New rules from The Electronic Payments Association—NACHA took effect late last month that standardize the use of the ACH network for person-to-person payments and provide a clearer definition of “third-party sender.”
In 2012, NACHA released an ACH P2P payments proposal and moved forward on the measure last year. The rules were intended to help originators and third-party service providers improve fraud and risk management practices and reduce costs and disputes.
Previously, there was no way to designate or label the P2P payments because the ACH network was primarily used by governments and businesses. The NACHA proposal, however, allows a credit version of the WEB standard entry class code to be used for P2P transactions and details how such transactions should be handled.
NACHA said expanding the use of the ACH network aligns with the goals of replacing costly payment methods such as cash and check, enabling “payments plus information” and the utilization of new technologies to support ACH payment adoption.
While originators are not required to use the new WEB credit P2P application until March 2015, ACH operators and financial institutions must be able to accept the transactions now. All financial institutions will be required to use the application for all P2P payments via ACH as of March 20, 2015.
Additionally, the rules amend the definition of a third-party sender to address confusion about its role. Third-party senders are defined as intermediaries between originators and the receiving institution; third-party senders also have origination agreements with the receiving institution.
The rule mandates that an ACH participant can act as a third-party sender or originator but cannot assume both roles for the same transaction.