ACH Origination Best Practices

Tips for Managing Risk and Implementing Best Practices in ACH Origination.

The world of ACH Origination is complex – navigating regulatory compliance, managing risk, clearing the ongoing technical and operational hurdles, tracking and reconciling transactions, and then of course – keeping customers happy. It can be a lot.

But even if your credit union only originates consumer entries such as transfers and loans, it’s still exposed to the same risks as credit unions and other FIs that offer traditional business origination services such as payroll and B2B payments. Which is to say, offering less doesn’t mean doing less.

The good news is that the same risk management techniques used to mitigate business payment origination can also be considered for consumer payment services. So, whether you offer one, or both, the same best practices apply. Here are a few to implement at your credit union:

  • Using Know Your Customer (KYC) and due diligence during onboarding
  • Implementing processing limits
  • Utilizing external account validation
  • Using multi-factor authentication for establishing new payment recipients and contact changes
  • Keeping up with transaction monitoring
  • Conducting accountholder education

As a bonus, here are two risks unique to originating consumer-to-consumer debits and credits that you should be aware of:

  • Your credit union’s policy should limit consumers to only debiting external accounts that they demonstrate ownership of.
  • Your credit union is exposed to return risk of consumer debits for at least 60 days.

Got more questions about best practices for ACH Origination? Don’t see one you thought we should’ve had on our list? Reach out and let us know.

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