Before you submit an ACH Payment to PayPal, you are required to receive full authorization from the customer for the payment.
For more information regarding ACH, refer to About ACH Payments.
For CCD or PPD payments, the requirements of NACHA are in line with the Regulation E requirements of the Federal Reserve Board. You should be aware, however, that NACHA’s rules apply to authorizations for both one-off and recurring transactions, while Regulation E covers only authorizations for recurring transactions.
When obtaining authorization for payment, include the following key items:
A payment cannot be revoked by the customer unless you (the merchant) have first been notified.
Specify the manner in which a customer can revoke payment.
Authorization for the transaction either can be in writing or can be displayed electronically.
The customer needs to sign the authorization either physically or digitally. Regulation E provides information on the requirements for authorization with digital signature.
The Authorization must contain evidence of the customer’s identity.
You must provide the customer a copy of the authorization (either electronic or hardcopy).
You must retain the authorization for a period of two years following the termination or revocation of the agreement.
You need not request an authorization for a credit.
Information that appears on this page is taken from ACH Compliance Manual: How to Comply with ACH-Related Rules and Regulations, copyright 2003 by NACHA, Electronic Funds Transfer Act, Regulation E, Uniform Commercial Code, and Federal Reserve Regulation CC.