Fighting Fraud: Businesses Soon Must Provide New Info to Banks

Businesses that utilize the ACH network for banking should know that Nacha has amended its operating rules.

A new format for the Company Entry Description field must be used by March 20, 2026. Nacha says that’s a “no later than” effective date, and originators can use the new descriptions as soon as is practical.

There will be two different descriptions you’ll be required to enter when you communicate with your bank.

Paying Employees

First, originators of direct deposit of payroll will need to use the description “PAYROLL” for the payment of wages, salaries and similar types of compensation. The term applies regardless of whether you’re paying employees or independent contractors. Reason: “PAYROLL” is used for descriptive purposes and isn’t a representation of employment status, Nacha explained.

With this standardized information, receiving banks will have additional data to assist in identification of new or multiple payroll payments to a particular account. As a result, the banks will be better equipped in their efforts to reduce fraud and improve the recovery of funds if fraud does occur. Also, for financial institutions engaged in the practice, the info may factor in to provide or suppress early funds availability.

While the first seven characters of the Company Entry Description field are prescribed, originators can use the remaining three characters for further description. Some examples include:

• PAYROLL 02
• PAYROLL424, and
• PAYROLLEMP.

Making Purchases

A second type of transaction must be noted in the Company Entry Description field by the 2026 deadline – i.e., e-commerce purchases must be marked as “PURCHASE.”

An e-commerce purchase is “a debit entry authorized by a consumer receiver for the online purchase of goods, including recurring purchases first authorized online.” This descriptor is intended to help manage risk and improve ACH quality.

Your company may be entering these field descriptions itself, using a third-party service provider or even relying on a financial institution to assist with formatting. In any case, now’s the time to begin system updates.