigate compliance and liability challenges for Originators, ODFIs and RDFIs that use this NOC code.

Effective September 18, 2015

Reducing the Unauthorized Return Rate Threshold

This Rule reduces the return rate threshold for unauthorized debit Entries from 1.0 percent to 0.5 percent of the total debit Entries originated.

  • Unauthorized Return Reason Codes include:
    • R05 – Unauthorized Debit to a Consumer Account using a Corporate SEC code
    • R07 – Authorization revoked by Customer
    • R10 – Customer advises Unauthorized, Improper Ineligible, or part of an Incomplete Transaction
    • R29 – Corporate Customer advises Not Authorized
    • R51 – Item related to RCK Entry is Ineligible or RCK Entry is improper. (RCK's are returned checks converted to ACH.)

Establishing an Inquiry Process for Administrative and Overall Debit Return Rates

This Rule establishes a guideline for an Originator's administrative return rate of 3 percent or below of the total debit Entries originated.

Administrative Return Reason Codes include:
  • R02 – Account Closed
  • R03 – No Account/ Unable to locate Account
  • R04 – Invalid Account Number Structure

Additionally, this Rule also establishes an acceptable guideline for an Originator's overall debit Entry return rate of 15 percent or below of the total debit Entries originated (excluding RCK Entries). Return rates that exceed these guidelines may trigger an inquiry and review process by NACHA and the engagement of an industry review panel to evaluate the facts behind an Originator's ACH activity. The evaluation could result in a Rules violation or a Rules enforcement proceeding.

Reinitiation of Debit Entries

  • Reinitiation is the method permitted in the Rules to resubmit a returned Entry. The NACHA Rules now formally define the types of Entries that may be reinitiated, and those that are prohibited from reinitiation.
  • This Rule requires a reinitiated Entry to contain identical content in the following fields: Company Name, Company ID, and Amount. The Rules permit modification of other fields only to the extent necessary to correct an error or facilitate processing of an Entry. This change allows reinitiation to correct administrative errors, while prohibiting reinitiation of Entries that may be attempts to evade the limitation by varying the content of the Entry. The reinitiated Entries must contain "RETRY PYMT" in the Company Entry Description Field, which for all Originators is a free-form text field.
  • The Rule allows the Return Code R10 (currently used for Extended Returns) to be used for a Return that is a result of a violation of the Reinitiation Rule.

Effective October 3, 2016, pertaining to entries originated on or after August 1, 2016.

Improving ACH Network Quality – UNAUTHORIZED ENTRY FEE

  • This rule is intended to improve ACH Network quality by reducing the incidence of ACH debits Entries that are returned as unauthorized. Under this Rule, an Originating Depository Financial Institution (ODFI) will pay a fee for each ACH debit that is returned as unauthorized (return reason codes R05, R07, R10, R29 and R51 as outlined previously).
  • Originators could be charged the Unauthorized Entry Fees, which could be in excess of $5.00 per Unauthorized Entry.
  • This Rule will become effective for applicable return Entries with a Settlement Date of October 3, 2016 or later.

Originators should begin to implement systems, tools, and processes to reduce unauthorized debit returns as soon as possible. Doing so will position your organization to avoid possible NACHA Rules violations and fees.

Effective September 23, 2016 and beyond.

Same Day ACH

This Rule provides Originating Depository Financial Institutions (ODFIs) the option to allow customers to initiate Same Day Settlement of domestic ACH entries less than $25,000 through the ACH Network in a three-phased approach.

  • Phase I, effective September 23, 2016 will involve Credit origination only, and the Receiving Depository Financial Institution (RDFI) must make the funds available to the Receiver's account by the end of the business day.
  • Phase II, effective, September 15, 2017 will add Debit origination as a Same Day origination option. As with Credit origination, the RDFI must make the funds available to the Receiver's account by the end of the business day.
  • Phase III, effective March 16, 2018 will require all RDFIs to provide funds available for all same day ACH received Entries to the Receivers account by 5 p.m. local time.
  • RDFI's may elect to send Notifications of Changes (NOCs) and Returns through the same day windows, potentially enabling Originators to receive this information faster.

TD Bank, America's Most Convenient Bank® recommends that all ACH Originators obtain a copy of the ACH NACHA Rules.

The ACH Rules for Corporate Originators is published annually and may be ordered at Alternatively, an electronic version of the ACH Rules may be viewed online by registering at If you have any questions, please feel free to contact Treasury Management Services Support at 1-866-475-7262.