Third-Party Senders: Should You Look Again?

Amy Donaghue

By: Amy Donaghue, AAP, APRP, NCP, Director, Advisory Services - Risk & Third-Party Services

Now that the Third-Party Sender Registration process has been in place for roughly sixteen months, hopefully it has become just another familiar requirement of providing services to a Third-Party Sender. However, sometimes it is easy to let things slip out of mind once a routine is established and searching existing clientele for Third-Party Sender relationships should NOT be a onetime deal. It is still a best practice and important to remain vigilant in evaluating whether your financial institution is processing ACH activity for unidentified Third-Party Senders. When is the last time you looked at your smaller CPA firms, payroll processing companies, property management firms, etc.? To help you examine your Originator relationships, we offer a free Third-Party Sender Identification Tool for download in the EPCOR Knowledge Community.

So, what have we learned from the registration process thus far? When the Rule was first conceived, there was no way to determine exactly how many of these types of participants were active in the ACH Network. While larger Third-Party Senders were easily identified based on the type of company and/or volume of activity they generated, smaller, or more ambiguous, Third-Party Senders often only came to light if they became an issue by means of unfavorable origination activity or high volumes of return activity.

As of the first of this year, there were just a little less than six thousand Third-Party Senders registered with Nacha. There were a limited number of ODFIs who needed to be prompted to complete their registration, as well as a limited number of invalid registrations completed. The invalid registrations primarily consisted of ODFI registrations of companies that were considered Third-Party Service Providers of the ODFI or Third-Party Service Providers used by the ODFI’s Originators. This is a clear example of why it is recommended to use the Third-Party Sender Identification Tool.

Additionally, at the first of the year, Nacha sent out a courtesy reminder to those ODFIs that had registered their Third-Party Senders. The content of the letter was to remind ODFIs of the Third-Party Senders’ obligation to conduct, or have conducted, an ACH Rules Compliance Audit. If you or your Third-Party Sender have questions regarding this requirement or if your Third-Party Sender needs assistance, please don’t hesitate to reach out to EPCOR at 800.500.0100 or via email at memserve@epcor.org. We also have resources to help both your financial institution and your clients stay in compliance with the ACH Rules and mitigate risk including ODFI monitoring tools and checklists, specialized Advisory Services and even special membership options for Third-Party Sender clients.

Check out EPCOR's Third-Party Sender offerings on our website.