Understanding ACH Fees and Payment Fraud with Jordan Bennett from Nacha

Welcome back to ‘The Property Management Show,’ where we deep-dive into the world of property management, marketing, and entrepreneurship. Your hosts are Marie Tepman and Brittany Jones from Fourandhalf Marketing Agency. Since 2012, Fourandhalf has helped hundreds of property managers get more owner leads through digital marketing. Whether you need help with your website, SEO, online reputation, content, video, social media, or even advertising campaigns – we can do it all. Our guest today is Jordan Bennett, who is the Senior Director of Network Risk Management at Nacha, and a former Risk Analyst at the Federal Reserve. We are discussing ACH fees and payment fraud, and to put the entire discussion into better context, we asked Jordan to explain what his job entails. Management Payment Risks Nacha is the rule-making body and trade association for ACH payments. They are always promoting ACH, and Jordan’s job is thinking about how to prevent risk. He wants to keep people’s money in their accounts, and he wants to stop the schemes that can rob them of that money. Not only does he want to make payments safe, but he also wants to educate consumers on the fact that ACH is one of the safest payment methods they can choose in the U.S. He works with banks and companies to decide how to utilize it and better manage any risks that may be present. ACH Transaction Fees For the longest time, ACH has been popular because it’s free. It’s always been the free option versus credit cards, where consumers have to pay transaction fee. Some companies, however, are beginning to charge transaction fees for ACH payments. Why is this shift happening? Jordan reminds us that there has always been a cost to run an ACH system. It’s a low cost because it’s a batch system, so it doesn’t cost as much as credit cards, which operate on an interchange system. With ACH, there’s a lower cost to the financial institution and the property manager who is accepting the payment, but there is still a cost to running the network. So, it makes sense that a property manager and their financial institution may want to recoup these fees. A lot of systems and anti-fraud tools and infrastructure needs to be maintained with ACH. It’s never been free (even though the customers see it as free). Nacha cannot suggest or encourage or discourage fees. With antitrust laws what they are, Nacha cannot tell an industry whether they should or should not charge a fee. However, it’s important to remember that this process does not automatically happen. People get paid to do their jobs, and it takes jobs to keep these payments safe. What we don’t want to do is set a precedent where it’s preferable to pay with a check to avoid the ACH fee. Consumers who do not want their information available and want the convenience of an ACH transfer will continue to use this method and not return to the days of using checks. Even from a management company or HOA perspective, accepting checks means you physically have to open an envelope and process the payment every time it’s made. If you have hundreds of rent checks coming in, that’s going to take time and require personnel. There will be a transaction cost regardless of how the payments come in. Your check fees may be higher from the bank than the ACH transfer fee. Property managers should not encourage checks. When a check is paid, the consumer knows they have money in their account, but they may forget. And, if that check takes a few days to get through the mail and be deposited, the consumer might have forgotten about the rent check that was written and they’ll spend the money that’s in the account. Everything could bounce. That’s an unnecessary risk that landlords and property managers don’t have to take. ACH can be a regular recurring payment that comes out every month on the same day. It takes a few minutes to set up,