March 17, 2021
Doing beats stewing
~ Arnold Glasow
Forget the rear-view mirror, I want a mirror that lets me prepare for the upcoming traffic. NACHA warned us in 2018 that March 19, 2021 would be upon us sooner than expected and here we are, ladies and gentlemen . . . gooo time! NACHA Rule – – Businesses that originate online ACH debits must include account validation as part of a commercially reasonable system for fraud detection. Since NACHA, the governing body of electronic payments, represents over 10,000 financial institutions the effect will be far-reaching.
This rule change is designed for businesses who debit funds via ACH for online orders so that merchants and their online customers are better protected from fraudulent ACH transactions. Account validation is a process that verifies that the account submitted for the ACH purchase of goods/services is valid and belongs to the customer. This rule does not impact credit or debit card payments, just ACH payments.
Shawn Princell, CEO of RIBBIT and advisor to the NACHA board, says, the new rule forces a disruption to existing processes which provides a great opportunity to improve the user experience. Account validation shouldn’t be implemented just for compliance reasons. Many solutions provide value by mitigating risk such as: NSF/unauthorized, account takeover, and consumer affordability of payments. One flavor rarely fits every customer so make sure when you implement a solution that you have options.
As fraud increased around WEB based ACH payments, NACHA realized that many originators were not using a “commercially reasonable fraudulent transaction detection system”. As a protection against fraudulent payments, NACHA decided to regulate the originators at the source of the payment trail. Early detection before ACH debits are sent to the banks saves posting errors to consumer’s bank accounts. It’s a win-win for everyone involved.
Although the rule goes into effect in March 2021, NACHA has announced they will not be enforcing the rule until 2022. This provides businesses with additional time to find the right partners to secure compliance and improve their payment ecosystem. RIBBIT has engineered an encompassing risk formula that combines bank and payment intelligence with thousands of consumer attributes painting a broader and fairer picture of a consumer’s financial footprint.
Noncompliance of the new NACHA rule results in warnings followed by fines up to $500K per month until a resolution is made, and worst-case scenario is suspension of originating entries. Bottom line make it happen!
OXFORD, Ohio, April 12, 2022 /PRNewswire/ — Today, RIBBIT Inc. announced the appointment of Greg Rable to the RIBBIT Board of Directors. As the former Founder/CEO of FactorTrust, since acquired by TransUnion in 2017, Greg brings over 25 years of management and strategy experience, combined with a history of building successful fintech and alternative data businesses for the consumer finance space. In his role, Mr. Rable is helping guide the RIBBIT leadership team and promote the growth of bank behavior data as a powerful and necessary predictive data solution.
Financial inclusion matters not only because it promotes growth, but because it helps ensure prosperity ~ Sri Mulyani Indrawati
How arbitrary are the words ‘financial inclusion’; who’s in, who’s out and why is it so unfair? If a consumer is ‘in,’ there are financial opportunities for building a better life. If a person is ‘out,’ good luck with climbing out of a deep money pit. Today’s financial institutions think they are building a more inclusive process. However, many are still using information reflective of historical bias so if it didn’t work then, it ‘ain’t gonna work now’.
When a man gives you a rose, what you see may not be what he intends~ Patrick Rothfuss
Assessing information is the foundation of most of life’s important decisions. Mistakes are made when the data is unavailable, unclear, inaccurate, insufficient, immaterial, or unjust. How many people have suffered throughout history by poor decision-making? Like it or not, today’s world is data driven, hopefully an information mecca for making insightful, educated, proven and unbiased decisions. However, data is just that, information on a page, it becomes meaningful only when it is wisely analyzed and interpreted.