Protecting Your Electronic Payments: What’s The Functionality You Need to Reduce Fraud Risk?

The payments ecosystem has undergone a fundamental shift towards speed, automation, and is now mainly electronic. At the center of this movement is the Automated Clearing House (ACH) Network, a U.S. financial infrastructure used to electronically move money between bank accounts. Common payment types traveling across ACH include payroll direct deposits, vendor disbursements from AP teams, recurring utility or mortgage payments, government benefits, and IRS tax refunds.

The network itself is governed by the National Automated Clearing House Association (NACHA), which establishes the rules and operating standards that financial institutions and businesses must follow.

Digital payments now dominate, and the volume flowing through NACHA reflects that trend clearly. For example, same day ACHs have gained significant adoption, allowing eligible transactions to clear within hours rather than days. In the third quarter of 2025, $585 billion worth of same day ACH was made which is a 15% increase from 2024’s third quarter. (source)

As these numbers rise, payments fraud is rising in parallel. At its core, payments fraud is defined as the use of illegal means—including intentional deception, misrepresentation, or manipulation—to make or receive payments for personal gain. With more payments, faster payments, and more automated payments, the opportunities for exploitation grow as well. This rapidly evolving environment is exactly what has prompted NACHA to introduce new, mandatory risk-management requirements.

To address the escalating risk landscape, NACHA is implementing a significant multi-phase mandate aimed at strengthening fraud controls across all organizations participating in the ACH ecosystem.  These rules are proactive, risk-based fraud monitoring, not validating account ownership on every ACH payment, although account validation is a critical control for reducing exposure.

To understand the impact, it helps to look at the structure of the ACH relationship. In the ACH framework, a business making a payment is classified as the Originator—the entity initiating an ACH credit or debit on behalf of a customer or vendor. The business’s bank serves as the Originating Depository Financial Institution (ODFI). Although the ODFI is the party legally accountable for adhering to NACHA rules, the operational responsibility falls directly on the Originator.

That means companies must implement controls to:

These requirements form the basis of the NACHA Account Validation Rule, part of the broader 2026 fraud-monitoring mandate. While regulators will hold the ODFI accountable, banks increasingly expect businesses to enforce these controls themselves. Originators who fail to do so increase their exposure to fraud losses, misdirected payments, and reputational damage while also introducing compliance risk for their financial institution.

In practice, the mandate shifts fraud prevention from a reactive responsibility to an explicit, forward-looking obligation, ensuring that organizations validate and verify recipients before payments enter the ACH Network. This is the backdrop against which fraud-prevention functionality must be evaluated; because the tools, workflows, and technologies companies use today must meaningfully support these mandatory requirements tomorrow.

That raises the practical question: what functionality does a business actually need to protect its ACH payments? Because the mandate doesn’t just require more effort; it requires better systems. And not all solutions are built equally. Some providers offer partial protections or point services; others offer fully embedded, workflow-wide fraud defenses. The difference between the two can determine whether a company catches an issue early or becomes the next victim of a preventable scheme.

While these requirements are specific to ACH payments under NACHA Operating Rules, most organizations will apply the same controls across all electronic payment types, including wires and RTP, because fraud schemes target the broader payment workflow, not a single rail. Which brings us to the core of this discussion: the functionality required to safeguard the electronic payments that you send.

A software solution should check several boxes. It needs to be embedded; they need to allow advanced configuration; and they need to have extensive verification and validation capabilities.

Being embedded isn’t just an advantage in this situation; it’s a necessity. Although certain providers may offer appropriate preventative services, the lack of integration creates opportunities for companies to still be defrauded. How does this happen?

Fraudsters look for the weakest point in the process. Any part of any workflow can be susceptible to a fraudulent attack, and due to their lack of integration, point systems simply cannot offer total coverage across an entire workflow.

Fraudsters can be incredibly patient, but when they spring their trap, things suddenly move incredibly fast. Point systems have their own data feeds, rules engines, and decisioning. Pipelines like these cause lag. A lag leads to latency, latency leads to fragmentation, and in this scenario, fragmentation leads to fraud.

When a company manages two separate systems of any kind, there is a definitive gap. This gap can be intentionally exploited by a ‘fraudster-in-the-middle’.  The lack of synchronization creates a blind spot allowing malicious actors to impersonate one system with a spoofed email domain causing a devastating chain of events before anyone realizes what’s happening.

Managing two separate systems may seem harmless operationally, but when it comes to shoring up your fraud defense, every handoff is an opportunity for deception. Embedded systems solve these issues by creating end-to-end visibility, allowing you to catch anomalies or fraud schemes in real time, and cut out the middle where fraudsters thrive.

Having an embedded system is just the first box to check when searching for a solution to prevent fraud, lower risk, and adhere to compliance. But embedding alone isn’t sufficient. A critical capability is configurable rules, allowing organizations to tailor controls to their risk profile and operational workflow.

Rules and parameters can sometimes feel like complexity, and permission-related limitations can be frustrating. However, in risk, fraud, and compliance, these controls should be viewed as safeguards rather than obstacles. They help turn policies into enforceable workflow steps that reduce risk and prevent avoidable losses.

An overlying strategy that can be the first line of offense against fraud is mitigating change control. Change control is a general term that is used to describe a systematic modification to a project, system, or process so that they exist in a controlled manner and with minimal disruption. This structured process touches several components of risk management, but one we will talk about specifically is change control surrounding vendor payment details.

