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  • 1.  Offline entry by gift processors and converting data for direct debit details for monthly giving

    Posted 05-22-2023 10:47 AM

    TL;DR: Has anyone dealt with Nacha's supposed requirements that only customers/donors themselves can set up direct debit transactions?  What does that mean for offline entry by gift processors or the migration of direct debit details between systems?

    I have a client switching to Engaging Networks for their digital marketing platform and they'll be using Stripe.  They're telling us we can't migrate the direct debit details from the current system nor have gift processors enter them now or ever because they say that Nacha no longer allows it:  Nacha Bank Account Validation Rule : Stripe: Help & Support

    Stripe remove preview
    Nacha Bank Account Validation Rule : Stripe: Help & Support
    Nacha is the governing body that oversees the ACH network that processes payments from a US bank account. Non-compliance with Nacha's operating rules could result in penalties and, in some cases, account termination. Nacha will begin enforcing the WEB Debit Account Validation Rule starting March 19, 2022.
    View this on Stripe >


    I have all kinds of thoughts and questions on this, but I'll hold my tongue right now and just ask if anyone has experienced this with EN, Stripe, or otherwise?  Thanks.



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    Bill Connors, CFRE
    Independent Consultant on Raiser's Edge
    bill@billconnors.com
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  • 2.  RE: Offline entry by gift processors and converting data for direct debit details for monthly giving

    Posted 05-22-2023 04:45 PM

    I don't see how these rules apply to need validation.  If they are just being transferred over and are already existing accounts, it doesn't seem to need any validation.  These accounts, while they may be new to the processor, have a documented history with your client.  I would think that would allow them to just convert them over.

    From the NACHA rules page linked on the Stripe page, this part seemed to make sense.

    If a WEB debit customer authorizes use of an account number that has been previously used successfully for WEB debits, must an Originator do additional validation of that account number?

    No. Use of an account number with a proven history of prior successful payments is a sufficient means for validation for use of the account with a new WEB authorization.

    I'm not familiar with Stripe or these processes, but if that were the case, no one would ever be able to move over direct debits if changing processors.  It makes sense that new accounts would need to go through validation, but this does not seem to apply to the rules as written.



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    Dariel Dixon
    Chautauqua Institution
    ddixon@chq.org
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  • 3.  RE: Offline entry by gift processors and converting data for direct debit details for monthly giving

    Posted 05-22-2023 05:38 PM
    Hi Bill, 

    First, NACHA most certainly allows for other people to key in ACH details besides the customer, and has a mechanism for doing so, called a Standing Authorization. Such an authorization can be obtained either verbally or in writing, including through online authorization. It doesn't matter to NACHA whether you use the same payment processor for future transactions or not. NACHA even sells forms for collecting standing auths. 

    The NACHA rule EN is referencing in Stripe's docs is that businesses using ACH have to have a "commercially reasonable fraudulent transaction detection system" which explicitly includes account validation. Account validation simply means a system of validating that the account number and routing number describe real accounts.

    NACHA explicitly says that "the Originator must use a commercially reasonable means to determine that the account number to be used for the WEB debit is for a valid account." It identifies the two methods that Stripe put in its help document, but also goes on to say (emphasis addded) that:

    Other options [...]may also provide a commercially reasonable means to test an account for ACH use. As an example, use of a third-party that provides scoring information on the account status might be determined by some Originators to be a commercially reasonable option. Similarly, for others, an account with a proven history of prior successful payments may prove a sufficient means for validation...

    ---
    Point is that your org has a standing authorization to bill, and a commercially reasonable approach to rely on the existing information, and who keys it in is irrelevant. I hope this helps. I know the EN guys pretty well - happy to jump on a call if you think it will help.


    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:






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