Effective March 17, 2023: Micro-Entries (Phase 2)

Originators of Micro-Entries will be required to use commercially reasonable fraud detection, including the monitoring of Micro-Entry forward and return volumes.

• The use of commercially reasonable fraud detection is intended to minimize the incidence of fraud schemes that make use of Micro-Entries
• Monitoring forward and return volumes, at a minimum, establishes a baseline of normal activity
• An Originator would not be required to perform an entry-by-entry review

Phase 1 of the Micro-Entries Rule was implemented on September 16, 2022:

During phase 1, the term Micro-Entry was defined, and Originators were required to use the standard Company Entry Description and follow other origination practices.

This Rule defined and standardized practices and formatting of Micro-Entries, which are used by some ACH Originators as a method of account validation.

This Rule:

• Defined “Micro-Entries” as ACH credits of less than $1.00 and any offsetting ACH debits, used for the purpose of verifying a Receiver’s account;
• Standardized the Company Entry Description and Company Name requirements for Micro-Entries;
• Established other Micro-Entry origination practices;
• Applied risk management requirements to the origination of Micro-Entries.

In the Company Entry Description field, the Rule will require the use of ACCTVERIFY.

 Originator Obligations

As an ACH Originator with the Bank, there is a contractual responsibility to follow TBK Bank’s Treasury Management Master Agreement and Nacha Rules.

The Nacha Operating Rules set forth what types of transactions can process through the ACH Network. Standard Entry Class (SEC) Codes identify what type of an ACH Entry is being processed.  Failure to comply with the Nacha Rules can lead to termination of services and/or fines imposed by Nacha.

Standard Entry Class Codes

A Standard Entry Class (SEC) Code is a three-alpha character code that identifies an ACH Entry. Originators who initiate entries into the ACH Network use the SEC Codes to indicate the type of payment, such as debit or credit to a consumer or corporate account.

Selecting which code to use depends on the category of payment, type of the account the Receiver holds, the parties involved, and the process the Originator used to obtain an authorization from the Receiver.

Commercial Center supports 5 types of ACH Entries with the following SEC Codes:

1. CCD Corporate Credit or Debit Entry
2. CTX Corporate Trade Exchange
3. PPD Prearranged Payment and Deposit Entry Direct Deposit
4. TEL Telephone – Initiated Entry
5. WEB Internet – Initiated

Team Members from TBK Bank Treasury Management may contact an ACH company periodically to:

• Provide notification of incorrect SEC Code usage.
• Inform a company of Nacha Rules violations and the need for procedural changes.
• Verify a company’s internal ACH procedures and policies.

Dual Control is a layer of security requiring two Users to complete an ACH transaction. The first User is responsible for creating or loading an ACH file, while the second person reviews and approves the file.

Benefits of dual control:

• Reduce the risk of fraud by requiring that two Users are involved in any transaction.
• Decrease errors by having a second review of ACH files before they are submitted.

Secure Browser provides enhanced security by allowing Users to access Commercial and Small Business Center through an icon installed on their desktop. This feature helps prevent malware by limiting access to other websites while using online banking.

Administrator Controls can minimize the amount of funds at risk by setting ACH limits on individual Users and accounts.

ACH Payment Audit provides Administrators the authority to review all ACH Entries created for their company.