Micro-Entries (Phase 2)

Effective Date - March 17, 2023

The Micro-Entry Rule defines and standardizes practice and formatting of Micro-Entries, which are used by some ACH Originators as a method of account validation.

Phase 2 of this Rule will be effective March 17, 2023

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

Details

This Rule defines and standardizes practice and formatting of Micro-Entries, which are used by some ACH Originators as a method of account validation.

Phase 2 of this Rule will be effective March 17, 2023 

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

Technical

In Phase 2 of the Rule risk management requirements will be applied to Originators.

An Originator of Micro-Entries must conduct commercially reasonable fraud detection on its use of Micro-Entries, including by monitoring of forward and return volumes of Micro-Entries

• 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

Impact

Benefits

For ODFIs and their Originators

• Reduces the potential of originating fraudulently-initiated Micro-Entries

For the ACH Network as a whole

• Improve the quality of this type of Entry in the ACH Network

Impacts

Originators

Originators will need to conduct commercially reasonable fraud detection for Micro-Entries (Phase 2)

• Monitoring forward and return volumes of Micro-Entries
• Other desired velocity checks or anomaly detection

 

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