New Financial Institutions (FIs) get new routing numbers (a unique nine digit identifier designating U.S. FIs and used for routing ACH transactions). Established FIs can get new or additional routing numbers. Routing numbers can change with mergers and acquisitions, or even be retired when no longer needed (for example, when a bank closes). So, what’s that routing number, cucumber? Keeping track of routing numbers and which FIs they belong to can be challenging.
Consequently, there is growing evidence that some ACH Originators (banks, payment processors, billers) are not updating their routing number directories, which are used to validate ACH routing and account numbers prior to ACH origination. Numerous ACH payments fail to be originated, and are blocked from being originated, by banks and processors, because their routing number validation tables are not current.
This particularly impacts new routing numbers that are not added to payment validation tables. New routing numbers that fail payment validation, and are rejected as not being legitimate, causes a bad experience for businesses and customers. For example, when a consumer provides a new routing number (and account) for a bill payment that is not recognized, the consumer may receive a message like, “Do you have another account number?” or “Please use another payment method.”
A company that spoke with Nacha estimates that this issue impacts 10% of all ACH payments for newly established routing numbers. Rejected payments for legitimate routing numbers erodes confidence in ACH, and, in fact, this company reported that a customer abandoned its ACH offering because of such issues.
To keep ACH payments flowing smoothly, Nacha recommends that routing number validation tables be updated at least monthly as a best practice. Here are some options for obtaining current routing numbers:
- FIs can automate routing number information updates for FedACH (Federal Reserve financial services network) participants directly from the Federal Reserve. Contact the Customer Contact Center (CCC) at (888) 333-7010 for further information.
- Non-FIs can contact their Originating Depository Financial Institution (ODFI). The ODFI may be able to assist with routing number updates, via the ODFI’s Federal Reserve connection. Contact your ODFI representative for more information.
- FIs and non-FIs alike can also get the latest routing number information from Accuity, a LexisNexis Risk Solutions company. Accuity, a Nacha partner, is the official registrar for ABA routing numbers. There are several products available that can help originators and ODFIs keep current on routing numbers: EPICWare, US Routing and Transit Number File (RTN File), and Bankers Almanac Validate. For more information, contact Accuity’s payment specialist.
So, stay current with routing numbers, cucumber. Then you’ll also know the current FI name, choo-choo train!