When it comes to changing details surrounding vendor payments, the details that can change most frequently are the bank account details. Most often, there is an identification of the change where a request is formally made that highlights what the change is, why it’s needed, and what part of the system it affects. This is the first place where a fraudster can cause trouble, so it is always important that the request is evaluated and assessed.

Reviewing and approving the change should come next along with implementing the proposed adjustment. Once approved, the change is executed according to a plan which includes testing and communication. Finally, the adjustments need to be logged and documented as well as validated so that the outcome is as expected.

In the end, all of this underscores a simple reality: the software you choose to combat risk and fraud must actively support strong change control practices, not work against them. Every step in the process – from identifying a change in vendor banking details, to validating the request, to logging and documenting the update – needs to be reinforced by the system itself. When your tools are designed to structure, verify, and monitor every adjustment, you aren’t just managing change—you’re closing off one of the most common pathways fraudsters use to infiltrate vendor payment processes.

Thresholds are key controls that help strengthen your fraud/risk mitigation framework. Depending on the exposure, liability, and recurring fraud schemes you come up against, implementing various thresholds might be something you want to dial up or dial down. An example of a very simple threshold is a transaction value threshold. A transaction value threshold requires that any payment exceeding a predefined amount undergoes heightened scrutiny and receives approval from an authorized reviewer before it can be processed.

Here are several additional threshold types that should be considered:

Note: NACHA rules apply specifically to ACH payments. However, organizations often extend similar controls to wire payments and other electronic payment types to reduce overall payment fraud exposure.

Again, it is not advised that all these thresholds are implemented – that would be cumbersome – but to pick and choose the ones that aid your business in battling against the specific types of fraud schemes you face the most.

Master data overwriting is when a change is made to a customer or vendor record, and all historical transactions are automatically updated with that change. Some systems automatically overwrite historical records when master data changes — a behavior known as retroactive propagation. While it keeps data consistent, it destroys the ability to reconstruct what was true at the time of payment. In fraud prevention, this is dangerous; it allows identity or bank detail changes to ripple backward through history, erasing the digital evidence that something ever changed.

To prevent this, integrated financial systems need to maintain versioned master data and immutable audit trails. Every update to a vendor’s profile is recorded as a new version, preserving a timestamped record of what existed when each transaction occurred. This not only supports compliance and audit readiness but also makes it far easier to detect manipulation attempts, since changes in vendor identity, account details, or ownership history are fully traceable rather than silently overwritten.

On top of advanced configuration, there are several distinct pieces of functionality that are essential for protection against fraud. They are:

Bank account verification is about confirming that the person or organization you’re paying actually owns the account you’re sending money to. In practice, this means going beyond “the number fits the right pattern” and using tools like micro-deposits, account owner name checks, open-banking style APIs, or bank-provided verification services to validate ownership. When a vendor’s banking details are added or changed, verification steps create a hard speed bump for fraudsters: they can’t simply insert a new account and hope no one notices. Instead, the system demands proof that the account belongs to the legitimate vendor, and it records when, how, and by whom that verification was completed. That traceability is just as important as the check itself when you need to investigate suspicious activity later.

Vendor verification zooms out from the bank account and looks at the entity behind it. The goal is to confirm that the vendor is who they claim to be, is legally registered where they say they are, and is not a shell company designed to siphon off funds. This can involve checking tax IDs against government databases, validating business registrations, confirming addresses and phone numbers, and comparing legal names against third-party databases or internal records. Strong vendor verification processes are especially important during onboarding and whenever core vendor data changes (legal name, tax ID, address, or banking details). By treating vendor identity as a governed, auditable process, rather than a one-time data entry task, you lower the risk of paying imposters, ghost vendors, or manipulated records that have been altered by an insider.

Sanction list screening ensures that none of your payees appear on restricted or prohibited party lists maintained by governments and regulatory bodies. These lists, such as OFAC sanctions in the U.S. and similar regimes globally, are updated frequently, and the penalties for violating them can be severe. Embedding screening into both vendor onboarding and payment execution means that vendor names, owners, and sometimes even locations are automatically compared against up-to-date lists using fuzzy-matching logic. When there’s a potential hit, the system routes it to review instead of allowing the payment to proceed silently.

When evaluating the native capabilities inside Dynamics 365 Finance & Supply Chain Management, it quickly becomes clear that the platform’s out-of-the-box features for vendor and payment security are extremely limited. Beyond a handful of configurable parameters, organizations are left without true safeguards built into their operational workflow.

As discussed earlier, standalone or non-integrated tools may offer partial protections, but they introduce gaps that determined fraudsters can exploit, especially through man-in-the-middle attacks. That reality makes a fully embedded approach not just preferable, but essential.

SKsoft is committed to delivering that embedded strategy for both Dynamics 365 Finance & Supply Chain Management and Business Central. Our focus is simple: strengthen every stage where vendor and bank data can be compromised. That includes robust bank account verification and validation, as well as screening vendors themselves before funds ever move.

Our roadmap includes these capabilities as part of our broader banking and treasury automation suite, giving customers a complete and seamless line of defense right where they already work. Our initial offering will focus on vendor protection, including bank account verification and validation, vendor identity verification, and sanctions screening. We plan to expand these capabilities over time to cover customers and additional risk and fraud scenarios.