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BreadcrumbResourcesACH: A guide to Direct Debit in the US

Submitting ACH payment requests to the bank

Once you have access to the scheme and authorization from your customer, how do you actually take payment via ACH debit?

In order to take an ACH debit payment, you’ll need to submit a payment request to your bank. Before you begin, you’ll need an origination agreement in place with an ACH network member bank (i.e. an ODFI).

Submitting prenotifications

If this is the first time you’re requesting payment from an account, it can be worth submitting a prenotification first. A prenotification (or prenote) is effectively a payment request for a zero-dollar amount, enabling you to check the provided bank details are correct.

The main advantages of submitting prenotifications are:

  • Avoiding failure fees - If the bank details are incorrect, the merchant can avoid any fees that would have been incurred had they submitted a payment request

  • Catching fraud early - If the customer has provided fraudulent bank details, the bank has the opportunity to detect this

  • Protecting reputation - Businesses with high volumes of payment failures can be denied access to the ACH scheme (see more here)

Prenotifications are submitted in the same format as regular payment requests, and can be submitted together with payment requests or separately.

The submission process for ACH payment requests

To submit payment requests to the ACH network, you need to securely upload an ACH file to your bank, which will then process it and send its own version of the file to the ACH network.

Nacha requires all ACH files follow a specific format, which it outlines in its official rules. As noted earlier, the ACH file format is complex and requires a certain level of technical expertise to generate. However, businesses can avoid the hassle of handling this internally by accessing the ACH scheme indirectly via a TPPP, which will handle it instead.

If an ACH payment request is successful, your account will be credited. However, if a payment fails, your bank will send a message detailing the failure - this is called a return.

Making changes to ACH payment requests

It may sometimes be necessary to make changes to payments that you’ve already submitted, such as correcting small errors that are not significant enough to trigger the payment request to fail. For example, using the name Bobby Smith for a customer whose account is in the name Robert Smith. In cases like these, the bank will still process the payment, but will also send you a Notification of Change, warning you to update the customer details.

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