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ACH Payment Description Requirements

Important Update – ACH Payment Description Requirements

Effective March 20, 2026

Updates to ACH Network rules will introduce new standard requirements for certain ACH payment descriptions, including payroll and purchases. These industry-wide changes are designed to support clearer payment records and strengthen fraud monitoring across the financial system.

Compensation Payments Must Begin with “PAYROLL”

Employers and other organizations sending compensation payments through ACH must include “PAYROLL” at the beginning (leftmost characters) of the payment description field.

This requirement applies to compensation-related ACH credits, including:

  • Employee payroll deposits
  • Contractor or 1099 payments
  • Other compensation payments

Using “PAYROLL” ensures these transactions are clearly identified and consistently classified across financial institutions.

Online Consumer Purchase Debits Must Begin with “PURCHASE”

Organizations initiating ACH debits for consumer purchase transactions authorized online must include “PURCHASE” at the beginning (leftmost characters) of the payment description field.

This applies to ACH debits authorized by consumers for the purchase of goods or services through online or electronic channels.

Using “PURCHASE” improves transaction identification and monitoring and supports fraud prevention efforts.

Updates Within the ACH Workflow

To assist with compliance, brief on-screen guidance will be added near the description field within the online ACH payment workflow. These reminders are designed to help ensure descriptions are entered correctly under the new requirements.

What This Means for Your Organization

If your organization originates ACH payments, you will need to:

  • Start the description field with “PAYROLL” for compensation payments
  • Start the description field with “PURCHASE” for applicable online consumer purchase debits
  • Follow the on-screen guidance within the ACH system

You may continue using ACH services as you do today. No other process changes are required.

Why This Change Was Made

These updates improve payment transparency and help financial institutions more effectively identify payroll and purchase transactions. This supports stronger monitoring and helps reduce the risk of unauthorized activity.

If you have questions about how this update may affect your organization, please contact our cash management team using the form below.

Cash Management Solutions Form

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