Magazine article American Banker

Nacha Adopts Payment Code for ACH Credits

Magazine article American Banker

Nacha Adopts Payment Code for ACH Credits

Article excerpt

Nacha, the electronic payments association, has started using a security feature developed by The Clearing House Payments Co. LLC that makes it safer for companies to send automated clearing house payments.

The Clearing House, of New York, said Nacha is the 30th organization to agree to use a universal payment identification code (UPIC) in place of an account number, thus keeping that sensitive information private.

The Clearing House markets the payment code through its ACH unit, Electronic Payments Network.

Nacha oversees the rules and development of ACH payment formats. Michael Herd, a spokesman for the Herndon, Va., organization, says it uses the ACH network to pay its employees, to pay some suppliers, to collect dues from members, and to accept payments for conferences and publications.

But in order to accept ACH payments, "we have to give them our account number," Mr. Herd said, and "it's always in the back of your mind" that the information could be used to make fraudulent withdrawals.

In fact, in 2002 someone used Nacha's bank account information, which it printed on its conference brochures, to buy several computers from a major electronics manufacturer. Mr. Herd said his group now uses debit blocks and other tools to prevent unauthorized people from debiting its accounts.

The UPIC provides an additional level of security because it functions as a substitute account number. Customers route ACH payments to a UPIC number rather than to a standard bank account number; when the bank receives the payment it is sent to the recipient's account.

As a result, The Clearing House says, the UPIC can be safely published on a user's Web site or printed on its invoices. UPICs work only for pushing ACH credits to the user, and cannot be used to debit an account or to forge a check.

Rossana Salaris, a senior vice president at The Clearing House, said interest in UPICs has picked up sharply this year. …

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