Compliance with NACHA (National Automated Clearing House Association) rules is crucial for employers and entities involved in money transactions. While delving into every detail may be overwhelming, understanding the key aspects and emerging trends in NACHA compliance is essential.

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Contracts and Authorization Forms

One critical area employers need to focus on is ensuring they have proper contracts with the parties responsible for moving money on their behalf. These contracts, commonly known as origination agreements, must include specific provisions mandated by NACHA’s operating rules. Additionally, employers need to have an ACH (Automated Clearing House) authorization form that grants permission for their payroll vendors or money movers to debit their accounts.

Staying Up-to-Date with Changing Rules

NACHA’s operating rules undergo periodic updates, making it crucial for employers to stay informed about these changes. Payroll companies or vendors may reach out to employers to request the signing of updated ACH authorization forms, especially if there have been account changes. Employers should promptly respond to these requests to ensure timely payments and avoid any unnecessary delays.

The Trending Concept of Nesting

A notable trend in ACH compliance is the concept of nesting, also known as nested third-party senders. Imagine a set of Russian dolls, with each doll nestled within another. Similarly, in the context of ACH transactions, nesting refers to the presence of intermediaries between employers and banks. These intermediaries, referred to as nested third-party senders, act as additional middlemen in the money-moving process.

Implications of Nesting

While nesting may seem complex, it has practical implications for compliance. Many larger banks are reluctant to engage in nested third-party sender relationships due to the added complexity and workload involved.

As a result, efforts are being made to eliminate nesting by reassigning contracts and signing new ACH authorization agreements. Employers may receive requests from their payroll companies to sign updated forms to establish direct authorization and eliminate nested relationships.

Importance of Responding to Requests

Employers should not ignore requests from their payroll companies regarding updated contracts or authorization forms. These requests are essential for streamlining operations, maintaining compliance, and ensuring the timely and efficient movement of funds. Promptly addressing these requests contributes to the smooth functioning of the payment process and strengthens the relationship between employers, payroll companies, and financial institutions.


Navigating NACHA compliance is a crucial responsibility for employers. By understanding the essentials and staying informed about changes and trends, employers can ensure compliance with NACHA’s operating rules.

By maintaining proper contracts and promptly responding to requests, employers contribute to the seamless and secure movement of funds, benefiting both their workforce and business operations.

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Watch our video, NACHA, Bank Secrecy Act, Money Transmitter Law: What Businesses Must Know

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