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What Is an ACH Debit Block?

A number of different new payment methods are now available, allowing customers and businesses to choose from a variety of options to find what suits them best. From buy now pay later to digital services such as eWallets, it’s never been easier to make online payments. One such method is known as an ACH payment, named because it is made through the Automated Clearing House network.

As with any payment method, there is always the possibility of fraud. Even though ACH payments are highly secure, it’s important to take measures to ensure that you protect your data and funds. That’s where ACH debit blocks come in. These are a form of fraud protection that allow you to block any ACH debits and credits, stopping funds from leaving your account. Keep reading to find out what an ACH credit block is and why it’s important.

What is an ACH payment?

As previously mentioned, ACH payments are made through an online network known as the Automatic Clearing House network. These payments are usually made in the form of eChecks, which are a digital version of traditional paper checks.

Through this process, customers must provide their payment information along with authorization. The payee must then use an ACH payment processing software to input the details and initiate the transaction. Within around 3 to 5 business days, funds will be transferred directly from the customer’s account to the payee’s account.

ACH debit block definition

Now that you understand what an ACH payment is, what is the ACH debit block definition? Put simply, this is a fraud management tool that allows you to keep your funds safe and avoid unwanted transactions. An ACH block prevents all ACH debits and credits, meaning that no transactions of this kind will be authorized from your account.

In order to do this, you should contact your bank account to organize an ACH debit block agreement, who will be able to set this up for you quickly and easily. If you believe you are at risk of fraudulent activity, then this is a good idea as a preventative measure.

What is an ACH filter?

An alternative to a full ACH debit block is an ACH filter. This blocks most ACH transactions from your account, but allows you to add a list of criteria for the transactions that are permitted. For example, you can add a list of payees to authorize payments to. This gives you a greater degree of control over your transactions, rather than simply blocking everything.

You can also set up text or email alerts with an ACH filter, so that you know when funds have been taken out of your account. This allows you to keep track of your activity and quickly spot any transactions that you think may be fraudulent.

What is a hard hold?

As an alternative to organizing an ACH debit block agreement, you can also arrange a hard hold for your bank account. This is for more serious cases of fraud where you believe that your bank account has been breached. This blocks all payments from the account and is usually a step on the way to actually closing your account.

It’s not necessarily a good idea to immediately close your account when you believe you have been a victim of fraud. A hard hold is a much better option as it protects you from all unwanted payments. If you simply close the account, you may be subject to overdraft fees if ACH debit payments are taken from the closed account.

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GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.

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