Dear ACH Client:

We appreciate your Treasury Management business and want to keep you up-to-date on changes in our services and the rules that apply to them. To that end, we are alerting you to a number of revisions to the NACHA Rules that may impact you as an originator of ACH Debit and/or Credit Entries and also clarify some issues.

The ACH Service Terms & Conditions, which you entered into with us in connection with the Treasury Management Master Agreement, require all originators to comply with the NACHA Rules and provide us the right to suspend or terminate services in the event you do not comply. You are also financially responsible for any fines we are required to pay as a result of your noncompliance. As a result, you are bound to comply with the provisions described below. For those rules that are not yet effective, your compliance must be no later than the date indicated.

We want you to be aware of the following:

  1. Types of Entries We Process: We process CCD (Corporate Debit/Credit Entries), CTX (Corporate Trade Exchange Entries) and PPD (Prearranged Payment and Deposit – consumer Entries only) as  part of our standard service package, including child support and tax payments. You may also originate WEB (Internet-Initiated/Mobil – consumer Entries only) and TEL (Telephone-Initiated – consumer Entries only), but you must enter into a separate addendum to do so. We will notify you if we determine to process additional types of Entries.
  2. Your Exposure Limits: We establish for each client a Daily Exposure Limit as part of your set-up. We may change your limit in our discretion. Please make sure you have a record of your exposure limit and abide by it.
  3. Monitoring Excess Return Rates: We monitor the return rates of our clients’ Entries and may  require corrective action in the event of excess return rates. Effective September 18, 2015, we will require a detailed plan to reduce any return rates considered excessive under the NACHA Rules. We may also terminate the service for abuses. In the event we are fined by a Receiver’s financial institution (“RDFI”) for a return of your Entry, we may charge the amount of that fine to you.
  4. Limits on Reinitiation of Returned Entries: The NACHA Rules are changing, effective September 18, 2015, with respect to your rights to reinitiate a returned Entry.
    • Where you request, and we are capable, we may reinitiate Debit Entries returned due to insufficient or uncollected funds, but not more than two times following the return.
    • You may also reinitiate an Entry when corrective action has been taken to remedy the reason for the return; however, neither of us may knowingly resubmit Debit Entries returned due to stop payment unless reinitiation has been separately authorized by the Receiver after the Entry was returned.
    • You may not reinitiate Entries returned as unauthorized or returns due to revocation or termination of an authorization.
    • Entries must in all events be reinitiated no later than 180 days of the Settlement Date of the original Entry.
    • Reinitiated entries must contain the identical content in the following fields; Company Name, Company ID, and Amount and the words “RETRY PYMT” must be included in the Company Entry Description Field. Please note that RETRY PYMNT must be in all upper case letters.
  5. Dishonor of Returned Entries: We may dishonor a returned Entry to the RDFI if the returned Entry was untimely, contained incorrect information, was misrouted, was a duplicate, or, as of March 20, 2015, resulted in an unintended credit to a Receiver related to the reversal process. We will transmit any dishonored return Entry within 5 Business Days of the Settlement Date of the return.
  6. Handling NOCs: We will provide information to you with respect to each Notification of Change (“NOC”) Entry or Corrected NOC Entry received by us relating to Entries transmitted by you.
    • We will provide such information to you by phone, fax, electronic transmission, email (including the Fed ACH Payments Reporter service) or in writing no later than one Business Day after the Business Day of receipt of each NOC or Corrected NOC Entry.
    • You will need to ensure that changes requested by the NOC or Corrected NOC are made within 6 Business Days of your receipt of the NOC information from us or prior to initiating another Entry to the Receiver’s account, whichever is later.
    • We may refuse an NOC containing incorrect or incomplete information.
  7. Prenotes: At your option, you may send prenotification that you intend to initiate an Entry to a particular account in accordance with the procedures set forth in the NACHA Rules or as established by us.
    • Please remember that you may not initiate live dollar Entries until at least 3 Business Days following the Settlement Date of the prenotification (as long as we have not received a return or NOC related to the prenotification by the opening of business on the second Business Day following such Settlement Date). Previously it was 6 Business Days.
    • The prenotification can be returned or result in an NOC. If the prenotification is returned, you need to research the reason for return and make any necessary corrections before transmitting another Entry.
    • If the prenotification results in an NOC, you need to make the required change within 6 Business Days of receipt or prior to initiating another Entry, whichever is earlier, or issue a Refused NOC within 15 days of receipt of the NOC or Corrected NOC.
  8. Your Obligations for Authorizations: The NACHA Rules are getting more stringent with respect to the ACH authorization process and require diligence on your part to obtain authorizations from all Receivers, consumer and corporate, and retain them for two years after they expire. Moreover, Receivers have the right to see evidence of their authorizations upon request. So, you must respond to us within 5 Business Days of our request with an accurate record evidencing the Receiver’s authorization. We have forms for authorizations we will make available upon your request.
  9. SEC Codes: NACHA requires that when a transaction is submitted for processing, the transaction must include an ACH Standard Entry Class (SEC) Code to designate how the transaction was authorized. It’s important to select the correct payment type when creating an ACH profile or submitting a Pass thru file.  The most common ACH SEC Codes are CCD and PPD.  CCD’s are Corporate Credit or Debit transactions and are used to originate transactions to or from Corporate Accounts onlyPPD’s are Prearranged Payment or Deposit transactions and are used to originate transactions to Consumer Accounts only.
  10. Reversals: The ACH module has ACH Reversal capability built into the ACH Batches page. With this feature you may create one or more reversal entries or ACH reversal batches from batches with a status of Processed. When you initiate a reversal entry, it is a new ACH entry that is originated and is the opposite of the original entry. If the original entry was an ACH credit, a reversal debit entry is initiated. If the original entry was an ACH debit, a reversal credit entry is initiated. Likewise, when initiating a reversal of an entire ACH batch previously processed, the reversal batch is a new batch containing the opposite type of entries. Reversal entries and reversal batches, when created by the ACH reversal feature, will always contain the required batch entry description of REVERSAL in the batch header. Please note that REVERSAL must be in all upper case letters. For those utilizing the Pass Thru feature, you must be certain that REVERSAL is contained in the batch entry description.
  11. Company Entry Description: The Company Entry Description should describe the purpose of the entry to the Receiver. The Company Entry Description field is used by the Originator to provide a description of the transaction for the Receiver. For example, Payroll, Dividend, etc. In accordance with Regulation E, most Receiving Banks will display this field on their Bank statement.

Thank you for your attention to these matters. We appreciate your business and are here to assist with any questions.