Business Email Compromise (BEC) remains the biggest contributor to fraud losses we see happen to our customers. While we may catch some, we cannot catch them all. One of the most important things you can do is to make sure you and your staff are verifying (call using the number on file; not the number on the email) any payroll change requests with your client. Most fraud happens when the payroll change was not verified.

Between July 2019 and December 2021, there was a 65% increase in exposed losses due to Business Email Compromise. This trend continues to grow and is the most common type of fraud we see. These sophisticated fraudulent attacks have caused losses of over $43 Billion.

Learn more about what you can do to protect your business by viewing some of the resources below:

Leanne Jung
ACH Risk & Compliance Manager


Upcoming Holiday Hours and Non-Processing Days

reminder Please plan ahead and allow an extra day for processing if the pay date falls on a federal holiday, which can be found here. ACH transactions cannot be dated for a federal holiday (no debits or credits to an account on that date).
DateHours of OperationProcessing Notes
Monday, July 4th
Independence Day
CLOSEDACH transactions cannot be dated for July 4th.

Completing Client Agreements

The information we collect on the Client Agreement is for Know Your Customer (KYC) purposes and to verify the legitimacy of the company and their ACH activity. This KYC policy is a regulation of the Patriot Act intended to ensure customers are not likely to be engaged in criminal activity. You should have a client screening process to ensure your customer doesn’t pose a risk to your business.

To do our part, we run a validation check on the company using the information provided on the contract. It is important that this information is accurate and contains your client’s information as requested on the contract. Please ensure the company address is where the company transacts business, the phone number is the customer service number, owner names include first and last name, background questions addressed, and all information is completed.

As a reminder, Kotapay will not reach out to your clients. The information provided on the agreement is only for verification purposes.


Pay key on keyboard 

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Incomplete File Uploads

When an ACH file is uploaded but not fully submitted nor rejected, it will stay on the website on the Status/Welcome page. The email addresses on file will then start receiving notification of Incomplete File Uploads. To resolve this:

  1. Log into the Kotapay website, on the Welcome screen you will see a box that says "Status: There is (# of files) file upload issue(s) that needs your attention."

    one file upload issue that needs your attention

  2. Click Go To Status Page button to review the file(s) that are needing attention.
  3. Click View File to review the details of that file or reject file if you know it should not be submitted. If you believe the file has previously been submitted, you can review your File Acknowledgement Report to confirm, or contact the Support Department.
  4. Once all file upload issues are resolved, the Status box will state "No file upload issues currently need your attention."

Nacha Rules Updates

  • Supplementing Data Security Requirements (Phase 2) requires companies who send over 2 million ACH payments per year to protect account information by rendering them unreadable when stored electronically. Learn more about this rule by visiting the Nacha website.
    • Effective June 30th, 2022
  • Micro-Entries: this rule defines and standardizes the practice and formatting of micro-entries. Micro-entries are defined as ACH credits of less than $1 and any offsetting ACH debits used to verify a Receiver’s account. More information to come in the coming months.
    • Phase 1 is effective September 16th, 2022. Originators will be required to use the standard Company Entry Description.
    • Phase 2 is effective March 17th, 2023. Originators will be required to use commercially reasonable fraud detection.

Employee Spotlight

Chad Schornack is the VP of Programming & Analytics and this year is celebrating 25 years at Kotapay! Chad is the chief architect of the programs and systems we utilize to manage our customers and their transactions.

Fun fact about Chad: He created and built the software we use to process over 60 million transactions annually.

When he’s not working, Chad enjoys hunting, woodworking, cooking and spending time with his wife Sarah.

Chad has been a leader, dreamer, team player, visionary, and an essential member of the Kotapay Team. Thank you Chad for all you have done and continue to do!

 Chad's 25th anniversary