This article provides definitions and guidance related to Notifications of Change (NOCs) to ensure you have a clear understanding of the requirements and expectations.
Definitions
Automated Clearing House (ACH) is the automated sending and receiving of payments; typically used for payroll or bill payments. The ACH is governed by the Nacha Operating Rules, where an Originator is a person or business entity that initiates payment transactions into the ACH Network based on an agreement with the receiver. In the ACH network, the sending bank is referred to as the Originating Depository Financial Institution (ODFI) and the Receiving Bank is referred to as the Receiving Depository Financial Institution (RDFI).Notifications of Change (NOC)
As an alternative to returning a “live” ACH entry, a Prenote or Micro-Entry, an RDFI may choose to send a Notification of Change, which is a zero dollar entry sent by the RDFI to the ODFI for the purpose of identifying incorrect information contained within an entry and providing correct data to be used on future entries. When sending an NOC, the receiving bank decides to accept and correct the entry, and to post the transaction to the intended account. There are over 50 different NOC codes; some of the most common are listed in the table below:| Code | Description | Corrected Data |
|---|---|---|
| C01 | **Incorrect DFI Account Number: **Account number is incorrect or is formatted incorrectly. Example: The Receiver provided an incorrect account number. | Correct DFI Account Number appears in the first (left justification) 17 positions of the Corrected Data Field. |
| C02 | **Incorrect Routing Number: **Due to a merger or consolidation, a once valid routing number must be changed. Example: A Receiving Bank merged with another bank and now uses the other bank’s routing number. | Correct Routing Number (including check digit) appears in the first 9 positions of the Corrected Data Field. |
| C03 | **Incorrect Routing Number and Incorrect DFI Account Number: **Due to a merger or consolidation, a once valid routing number must be changed, and this change will cause a change to the account number structure. (Note: This code is not available for use with IAT.) | Correct Routing Number (including check digit) appears in first 9 positions of the Corrected Data Field. |
| C05 | **Incorrect Transaction Code: **An item which the RDFI determines should be posted to a different account type. Example: The account number contained in the entry is a checking account number, but the entry contains a Transaction Code for a savings account. | Correct Transaction Code appears in first 2 positions of the Corrected Data Field. |
| C06 | **Incorrect DFI Account Number and Incorrect Transaction Code: **Account number is incorrect or is formatted incorrectly and an item which the RDFI determines should be posted to a different account type. (Note: This code is not available for use with IAT.) | Correct account number appears in the first (left justification) 17 positions of the Corrected Data Field; correct Transaction Code appears in positions 21 and 22 of the same field with spaces in positions 18 through 20. |
| C07 | **Incorrect Routing Number, Incorrect DFI Account Number and Incorrect Transaction Code: **Due to a merger or consolidation, a once valid routing number must be changed, account number is incorrect or is formatted incorrectly and an item which the RDFI determines should be posted to a different account type. (Note: This code is not available for use with IAT.) | Correct routing number appears in the first 9 positions of the Corrected Data Field; correct account number appears in positions 10 through 26 of the same field and correct Transaction Code appears in positions 27 and 28 of the same field. |
| C08 | Incorrect Foreign Receiving DFI Identification (IAT Only) | Correct Foreign Receiving DFI identification appears in the first (left justification) 34 positions of the Corrected Data Field. |
| C09 | **Incorrect Individual ID Number/Incorrect Receiver Identification Number: **Individual’s ID number is incorrect. This correction applies to transactions initiated by the customer, which may require a PIN number for identification. | Correct number appears in the first 22 positions of the Corrected Data Field. |
| C13 | Addenda Format Error: Information in the Entry Detail Record was correct and the entry was able to be posted by the RDFI, but information in the addenda record was unclear or formatted incorrectly. Example: a CCD entry addenda record does not contain ANSI X12. |
Nacha Rules
If an RDFI chooses to send an NOC, it must do so within two banking days from the Settlement Date of the original entry. When receiving an NOC, Lead will provide the NOC to the Payments Client within two banking days of the settlement date. Lead will deliver NOC details to Payments Clients daily via Webhook, a Return/NOC file, or via Online Banking. Typically, when a Payments Client receives an NOC, the transaction will process as usual; however, it’s important to update records with the revised account details to make sure any future transactions are processed accurately. According to the rules set by Nacha, these updates to the customer records must be completed within six banking days of receiving an NOC, or prior to initiating subsequent entities, whichever is later. Originators of one-time payments are not required to make the specified changes. Failure to manage NOCs could result in Lead facing fines imposed by Nacha. These fines range from $1,000 to $500,000 per month depending upon the frequency and volume of violations. Based on the Lead ACH Agreement with all Payment Clients sending ACH, fines assessed by Nacha may be charged to the Client. Nacha can also prohibit a client from utilizing the ACH Network for failure to comply with the Rules.Expectations
After a NOC is received, the Lead system may auto-reject subsequent attempts to submit payment with the old instructions. Lead will monitor NOCs and may reach out to you if the same NOC is received multiple times.The expectation is that you must proactively manage the NOCs you receive. If there are any issues with managing NOCs, questions, or unexpected activity, contact Lead as soon as possible via email or Slack.