What is the Micro-Entries Rule?
On September 16, 2022, a new Nacha rule was introduced in an effort to standardize Micro-Entry formatting and practices. Micro-Entries are defined as ACH credits of less than $1.00, and any offsetting debits, and used for account validation purposes. Credit amounts must be equal to, or greater than, debit amounts, and must be transmitted to settle at the same time. The first phase of the Micro-Entry rule meant ACH Originators must use “ACCTVERIFY” in the company entry description field, Company Name must be easily recognized by the receiver.
This 2nd phase of the rule requires originators of Micro-Entries to use commercially reasonable fraud detection, including the monitoring of Micro-Entry forward and return volumes.
Details
Originators of Micro-Entries are required to use commercially reasonable fraud detection, including the monitoring of Micro-Entry forward and return volumes. This phase of the Rule became effective March 17, 2023.
Purpose
In Phase 2 of the rule risk management requirements are applied to Originators. The use of commercially reasonable fraud detection is intended to minimize the incidence of fraud schemes that make use of Micro-Entries - Monitor forward and return volumes, at a minimum, establishes a baseline of normal activity
- An originator is not required to perform an entry-by-entry review
Benefits - Reduces the potential of originating fraudulently-initiated Micro-Entries for the ACH Network
- Improves the quality of this type of entry in the ACH Network
Expectation
ACH Originators, who must apply commercially reasonable fraud detection standards (which includes monitoring of forward and return volumes) to Micro-Entries must use reasonable methods to recognize and prevent suspicious activity. This requirement is different from the WEB Debit account validation requirement in that the account number for a Micro-Entry does not need to be individually validated and originators are not required to perform an entry-by-entry review. At a minimum, originators should understand forward and return volumes to establish a baseline of normal Micro-Entry activity. Velocity monitoring, recognizing the number of times an account number is used (in various formats), in addition to the number of transactions, can also be an important tool in the originator’s fraud monitoring efforts.
Detailed information can be found by visiting NACHA.org. If you have any questions, please contact us at (844) 261-2548.
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