What You Need to Know Before March 20, 2026
As part of ongoing efforts to improve transparency and reduce fraud across the ACH network, Nacha, the governing body for ACH transactions, has announced several rule changes that will take effect on March 20, 2026.
If your business used ACH to pay employees, collect payments, or send electronic payments, some updates may be required. Cape Cod 5 is sharing this information early so you have time to prepare and avoid any disruption to your ACH services.
Changes to ACH Descriptions for Payroll Payments
What's changing?
Any ACH payment used to pay wages, salaries or similar compensation must now include the word "PAYROLL" in the Company Entry Description field.
What this means for your business
If you use ACH for payroll, you may need to update your ACH file setup, payroll software or Bank template
"PAYROLL" must:
Appear at the start of the description
Be left-justified
May include up to three added characters after it (example: PAYROLL 426)
Examples of descriptions that must be updated
If your payroll entries currently use descriptions such as "ACH," Direct Deposit," "Weekly Pay," "Commission," or "ACH Batch," they must be changed to include "PAYROLL" before March 20, 2026.
Please note: Using the word "Payroll" does not confirm or guarantee employment status. It is strictly a standardized description requirement.
Changes for Online or Text-Based Purchases
What's changing
Businesses that sell goods or merchandise online or via text (typically using ACH WEB entries) must now include the word "PURCHASE" in the Company Entry Description.
Does this apply to you?
This requirement applies only if your business:
Sells goods or merchandise online or through text-based payments
Uses ACH to collect those payments
It does not apply to:
Utility payments
Rent payments
Services paid online that are not merchandise-based
If you're unsure whether this applies to your business, your Cape Cod 5 team can help you determine next steps.
New Fraud Monitoring Requirements for ACH Originators
What's changing?
Your business must:
Have risk-based processes designed to detect:
Unauthorized ACH transactions
Transactions authorized under false pretenses (such as email or payment scams)
Review and update these procedures at least once per year
Keep procedures in writing
These procedures may be reviewed by Cape Cod 5 as part of our responsibility as your ACH provider.
Good to know
For many businesses, this documentation already exists as part of:
Internal controls
Accounting procedures
IT or payment approval workflows
In many cases, it simply needs to be formalized or labeled to include ACH activity.
What Happens if Action is Not Taken?
Failure to comply
Failure to comply with these Nacha requirements could result in:
Delays in ACH processing
Requests for additional documentation
Possible restrictions on ACH origination services
Our goal is to work with you well in advance to avoid any disruption.
What you should do now
We recommend that ACH users:
Review your current ACH descriptions for payroll and online payments
Talk with your payroll provider or software vendor about required updates
Confirm whether your business sells goods online using ACH
Ensure you have written fraud monitoring procedures in place
Contact Cape Cod 5 with any questions or for guidance
We're Here to Help
Cape Cod 5 is committed to helping our business clients navigate these changes smoothly. While we cannot create fraud monitoring procedures on your behalf, we are happy to:
Review documentation
Answer questions about the new requirements
Help you understand whether the changes apply to your business
Questions?
If you have questions, please reach out to our Treasury Management team.
