Clarification on ACH Stop Pays & Revoking Payments
by John Burnett, BOL Guru Guru Bio
Question: I recently received training on ACH stop pays. I was informed that if a member does a stop payment it is kept as a one time stop payment for that month and once the institution returns it then we are to expire the stop payment. Is this true and can the merchant then send through another ACH the following month? Can you clarify the difference between a stop pay and a revoke? My understanding is if a consumer has a payment coming out every month and decides he or she does not want it coming out as an ACH anymore and tells the company this, it would be placed as a revoke. Would a stop pay be considered something that has not come out of the account yet?
Answer: A stop payment order applies only to one transaction, the May payment of your life insurance premium, for example. ACH rules require that once a payment has been stopped and returned the stop payment expires. However, if the account is subject to Reg E, the consumer's stop payment order has no expiration under the regulation. In my opinion, that trumps the NACHA (ACH) rule, but it does only apply to a consumer account and only to one transaction (and any resubmission of that transaction). To revoke an authorization for a series of recurring ACH items, the receiver (your customer) must notify the originator that the authorization is revoked. Once notified of the revocation, the originator has no authority to submit further transactions. If the receiver is a consumer and notifies you (the receiving depository institution or RDFI) that he or she has revoked or is revoking the authorization, you are required by Reg E to block all future transfers under that authorization. You are allowed to require your customer to provide documentation of the revocation (such as a copy of it) within 14 days and if you don't get the documentation, you are permitted to lift the block on future transfers under the original authorization until you do get a copy of the revocation.
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