ACH authorization form

How to use this ACH authorization form

1. Choose the kind of payment. Pick recurring, one-time, or “either one” if you want the customer to tick the choice on the form.
2. Add your business details. Your name goes into the authorization paragraph, so the form says exactly who may take the payment.
3. Set the payment details. For recurring and one-time forms, enter the amount and dates, or leave them empty to print blank lines. Add extra lines, such as a customer number, under Form options.
4. Download and send. Use the fillable PDF if the customer will complete it on a computer. Use the plain PDF to print it.
5. Give the customer a copy of the signed form and keep yours on file.

What an ACH authorization form must include

An ACH debit authorization form has to be clearly an authorization, in terms the customer can understand. For consumer accounts, Nacha rules list the minimum contents. Here is where each one sits on this form.

The Nacha link opens Nacha’s page about its standards for authorizations. That page says every consumer debit authorization must hold a minimum set of details. It does not print the list. The list is in the Nacha Operating Rules.

The Regulation E link opens 12 CFR 1005.10. Its paragraph (b) says recurring payments from a consumer’s account need a writing that the consumer signs or similarly authenticates.

Other sentences on the form, and why they are there:

• Different amount sentence: Regulation E, 12 CFR 1005.10(d), asks for written notice of the amount and date at least 10 days before a recurring payment that is for a different amount than the one before it. Nacha’s guide How ACH works lists a 10 calendar-day notice for a change of amount and a 7 calendar-day notice for a change of date.
• Weekend and holiday sentence: ACH payments settle only on banking days. See how long an ACH transfer takes. Nacha’s page How ACH payments work lists it as common practice that a bill payment due on a weekend or holiday is collected on the next business day.
• Correction sentence: Common practice, so a payment taken in error can be refunded to the same account. Not a rule.
• Returned payment fee sentence (optional): Regulation E, 12 CFR 1005.3(b)(3), asks for notice, with the amount, before a fee is collected electronically. State law may limit the fee.

Two more duties sit outside the form itself:

• Give the customer a copy. For recurring payments, Regulation E, 12 CFR 1005.10(b), says the person who gets the authorization must give the consumer a copy. Give a copy for a single payment too.
• Keep it. Keep the signed form for two years after it ends or is cancelled.

Consumer accounts and business accounts

The detailed list above is for consumer accounts. For a business account, Nacha rules do not set a form. They ask for an agreement in which the business agrees to be bound by the Nacha Operating Rules. Nacha’s guide How ACH works says the same. This form includes that sentence, so one form works for both.

The difference matters when a payment is disputed. A consumer can have an unauthorized debit returned for up to 60 days. For a business account, the bank must return it by the opening of business on the second banking day after settlement. See R10 and R29.

Using the wording online or by phone

A paper form is not the only way to get an authorization. Under Download, “Copy the authorization wording” copies the authorization paragraphs as plain text. You can paste them into a contract or an online sign-up page. The paragraphs point to the payment details, the bank account and the date on the form, so your page or contract must show those too.

The points below are for payments from a consumer’s account.

• Online. The Nacha Operating Rules say an electronic authorization must be shown on the screen so the customer can read it. Nacha’s paper WEB Proof of Authorization Industry Practices says to keep a copy of the authorization and a record of the process that links it to the customer.
• Recurring payments online. Regulation E has a rule for recurring payments from a consumer’s account. Its official interpretation says a signed, written authorization can be given electronically, and the process should show who the customer is and that they agreed. It also says the customer must get a copy of the terms, electronically or on paper.
• By phone, one payment. Nacha says a business that takes a single payment on a spoken authorization must record it, or send the customer written notice confirming it before the payment settles.
• By phone, recurring payments. Nacha says the business must follow Regulation E for these payments, and that includes sending the customer a copy of the authorization. The interpretation says a business cannot sign a written authorization for the customer after only a spoken yes. Ask your bank before you take recurring payments by phone.

Common mistakes and how to fix them

• Vague amounts. “As billed” with no explanation is not clear terms. State the amount, a maximum, or that it is the amount on each invoice.
• No way to cancel. The form must say how and when to cancel. Add your email or address in the business section so the sentence is complete.
• Taking a different amount without notice. If a recurring amount changes, send written notice at least 10 calendar days before the payment. If the date changes, give 7 calendar days. Use the change notice letter.
• A signature with no date. The date of the authorization is a required element.
• Losing the form. If the customer’s bank asks for proof and you cannot produce it, the payment can be returned as unauthorized.

Sample ACH authorization form (filled in)

This is what the form looks like once it is filled in. Yours will show your own business name.