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As part of its effort to help users of its Phixius payment-data network mitigate fraud and enhance payment-routing certainty, Nacha announced Thursday the network will enable originators, fintechs, and financial institutions that originate and receive electronic payments to verify payment-related information, such as account ownership, account numbers, and routing information.
The technology, which Nacha calls the Account Ownership Verification Application, will help users of Phixius verify payment-related information among peers in the network, then provide network access to their customers. Rollout of the Account Ownership Verification Application will take place during the first quarter of this year.
“The Account Ownership Application tool will allow Phixius participants to verify account ownership information in addition to routing and account numbers,” George Throckmorton, Nacha managing director and executive director of Afinis Interoperability Standards says by email. “This exchanging and verifying of information assists Phixius participants in reducing fraud, ensuring compliance, and automating processes.”
While the Account Ownership Verification Application can provide more account data to help mitigate fraud, one thing it does not do is verify account balances, as in an open-banking scenario, according to Throckmorton.
“It does not [include account balance data],” Throckmorton says. “The account ownership verification application allows Phixius participants to validate a routing and account number and verify the name on the account in real-time prior to executing a payment.”
While Nacha does not disclose the number of Phixius participants, it does say participation is growing and forecasts more than 1 million Phixius transactions in 2022. Nacha declined to disclose user fees for the Phixius network.
Later this month, Nacha will host a free webinar to learn more about the upcoming Nacha account-validation rule and how the Phixius service can help with compliance. Effective March 19, 2022, Nacha’s ACH WEB Debit Account Validation Rule will start being enforced. The rule requires that the first use of an account number, or account number changes, be validated through a commercially reasonable fraudulent-transaction detection system prior to the debit payment, according to the Nacha Web site.
“Nacha’s Phixius service can assist companies, fintechs, and financial institutions with compliance with that rule,” Throckmorton says.
