The Automated Clearing House (ACH) network moves trillions of dollars each year through bank-to-bank transactions such as direct deposits, bill payments, and business transfers. At the center of this network is the National Automated Clearing House Association, or Nacha, an organization that creates and enforces the rules and standards for ACH payments. Nacha rules ensure that ACH payments are fast, reliable, and protected.

This guide covers Nacha rules: what they include, why they matter, and how to follow them effectively as your business grows.

What’s in this article?

• What is Nacha, and why does it matter for ACH payments?
  
• What are the Nacha Operating Rules?
  
• What types of transactions do Nacha rules cover?
  
• How do Nacha rules help prevent fraud and manage risk?
  
• How can businesses implement Nacha compliance effectively?
  
• How often do Nacha rules change, and what should businesses know?
  
• How Stripe Financial Connections can help
  

What is Nacha, and why does it matter for ACH payments?

Nacha is a nonprofit organization that runs the US Automated Clearing House network and acts as the traffic control system for ACH payments. All banks, credit unions, and payment processors that handle ACH payments must follow its standards. In 2024, the ACH network handled 33.6 billion transactions worth $86.2 trillion. Nacha rules ensure that those transactions are appropriately authorized, processed, and secured.

What are the Nacha Operating Rules?

The Nacha Operating Rules define how ACH payments must be initiated, transmitted, and settled. These rules make ACH payments interoperable and safe at scale.

Here are the main guidelines under Nacha:

• Defined roles: Every participant has specific responsibilities. The Originating Depository Financial Institution (ODFI) sends ACH entries, while the Receiving Depository Financial Institution (RDFI) processes incoming ones. Payment processors and third-party service providers are also accountable under the rules.

• Standardized formats: Every ACH transaction must follow Nacha’s precise file layout, which leads to consistent data across the network. Incorrect or incomplete files can be rejected and cause delays or potential noncompliance.

• Authorization: Each ACH debit must be properly authorized by the account holder. That approval can be written, electronic, or verbal, but it has to meet Nacha’s standards and define the amount, timing, and purpose.

• Data security: Bank account information must be encrypted in storage and in transit, and only accessible to authorized personnel.

• Transparency and communication: Customers must know whether they’re authorizing a one-time or recurring debit. Businesses must give advance notice, typically at least 7–⁠10 days, before any change in timing or amount for recurring debits.

• Cancellation and revocation: Customers can revoke authorization at any time. Once they do, a business is required to stop debiting the customer’s account before the next scheduled payment.

• Dispute rights: The customer must report an unauthorized or incorrect debit within 60 days, and their bank must credit the amount while investigating.

• Return rate thresholds: Nacha monitors all originators (i.e., businesses, individuals, and other entities that initiate ACH transactions) for excessive returns, especially unauthorized ones. If 0.5% or more of an originator’s debits are disputed, it will trigger a compliance review and potentially enforcement action.

• Record retention: A business must keep proof of a customer’s authorization for at least two years after their final payment. The business will need it if a dispute arises.

Ignoring Nacha’s rules can lead to serious consequences, such as fines of up to $500,000 per month or suspension from the ACH network.

What types of transactions do Nacha rules cover?

Nacha rules apply to almost every kind of payment that moves through the ACH network. They govern how funds are sent, received, and recorded across the system.

Here’s what they cover:

• Payroll and direct deposits: Employers use ACH credits to send paychecks, and government agencies use them for benefits such as social security.

• Customer payments: ACH debits are used for recurring bills, such as utilities, insurance, and rent, as well as one-time payments made online or over the phone.

• Business-to-business (B2B) payments: Companies often pay vendors and suppliers through ACH credits instead of using paper checks.

• Person-to-person (P2P) transfers: Bank-based apps and services use ACH transfers to send money between individuals.

• Government and international transfers: Federal and state payments, as well as certain cross-border transfers, run through ACH formats that follow Nacha’s International ACH Transaction (IAT) rules.

How do Nacha rules help prevent fraud and manage risk?

Nacha’s rules are designed to make ACH payments safer by catching risks before they cause damage. The organization uses a number of tactics to increase transaction security.

Security measures include:

• Account verification for online payments: A business collecting bank account details online must verify that the account is valid and that it belongs to the customer before processing the first payment. Nacha allows several verification methods, such as account validation tools, zero-dollar test transactions, and microdeposits, to stop fraud at the source.

• Return rate monitoring: Nacha tracks return rates for all originators. Unauthorized debits can’t exceed 0.5% of total transactions, and high return rates trigger an investigation, since they signal potential fraud or poor authorization practices.

• Egregious violation enforcement: Nacha can classify severe misconduct, such as having over 500 fraudulent entries or more than $500,000 in improper transactions, as “egregious.” That classification brings steep fines and possible suspension from the ACH network.

• Data security controls: Nacha mandates that all sensitive banking data be stored and transmitted securely using methods such as encryption, access limits, and audit trails. This reduces the risk of data breaches or misuse.

• Education and certification: Nacha promotes security awareness and certifies compliant third-party providers to help businesses identify trustworthy partners.

How can businesses implement Nacha compliance effectively?

To ensure you’re following Nacha’s rules, make compliance part of how your business operates every day.

Use these processes:

• Educate your team: Train finance, operations, and support teams on ACH fundamentals such as how authorizations work, how to handle cancellations, and what security standards apply. Make compliance part of onboarding and ongoing training.

• Use reliable technology: Work with payment partners that build Nacha compliance into their systems. Stripe Payments, for example, automatically handles file formatting, authorization collection, encryption, and account verification, so compliance is built into the workflow.

• Keep documentation organized: Store ACH authorizations and proof of customer consent for at least two years. Maintain easy access to records in case of disputes or audits.

• Monitor performance: Track your return rates and investigate any spikes in unauthorized or administrative returns. Quick detection prevents penalties and signals strong internal control.

• Partner with your bank: Your bank’s ACH department can review your procedures, flag potential issues, and help you prepare for any rule updates or compliance reviews.

• Stay current: Nacha updates its rules every year. Assign someone to track changes through Nacha’s bulletins, webinars, or your bank’s alerts. Then, adjust your internal processes as needed.

How often do Nacha rules change, and what should businesses know?

Nacha updates its Operating Rules every year to keep the ACH network current with new regulations and risks. Some updates are small, such as adjusting formatting requirements and clarifying language. Others reshape how payments work, such as when Same Day ACH was introduced or when account validation became mandatory for online payments.

Each change goes through a review and comment process, with clearly announced effective dates so participants have time to adapt. The updates typically roll out in spring or fall, and Nacha publishes summaries and FAQs to explain what’s changing and why. Businesses should stay up-to-date with these summaries and regularly check to ensure they’re following the latest practices.

How Stripe Financial Connections can help

Stripe Financial Connections is a set of application programming interfaces (APIs) that allows you to securely connect to your customers’ bank accounts and retrieve their financial data, enabling you to build innovative financial products and services.

Financial Connections can help you:

• Simplify onboarding: Offer a seamless, instant bank account verification process that does not require manual identity and account verification.

• Access rich financial data: Retrieve comprehensive information about your customers’ bank accounts, including balances, transactions, and account details.

• Automate recurring payments: Enable your customers to securely link their bank accounts for recurring payments, improving payment success rates.

• Enhance risk management: Analyze customers’ financial data to make more informed decisions about credit, lending, and other financial products.

• Comply with regulations: Financial Connections helps you meet Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements.

• Innovate with confidence: Build new financial products and services on top of the secure, reliable Financial Connections infrastructure.

Learn more about Financial Connections, or get started today.