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Review Company Entry Description of Payroll Payments: NACHA is requiring a standard description of "PAYROLL" be used for all PPD credit transactions used to pay wages, salaries, or similar compensation. |
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What's changing?
The National Automated Clearing House Association (NACHA) is implementing a change to its ACH Rules as part of a larger risk management initiative. The new rule requires all Business to Consumer PPD credits used for payment of wages, salaries or similar types of compensation to contain the description PAYROLL in the Company Entry Description Field.
The rule is scheduled to go into effect on Friday, March 20, 2026. Originators are encouraged to begin using the description as soon as practical.
What are the benefits of this change?
The new rule will standardize how payroll transactions are identified in ACH files, and is intended to reduce the incidence of fraud involving payroll redirections.
Recommended Next Steps
The Treasury Management Master Services Agreement you acknowledged requires all originators to comply with the NACHA Rules and provides us the right to suspend or terminate services in the event you do not comply. Your ACH payments will continue to process as submitted, but we are encouraging you to review your payments, following the steps below, to ensure compliance.
We are here to support our customers as best we can through this rule change. When possible, Five Star Bank will default qualifying transaction types to include the PAYROLL description. There are some scenarios where we cannot determine the nature of the transaction and you are required to make updates.
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