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Special thanks to @Myranda Brown, AAP, Manager, Audit Services for helping me write this blog!

The ACH Rules define a Micro-Entry as “a credit or debit entry used by an Originator for the purpose of verifying a Receiver’s account on an individual’s access to an account.” These transactions, which involve the movement of funds to and from a Receiver’s account, serve as a practical tool for fraud mitigation and account information validation. Unlike Prenotifications, Micro-Entries require specific action by the Receiver to complete the account validation process.

You’ve likely encountered Micro-Entries yourself — those small-value transactions, often called test deposits, used to validate accounts. They play a vital role in verifying account information during new client onboarding, ensuring the details provided are accurate. Likewise, Micro-Entries are commonly used in the ACH Network for person-to-person (P2P) or account-to-account (A2A) transfers and payroll validation to confirm account accuracy, helping prevent errors or delays in future transactions.

It’s important to note that the ACH Rules include specific requirements for originating these entries. Key requirements include:

• A credit Micro-Entry must be in an amount less than $1.00.
• The corresponding debit entry(s) must not exceed the total credit amount and must be simultaneously transmitted for settlement with the credit entry(s).
• Micro-Entries must be sent as a separate batch of entries with the verbiage “ACCTVERIFY” in the Company Entry Description Field of the Company Batch/Batch Header Record.

Additionally, the Rules also mandate that Originators implement commercially reasonable fraud detection measures, including the monitoring of forward and return Micro-Entry volumes. As there is no specification on how fraudulent detection should be completed, it is critical that your financial institution establish a baseline for normal activity to identify anomalies or potential fraudulent behavior. This baseline can be integrated into your existing Anti-Money Laundering (AML) or anomaly detection processes.

While following the Rules specific to Micro-Entries, it is also important that Originators understand the authorization requirements for these entries. As with any other ACH entry, the Originator must obtain authorization from the Receiver to transmit Micro-Entries to the Receiver’s account. The minimum components for these authorizations are based on the type of entry (consumer vs. corporate), the method by which the authorization was obtained (internet, telephone, paper, etc.) and any specific requirements the SEC code uses for the Micro-Entries. Due to the nature of these entries, the Originator would not want to provide the specific dollar amounts, as that is part of the validation process. However, to stay within the requirements of the ACH Rules on authorizations, Originators should provide a description of how the Micro-Entries will be used and a range or general dollar amount the Receiver can expect. 

You may be wondering, how does my financial institution ensure compliance when corporate Originators or vendors process these Micro-Entries on our behalf? To address this, consider implementing the following measures:

• Update ACH Origination Agreements: Ensure your agreements include specific requirements for corporate Originators, particularly if they utilize Micro-Entries for account validation.
• Staff Training: Provide comprehensive training to staff on ACH Rules related to Micro-Entries to ensure proper understanding and application.
• Monitoring Activities: Implement robust monitoring systems to track both forward and return volumes of Micro-Entries. This helps establish a baseline for normal activity and detect anomalies.
• Vendor Oversight: If you rely on a vendor or Third-Party Service Provider (TPSP), collaborate with them to confirm they adhere to all ACH Rules and compliance requirements.

As fraudulent techniques continue to evolve, it is critical for financial institutions and their Originators to recognize the significance of leveraging Micro-Entries for account validation and fraud detection. Additionally, understanding of these requirements of the ACH Rules and being able to provide education to corporate Originators helps to ensure compliance.

Looking for a quick and informative overview to share with your team or Originators?
Check out our Did You Know video, ACH Micro-Entries Dos and Don’ts, for a concise breakdown of the key rules, including transaction limits, formatting and sending requirements as well as essential fraud mitigation tips. It’s a great resource to reinforce what’s required and help keep your Micro-Entry practices on track.