ACH debit blocking method and system

#The present invention relates to Automated Clearing House (ACH) electronic banking debit transactions, particularly to a method and system for blocking consumer-oriented ACH debit transactions from posting against a commercial bank account.

#The Automated Clearing House network is a highly reliable and efficient nationwide batch-oriented electronic funds transfer system that provides for the interbank clearing of electronic payments between participating depository financial institutions. First introduced in the early 1970s as a more efficient alternative to checks, ACH has evolved into a nationwide mechanism that processes electronically originated credit and debit transfers. The ACH network handles billions of payments annually.

#ACH transactions are governed by the operating rules of the National Automated Clearing House Association (NACHA), which define the rights, obligations, and warranties of parties involved. NACHA is a trade association that develops operating rules and business practices for the ACH network as well as for other areas of electronic transactions. NACHA also works to facilitate the adoption of electronic payments in the areas of Internet commerce, electronic bill payment and presentment (EBPP), financial electronic data interchange (EDI), international payments, electronic checks, electronic benefits transfer (EBT), and student lending.

#For a more complete understanding of the present invention, the objects and advantages thereof, reference is now made to the following descriptions taken in connection with the accompanying drawings in which:

#FIG. 1 is a block diagram of a conventional ACH debit process;

#FIG. 2 is a flow diagram depicting a method of posting and recrediting ACH debits according to an embodiment of the invention; and

#Preferred embodiments of the present invention and their advantages may be understood by referring to FIGS. 2-3, which are described in the context of Automated Clearing House debit transactions. Nevertheless, the inventive concept can be adapted to the general processing of electronic payments within the banking industry involving reciprocating banking instructions for movement of funds associated with a transaction.

#In a preferred embodiment of the invention, one or more computer programs are provided at an RDFI to automatically scrutinize ACH debit entries or instructions received from an ACH Operator. Particularly, these programs parse each debit requesting instruction received. If the instruction pertains to a consumer-oriented transaction that will debit a commercial account, the instruction is assumed to be unauthorized and therefore is immediately returned to the ODFI within 24 hours of posting without any action required by the Receiver.

#FIG. 2 illustrates a method 200 of posting and recrediting ACH debits according to an embodiment of the invention. Specifically, an ACH batch file is received (step 210) at an RDFI from an ACH Operator. In a preferred embodiment, account numbers of the debit entries are validated (step 220) as serviced by the RDFI according to a standard procedure, implementation of which is apparent to one of ordinary skill in the art. For each debit, the corresponding account number to be debited is matched (step 230) against a list of commercial RDFI account numbers that are not allowed to post consumer-oriented debit entries. If a match is not found, the debit is allowed to post (step 235) to account 238 without further action. If a match is found, in addition to posting the debit (step 235) to the account 238, the debit is determined (step 240) whether or not to be directed toward a consumer account. For example, the SEC code associated with an entry is identified. In a preferred embodiment, all SEC codes other than CCD and CTX, such as, but not limited to PPD, WEB, TEL, RCK, ARC, and POP, are presumed to be consumer-oriented transaction. Moreover, CCD or CTX codes identify the entry as a commercial transaction. If the debit entry contains a CCD or CTX code, no further action is taken (step 245). If the debit entry is a consumer-oriented transaction, a credit reversal is generated (step 250) and posted (step 255) to the account, thereby negating the debit. In other words, a credit equal in amount to the debit nets a zero amount to the account. In addition to the posting of a credit reversal, the debit is returned (step 260) to the ODFI via the ACH Operator. For example, any debit identified as consumer-oriented is returned as a “R29” (Corporate Customer Advises Not Authorized). Subsequently, the Originator is notified that the debit is unauthorized. The posting of the debit and the credit reversal is reflected in an account statement or report generated (step 270) for the owner of the account, i.e., Receiver.