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CUNA Says NACHA 'Reason Code' Plan Could Clear Confusion
WASHINGTON (9/19/13)--The Credit Union National Association backs initiatives to minimize compliance costs for credit unions and other financial institutions, as well as clarifications to rules on the Automated Clearing House (ACH) network, and for those reasons supports an Electronic Payments Association (NACHA) proposal that would amend reason codes for returned entries.
 
The proposed changes would clarify that:
  • Receiving Depository Financial Institutions (RDFIs) should use Code R03 if they choose to return an entry because the receiver's name on the entry does not match the name on the account; and
  • RDFIs should use Code R04 if they choose to return an entry due to account number issues.
"We believe these technical changes would benefit ACH participants by reducing ambiguity currently associated with these return reason codes and improve processing efficiency for financial institutions," wrote Dennis Tsang, CUNA assistant general counsel, in a Sept. 17 CUNA Comment Letter.
 
"Some credit unions already use these return reason codes in a manner that is similar to the proposed rules," he noted.
 
In addition to reducing ambiguity, NACHA has said its proposed technical amendments also would improve processing efficiency for RDFIs and Originating Depository Financial Institutions.

The proposed changes, if adopted, will go into effect March 20, 2015. NACHA is accepting comment through Sept. 20.
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