Episode 704: ACH Payment Trends and Avoiding Fraud in Higher Ed

10/31/23 • 24 min

As higher ed institutions continue to evolve to offer more cashless payment solutions, automated clearing house (ACH) payments are becoming more popular. This week, Brad Smith, senior director of industry engagement and advocacy at Nacha, joins FOCUS to discuss the benefits of ACH payments for campus transactions. Learn more about ACH payments on campus, Nacha, and efforts to update the ACH rules for better risk management in the network.

What are ACH payments?
ACH payments are direct transactions involving a bank account. Most online payments attached to a bank account number are ACH, which allows transactions to be reflected to the account in near real-time. ACH payments are popular with different merchants because of the lower fees compared to other payment methods, reliability, and security.

“If you get paid by direct deposit, you know what the ACH network is,” said Smith.

In 2022, 30 billion transactions were made through the ACH network totalling $76.7 trillion. Business-to-business payments through same-day ACH saw a 44% growth in 2022, and in the first quarter of 2023 alone, same-day ACH transactions grew by 94% compared to first quarter of 2022.

Institution implementation
As Smith explains, ACH is most practical when used for large payments. ACH may not make sense for smaller purchases like at campus stores, sporting events, or dining halls. However, opportunities exist for ACH to be used for tuition payments, payroll, and business-to-business payments for accounts receivable and accounts payable.

Nacha’s role in ACH payments
Nacha owns and manages rules for the ACH network. Merchants, also known as ACH originators, enter an originator agreement with their bank, credit union, or third party processor, like TouchNet, to follow a specific set of standards to comply with. New rules are highlighted on the Nacha website.

For institutions implementing more ACH payment options on campus, Nacha is also working on a suite of tools to help educate students, parents, and vendors on why ACH is a good option.

Avoiding fraud
According to Smith, risks for fraud in regards to ACH do not vary greatly from other payment methods. The trend now is vendor impersonation. For example, a bad actor will call a staff member acting like a vendor who needs to change banking information. Next thing you know, payments are going to the bad actor instead of the actual vendor.

To help, Nacha provides a risk framework for partners that helps merchants address fraud. The first part of the framework are strict rules to set a solid anti-fraud foundation, which now includes a provision to validate transactions without needing to give out routing and account numbers. The second part is the operating guidelines that show merchants how to apply the rules to their processes.

Nacha recently rolled out new supplemental data security requirements to ensure data is secure while it’s at rest. This means that account information is unreadable, deleted, or masked properly any time ACH data is not being used. Third party vendors also held to the same standards as ACH originators to keep security a priority.

Best practices
As previously stated, the best opportunities for institutions to use ACH to reduce costs and increase efficiencies are for tuition, payroll, and business to business with vendors.

Smith believes one of the ways to stay vigilant against fraud is to continue education on the latest trends. This can be managed with an institution’s relationship with their bank or processor and completing regular training to stay up-to-date on compliance and fraud trends. There are also different organizations that offer training to colleges and universities on the latest ACH rules, risk courses, and audit courses.

Learn more about ACH rules and alleviating risk at www.nacha.org/rules/new.

Special Guest: Brad Smith.

“If you get paid by direct deposit, you know what the ACH network is,” said Smith.

For institutions implementing more ACH payment options on campus, Nacha is also working on a suite of tools to help educate students, parents, and vendors on why ACH is a good option.

Best practices
As previously stated, the best opportunities for institutions to use ACH to reduce costs and increase efficiencies are for tuition, payroll, and business to business with vendors.

Learn more about ACH rules and alleviating risk at www.nacha.org/rules/new.

Special Guest: Brad Smith.

Previous Episode

Episode 703: Empowering a Safe and Secure Experience with OneCard

On this episode of FOCUS, Doug Vanderpoel joins from Mount Holyoke College to share insights into how his institution uses the TouchNet OneCard Campus ID system to enhance the campus experience. From student ID management to ensuring campus safety and smart data monitoring, Mount Holyoke College has developed numerous unique and innovative uses for their OneCard system.

Mount Holyoke College
Mount Holyoke College, the oldest women’s college in the U.S., was established in 1837 in South Hadley, Massachusetts. It is home to over 2,000 students and 80 major buildings across the campus’ 800 acres. The college is a longtime TouchNet client, having implemented nearly every solution offered in the past 25 years. Most notable is the OneCard system, which Mount Holyoke has tailored to meet a wide range of needs.

An Integrated Campus ID Program
OneCard simplifies the student experience on campus. Students at Mount Holyoke use OneCard for their student ID, access to dorms and other campus buildings, meal plan swipes in the dining hall, tickets to events, vending, tracking packages, and even for POS transactions.

After the school got the initial functions of OneCard up and running, they sought more ways to integrate it into campus life. Most recently, they’ve partnered with USEFULL, a TouchNet Ready Partner, to provide reusable takeout containers in the dining hall, which are monitored and paid for through OneCard. The campus also has 24/7 coffee machines that are integrated with OneCard, so students can use their ID for payment. Faculty can even use their IDs to activate the institution’s gas and fuel stations to fill up the institution’s fleet vehicles.

