September 1, 2016
The National Automated Clearing House Association ("NACHA") is the organization responsible for establishing rules, regulations, and (in certain cases) pricing associated with the processing of ACH transactions and returns. Effective October 1, 2016, NACHA will be adding fees associated with ACH items that are returned unpaid from the financial institution due to items being intentionally dishonored by the consumer, either because of poor customer service, misrepresentations of the merchant or their website, or a debit authorization that was improperly obtained. These types of instances are known as "Unauthorized Returns".
NACHA has added this fee so as to encourage Originators (merchants) to carefully manage their sales, service, and refund policies to be more customer-focused and lessen these types of returns within the ACH system. These fees are being passed on to all ACH processors by their originating depository financial institutions ("ODFI's") through which third party processors submit ACH transactions. In order to cover the substantial cost of these returns, we will be adjusting our unauthorized returns pricing to reflect the NACHA price increase.
Effective October 1, 2016, fees for unauthorized returns (which includes but is not limited to R07, R10, and R29 as examples) will be $20.00 per item. Fees for other returns will NOT change, such as items returned by reason of Insufficient Funds, Account Frozen, or Account Closed to name a few examples.
We'd also like to take this moment to provide a brief reminder of other NACHA changes that have gone into effect over the last 12 months:
All originators (merchants) currently operate under guidance of several NACHA established return rate thresholds. Return rates exceeding these thresholds require remediation action plans by processors and merchants to immediately cause a lowering within the 30 days subsequent to a rolling 60 day breach of any of these thresholds. As a reminder:
- The Overall Return rate threshold (all debits return reasons) is currently established as 15% based on the number of debits returned versus the total number of debits submitted.
- The Administrative Return rate threshold (R02, R03, R04) is currently established as 3% based against total debits submitted.
- The Unauthorized Return rate threshold (R05, R07, R10, R29, R51) is currently established as 0.5% based against total debits submitted.
We thank you for your business and look forward to continuing to provide our services to you and your customers. If you have any questions regarding these changes, and whether they apply to you, please contact SPS Customer Service at (858) 549-9001 and select option 5.