DALLAS, April 29, 2019 /PRNewswire/ — GIACT Systems®, the leader in helping companies positively identify and authenticate customers, today announced a new white paper, Securing Faster Payments: Modernizing Account Validation, detailing account validation best practices related to ACH payments and NACHA’s upcoming change to its rule requiring that WEB debits be screened for fraud. The paper analyzes NACHA’s rule amendment (Article Two, Subsection 126.96.36.199, “Additional ODFI Warranties for Debit WEB Entries”), which requires ACH Originators of WEB debits to incorporate account validation as part of their “commercially reasonable fraudulent transaction detection system” to screen for fraud.
“Given the growing popularity and wide variety of use cases for WEB debits, NACHA’s rule change will have broad implications for industries across the payments ecosystem,” said Meg Nicholls, Chief Compliance Officer of GIACT.
In 2018 alone, according to NACHA, the ACH Network moved 23 billion payments, totaling $51 trillion. While new account validation protocols will help companies better protect themselves against fraud, it will also mean implementing new account validation measures for those billions of payments. GIACT’s paper evaluates several account validation solutions, including prenotes, trial deposits and reliance on account aggregators to validate accounts and account ownership. The paper also explores how the use of traditional and non-tradition data sources can enhance account validation.
“Many of the account validation practices in place fall short,” said David Barnhardt, EVP of Product at GIACT. “To sufficiently prevent unauthorized and administrative returns, companies need to adopt robust account verification protections that go beyond simple confirmation of account status and instead examine a wide variety of data points that more accurately determine both a customer’s identity and an account’s validity.”
The white paper was developed with input from Keith Barnett, Partner at Troutman Sanders, and Marsha Jones, President of TPPPA.