Integrated safety measures
The safety of students is paramount to Mount Holyoke College, as is evident in the measures they take to monitor access to dorms and buildings with OneCard. Mount Holyoke uses the system to grant or deny access to specific areas of the campus at any given time based on predetermined criteria, and on case-by-case situations if needed. When the school hosts conferences, attendees are given limited access with a visitor ID through OneCard for entry to the dining hall, presentation areas, and on-campus lodging accommodations for the duration of the conference.

Mount Holyoke has also connected various sensors with the Master Security Monitor feature of OneCard to detect irregularities at sensitive places on campus. The system alerts campus staff when emergency showers and eyewash stations are used in labs, sensors are tripped in the art museum, and even when there is unexpected motion around the on-campus horse stables.

Additionally, Mount Holyoke has connected panic buttons to the system as well for students and faculty to contact public safety in the case of emergencies. These panic buttons are also placed across campus in areas like the HR department, cash POS locations, practice rooms in the music department and more. If a button is pressed, public safety is notified immediately to respond to the location.

OneCard as a data source
The OneCard system is constantly gathering data, which Mount Holyoke decided to put to work in making informed decisions. It has given valuable insights into student behavior surrounding meal plans, dining hours, and dormitory capacity. The integration of the system with POS systems also aids in tracking popular food items, easing the product ordering process. Additionally, the ability to generate reports on dormitory usage and visitor patterns helps optimize campus resources.

The key to implementation
Having the right partner can make all the difference when setting up a system like OneCard. Listening to your teams and being communicative is one of the easiest ways to gain faculty and student adoption.

“Just build good relationships and listen to people's issues and problems and know your system and understand that you can have an effect on that,” said Vanderpoel.

As Mount Holyoke stands to prove, OneCard can be used in countless ways across campus. With the right approach and the right team, your institution can unlock the full potential of technology to enhance the overall student experience.

Special Guest: Doug Vanderpoel.

Next Episode

Episode 705: Optimizing Your Payment Solution to Work for Your Students

Many higher education administrators are called to their positions for the same reason: to help students succeed. Lisa Mazure, Associate Vice Chancellor for Finance and Fiscal Services at Alamo Colleges District, joins this episode of FOCUS to share her experiences with supporting students while keeping accounts receivable and revenue flow healthy. Listen to hear her journey of improving account services at different institutions, leading to an increase in student success and financial literacy.

Lansing Community College
Mazure joined Lansing Community College as the institution’s Controller after 25 years working for the government in the Office of the Auditor General. One of the first things she noticed in her role at Lansing was the disjointed experience for students interacting with the Student Finance Office for payments and refunds. Students were forced to log into multiple systems to manage different functions. From that point, she sought to consolidate the system down to one unified platform to make it easier for students.
In her search for solutions, the benefits of TouchNet became clear.

The college already used TouchNet for accepting online payments, but learned it could be expanded to also offer payment plans, refunds, and much more all through a single solution. This allowed LCC to reduce the number of systems that staff had to be trained on, improve the student and staff experience by managing everything in one place, and provide streamlined reporting and updated student accounts.

Payment plans
Once Mazure’s mission to simplify student finances was complete, she turned her attention to creating payment plans that accelerated student success.
“My goal is always for my students to be able to balance that financial responsibility with their academic success,” said Mazure.

One of the first plans the college implemented was bi-weekly payment plans, which remains popular with students because it spreads payments out in a way that matches up with paychecks rather than one lump sum each month.

Lansing also added specialized payment plans for past-due balances. Each plan is specific to a student’s account balance and the repayment agreement they have with the institution. Students on this plan have the opportunity to have their balances forgiven if they complete a certain number of credit hours and meet other Student Finance Office requirements.

Students on financial aid that didn’t cover their full balance were given a payment plan that started later in the semester, after their financial aid was fully rewarded. This made it easier on students to pay correct balances after the add/drop course period concluded. Veterans, students in the Adult Resource Center, those with childcare scholarships, and other special cases were also given additional payment plan options. Adding plans for these unique situations gave students more financial freedom, helping them be more successful on campus.

Alamo Colleges District
The Alamo Colleges District is a system of five independently accredited colleges with over 69,000 students across Bexar County in southern Texas. The district is home to an HBCU and all five are Hispanic serving institutions. Since Mazure joined the district, the system has been dealing with a large accounts receivable balance stemming from conditions during the pandemic, in which the colleges avoided putting holds on student accounts.

She and her team are actively exploring solutions for reengaging students with past due balances and starting the process of placing holds again. It is important for Mazure and the system to find the balance between financial responsibility and academic achievement.

Like Lansing Community College, the Alamo Colleges District uses TouchNet solutions for student finance needs, but has not used the tools to their full potential. Mazure has been working to incorporate as many TouchNet solutions as possible to create immediate changes to help students.

Balancing accounts receivable
The first change the district implemented was separating out past-due balances from current payment plans, so the financial office could work with students to address each balance on its own. Before then, payments made to current statements were automatically applied to past-due balances, making it difficult for students to stay up-to-date on current charges. Mazure’s approach is that students should have the opportunity to take care of past due balances independent of payment plans for current terms.

The Alamo Colleges District has now expanded their payment plan options to give students more flexibility to choose a plan that is right for them, leading to increases in payment plan enrollments and healthier accounts receivable balances while helping students meet their goals.

To further address outstand...