ACH Payments Tokenization: What Your Business Needs To Know

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In an ever-shifting payments landscape, there has been another change: NACHA, the governing body that oversees the ACH payments world, has now mandated ACH Payments Tokenization for businesses. Naturally, this has caused a lot of head-scratching amongst companies. Luckily, there are many options out there which you can choose to comply with ACH Payments Tokenization rules — but first, let’s look at what you need to know. 

Why Is ACH Payments Tokenization Now Mandatory? 

In the credit card processing sphere, it’s been necessary for payment transactions to be tokenized for a while now. 

Although data protection for ACH payment transactions has been a mark of good conduct, these transactions didn’t face the same regulation until recently. 

What Do The New Mandates Require?  

For ACH transactions, the data points are composed of a routing number and a bank account number, with the routing number is necessary for bank identification for the business or consumer. 

Under the new NACHA mandate, a reference token must stand in place of these numbers. The token sits alongside the customer data and is sent with the rest of the transaction string when the payment is processed. The ACH Payments Tokenization gateway protects the sensitive info (the account and routing numbers) in a safe place. 

How Quickly Do I Need To Act? 

There have been two new security benchmarks outlined by NACHA, which have operated over two distinct timeframes. 

The first covered originators and third-party participants with large transaction volumes (over 6 million throughout 2019). For these parties, ACH Payment Tokenization was necessary with a deadline of June 30, 2021. 

The second time period extends to June 30, 2022, and covers originators and third-party participants with a slightly lower transaction volume and period (more than 2 million transactions throughout 2020). Both of these dates have been shifted by a year due to the COVID-19 pandemic, giving ACH payment users more time. 

While NACHA does not actually stipulate that tokenization is the only method of protecting data, due to its high use and efficacy in the credit card sphere, ACH Payments Tokenization is an easy-to-understand and trustworthy solution for your business. 

The Bottom Line

This move puts into regulation what many businesses have understood for a while now: tokenizing sensitive data is good practice for your company. As methods of protecting data evolve, so do methods of retrieving it; keeping up to date with regulation not only keeps you on top of your dealings, giving your customers peace of mind but keeps you in line with the looming deadline. 

At Agile Payments, we know what you need to achieve the best ACH Payment Tokenization solutions for your business. Get in touch today, and let one of our team help.