Nacha's Meaningful Modernization Rule 4 - Alternative to Proof of Authorization Rule

9/10/2021 - By Janice Weisz, AAP

Under the current Rules, an originator is required to provide proof of authorization to its ODFI in such time that the ODFI can respond to an RDFI request for proof of authorization within ten banking days. Some ODFIs and originators report that a “pain point” occurs when they provide proofs of authorization, but then debits are returned as unauthorized. To avoid this issue, some ODFIs and originators would prefer to agree to accept the return of the debit rather than expend the time and resources necessary to provide proof of authorization.

Rule Overview

The Alternative to Proof of Authorization Rule will reduce an administrative burden on ODFIs and their originators for providing proof of authorization in every instance in which it is requested by an RDFI. By allowing an alternative, the Rule is intended to help reduce the costs and time needed to resolve some exceptions in which proof of authorization in requested. However, if the RDFI still needs proof of authorization, the ODFI and its originator must provide the proof of authorization within ten days of the RDFI’s subsequent request.

Impact to Participants

ODFIs and Originators

ODFIs and originators that want to take advantage of the Alternative to Proof of Authorization Rule may have to modify their business processes and procedures for responding to proof of authorization requests.


RDFIs may receive different responses to their request for proof of authorizations. RDFIs will need to develop practices and procedures to send subsequent requests for proofs of authorization in cases where a copy is still needed when ODFI has agreed to accept the return in lieu of providing the copy.


For more information, you can also visit Nacha's website.

Staying in compliance can be challenging, if you have any questions or need assistance preparing for these new Nacha Rules, email me or a member of our Financial Institutions Team so we can help.  

About the Author | Janice Weisz, AAP

Janice is a consultant in the Financial Institution Advisory Group at Saltmarsh, Cleaveland & Gund. Janice has been working with financial institutions since 2001 with an emphasis on operations, compliance, audit and internal controls. Janice currently is an Accredited ACH Professional (AAP) and conducts risk-based Nacha compliance audits and provides ACH-consulting services to the firm’s financial institution industry clients.

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