In October 2020, Alkami acquired ACH Alert, a treasury management solution enabling banks and credit unions to make Wire and ACH transactions safer and dispute resolution completely automated through Check & ACH Positive Pay, Wire & ACH Origination Verification, EDI Banking Translation, and ACH Return & ACH NOC. The payments fraud landscape has evolved drastically since April 2019 therefore the Alkami team refreshed the original article found here.
The volume of payments via the automated clearing house (ACH) Network is at an all-time high with 2023 marking the 11th consecutive year in which ACH Network value has increased by more than $1 trillion. Nacha credits the massive growth to both an increase in Same Day ACH, which grew 22% in volume and 41% in value and a rise in business-to-business payments, which rose 10%.
With the modern ACH Network thriving, banks and credit unions receiving ACH transactions must offer a solution to deliver translated EDI banking information including 820 (payment orders), 835 (healthcare payments), PPD+ SSA (Social Security Administration), and Free Form addenda contained within incoming commercial ACH transactions, ACH Notifications of Change (ACH NOCs), and ACH return information to ACH originators.
This increase among B2B payments underscores the demand for ACH among commercial accounts; therefore, financial institutions should offer a service that allows businesses to easily exchange payments and associated remittance information with other businesses, as they often initiate regular payments between one another. Making this even more important is the fact that check fraud is at an all-time high, and businesses should continue to migrate away from checks to electronic payments.
Businesses often fall victim to check scams because checks are often used for high-dollar B2B transactions like vendor payments. In fact, in 2022, 63% of organizations experienced check fraud, according to the 2023 AFP Payments Fraud and Control Survey. Same-day ACH is a viable alternative to B2B check payments to reduce fraud and increase treasury management revenue, but the process must be completely digitized.
Today, many financial institutions send secure emails with PDF documents, forcing commercial users to log in, print them and manually post payments. Instead of emailing PDF reports with remittance data in “human-readable format,” financial institutions should provide methods for commercial accounts to be alerted when payments containing EDI banking information post to their account. Commercial clients should also be able to obtain payment information in “computer-usable formats.”
With this method, commercial users can view remittance information (including free form addenda) within the transaction history screen and export all remittance data to automate posting to their accounting systems. Further streamlining the process, automating the delivery of posting files should be made possible.
Ultimately, financial institutions should provide methods to effectively monitor incoming ACH transactions and alert commercial accounts when incoming ACH transactions contain EDI banking information or when they have ACH returns or ACH NOCs. Information should be presented by settlement date to aid in the reconcilement process. Commercial users should be able to access the information online, export it in a variety of formats, and have data delivered electronically to automate posting.
By providing these capabilities, financial institutions strengthen their commercial banking solutions and increase competitiveness among contending financial institutions and against those not offering ACH reporting.
Learn more about Alkami’s EDI Banking solutions.
