NACHA Rule Change

June 2008: Company Name Identification Rule

Effective June 20, 2008: Company Name Identification Rule

The National Automated Clearing House voting membership approved the Company Name Identification Rule that will go into effect June 20, 2008. The intention is to reduce the number of unrecognized entries requiring investigation on the part of receiving financial institutions and NACHA anticipates that the Rule will improve the quality of the ACH network.

Overview of Company Name Identification Rule
The Company Name is, at maximum, a 16-character alphameric field within the ACH Company Batch header. The ACH Company Batch header accompanies and travels with each detail entry to the destination financial institution.

The new Rule will amend the NACHA Operating Rules ("Rules") to more clearly identify the source of an ACH transaction in the Company Name field. Specifically, the Rule clarifies how an Originator must identify itself within the originating ACH batch header. In short, the Originator in the Company Name field is the organization or entity that is known to and recognized by the Receiver of the entry.

Expanded Description and Requirements of Originating Company Name Field
The Rule expands the description of the Originating Company Name Field on the ACH file batch header to require that it contain a name by which the Originator of a transaction is known and readily recognized by the Receiver of the entry. This name could, for example, be the Originator's DBA name or "trading as" name. This name field, for example, should not include phone numbers. The inclusion of a readily recognizable Originator name enables Receivers of ACH entries to identify transactions as they appear on their periodic statements, and improves the customer service.

This new Rule also incorporates specific content requirements for the Company Name field when transactions are formulated into a file by one entity on behalf of another entity. For example, when a third-party sender, such as a payroll vendor, is disbursing funds on behalf of an employer, the employer should be identified in the Company Name Field. Another example is when a technology provider is collecting and originating ACH debits on behalf of an entity. The Company Name Field should reflect the entity that is in receipt of the funds as a result of the ACH debit processing and not the technology provider doing the back-office data collection.

The Company Name field definitions are clarified in some instances for specific Standard Entry Class (SEC) codes. For SEC codes ARC and BOC, the Company Name field must identify the payee of the source document (check) or the payee name indicated on the invoice or bill sent to the Receiver. For the SEC code POP, the Company Name field contains the merchant with whom the Receiver initiated the transaction.

Review your ACH Origination Batch Headers and Company Name Field
All ACH originating entities are encouraged to review what is currently being used in existing ACH origination batch headers in the Company Name field and determine whether the Company Names used are misleading or could appear to be veiled to Receivers, disguising who they are doing business with or who has their relationship. Each originating entity needs to determine whether their Company Name field contains proper identification and ensure that adherence to the Rule is part of establishing new ACH origination batch headers.

Should you wish to review your PNC ACH origination batch headers with PNC, contact your PNC Treasury Management representative.

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