Collect ACH authorization from customers
In addition to verifying their bank account information, you must also get the customer’s authorization to deduct funds from their account. For details on the rules that the National Automated Clearinghouse Association (“NACHA”) requires, visit their site.
In accordance with the NACHA Rules, we do not allow you to process ACH payments unless they have been authorized by the owner of the bank account. You are solely responsible for verifying the identity of your customers, determining their eligibility to purchase your products and services, and acquiring appropriate authorization to initiate ACH debits from their account. As part of the authorization process, we recommend collecting and storing digitally or in paper form for two years the following information from your customers (please note this is not an exhaustive list by any means):
|Clear, legible consent||Your authorization page must plainly state that you are obtaining consent to debit your customer’s bank account for a specific transaction or set of recurring transactions.
One way to achieve this is for the authorization form to have express language such as:
I authorize (your company) to electronically debit my account and, if necessary, electronically credit my account to correct erroneous debits.
|Transaction specific details||Date, time of transaction, debiting account info, item purchased, IP address (and corresponding details such as country), frequency if it is a recurring payment|
|Client/account information||Name on account/shipping information, any other controls in place to verify the identity of the customer|
|Any further transaction info||Prior transaction history, particularly for recurring payments (e.g. IP information, other logins, other purchases)|
|Receipt of transaction||Prompt your customer to print the authorization and retain a hard copy or electronic copy, and send an e-mail receipt of the processed transaction to your customer.|
|Process for revocation||Your authorization flow must provide your customer with a method to revoke authorization by notifying you, so be sure to include a telephone number and/or e-mail address where your customer can contact you. You should display this information on the authorization page and receipt/confirmation sent to the customer after the transaction has been completed.|
Obtaining the proper authorization for your ACH transaction is the most important step you can take to ensure compliance with the network rules and protect yourself against disputes, return fees, and reversed transactions.