Expanded requirements for the protection of electronically stored account information will go into effect next year in two phases, under changes to the ACH Network operating rules administered by Nacha.
The new rules are designed to improve the network's risk management processes by explicitly extending certain security requirements to large, non-financial institution originators, Third-Party Service Providers (TPSPs) and Third-Party Senders (TPSs). The rules will require the encryption of electronically stored deposit account information. The new rules take effect in two phases beginning June 30, 2020.
Broader Protection for Account Information
The change supplements existing account information security requirements for large-volume authorizers and third-parties. Nacha's current Security Framework calls for financial institutions to protect deposit account information by rendering it unreadable when it is stored electronically but does not explicitly include large, non-financial institution authorizers, Third-Party Service Providers (TPSPs), or Third-Party Senders (TPSs).
The plan is to increase data protection requirements by making this rule a requirement for all parties in two phases:
- Phase 1 – June 30, 2020, for Originators and Third-Parties with ACH volume greater than 6 million in 2019
- Phase 2 – June 30, 2021, for Originators and Third-Parties with ACH volume greater than 2 million in 2020
Nacha Operating rules are developed by the Virginia-based organization's Rules and Operations Committee, which includes Nacha direct members and representatives of community banks, credit unions, ACH operators, the U.S. Treasury Department and the Federal Reserve Board of Governors, as well as some representatives of the ACH Network end users, including payroll processors. After input from members of an ACH software and technical group, proposed rules are subject to a period of open comment before they go before Nacha's voting membership for approval. The implementation process for rules that are approved includes a period of education and public information before the rules go into effect for the approximately 10,000 financial institutions across the United States that make up the ACH Network.
More than 27 billion electronic payments, valued at more than $51 trillion, passed through the network in 2018. The network has continued to experience impressive growth in 2019. The organization reported first-quarter growth of 5.8% over the same period last year, along with a new record in February with the number of ACH transactions per day exceeding 100 million.
Cachet ACH Payroll Processing
At Cachet Financial Services, we provide safe and secure ACH payroll services for more than 100,000 employer across the country, processing more than $150 billion in ACH transactions annually.
Our clients have the added benefit of security layers that include multiple, secure back-up processes, a comprehensive system of independent, third-party audits, including annual audit for SSAE 18 SOC 1 certification, and a $50 million crime bond.
Our clients also have access to a full range of employee compensation services through our sister companies: Payroll Tax Management, Time Rack, and SBS Payroll. Call or click on the link below to learn more about our secure, reliable and cost-effective ACH payroll processing options.