Implementing Authorize.net

The Authorize.net setup process requires actions by your financial institution (FI), Narmi, and the Authorize.net team. It is critical that these steps be taken in a timely manner to ensure there are no delays to the funding process.

Implementation

At a high level, the process contains the following steps. If your FI uses Narmi AO ACH Service for ACH funding, only step #1 - Creation of Authorize.net Gateway, will be required. 

1. Creation of Authorize.net Gateway
2. eCheck Setup + Underwriting
3. Production testing + Risk Review

1. Authorize.net Gateway

First, your FI must set up your Authorize.net account here. This is immediate on the Authorize.net side and no extensive review is necessary; this step is to establish the Authorize.net gateway and facilitates card funding processes. 

2. eCheck Setup

Next, your FI must set up the eCheck portion with Authorize.net. eCheck is synonymous with ACH funding for the purposes of Authorize.net. Any accounts funded via ACH will be processed through eCheck. The eCheck setup process should take 2-5 days but can vary based on information requested by Authorize.net, underwriting criteria, etc. 

The eCheck setup process proceeds as follows:

1. Authorize.net requests documentation from FI (via email or phone)
   • Specific documents requested may vary based on available information via public resources, but will usually consist of the following:
     • Audited financials for the past 2 years
     • YTD financials
     • EIN letter
     • Business registration verification / State registration documents
     • Beneficial owner form
2. Underwriting
   • The Authorize.net underwriting team will review the information on the application and documentation mentioned in step #1
   • Additional documentation or approval may be required
3. eCheck account approval 
   • Your FI will be informed via email that your account has been approved 
4. Configure eCheck account & billing method
   • Your FI will need to input the bank account information for ACH funds deposited - this is where the eCheck funds will be deposited
   • When the Authorize.Net account was initially set up, your FI would have inputted a credit card for Authorize.Net fees. Your FI needs to confirm the billing method to be used going forward (usually a bank account opposed to a credit card) - this is where the Authorize.net fees will be charged
   • Please note - this must be a Demand Deposit Account (DDA)
     • Transactions are performed using NACHA code 27 (Checking Withdrawal (Debit)); Authorize.net is unable to transact to/from General Ledger (GL) accounts through NACHA code 47 (GL Withdrawal (Debit))
       
       

3. Production Testing + Risk Review

During production testing, real accounts will be opened with real funding to confirm the funding process is working as expected. Your FI will want to open all account types utilizing a mix of both ACH and card funding. Please note, that you will receive your customers' funds from both Authorize.net and Elavon. Authorize.net will batch deposit funds that originated via ACH, and Elavon will deposit funds that originated via card. Elavon serves as the merchant account provider for card funding, not Authorize.net.

After ACH transactions begin processing, a risk review will be triggered by Authorize.net to review the transactions and verify that the account is set up and functioning as expected. This risk review is triggered automatically based on a proprietary algorithm; consequently, there is not a set number of transactions or dollar amounts that need to be processed before the risk review will be triggered. However, it usually takes at least $500 worth of ACH transactions to be submitted before the risk review occurs. The sooner your FI can reach this unofficial threshold of prod testing funding, the better.

During the review, the risk team may follow up on any outstanding items from the underwriting team. Essentially, the risk team is ensuring the funding is in line with the information provided on the application. They will place a funding hold if the funds processed don't match what the underwriting team approved. 

After the risk review, funding will be released from Authorize.net and deposited to your financial institution. 

Once the testing and risk review phases are complete, your financial institution follows the standard funding workflow.

Best Practices 

Your Narmi Implementation project manager will assist you every step of the way in setting up and testing Authorize.net. Please follow the tips below to ensure your Authorize.net integration is completed quickly and efficiently. 

• Identify FI staff/family/friends early on who are willing and able to open prod accounts during the testing period (preferably with higher amounts so the risk review can be triggered as early as possible)
• Make your best effort to accurately estimate expected account openings and funding volumes while completing the application; this information is critical in their underwriting process
• Be ready with the documentation that underwriting will likely request (i.e. financials, business registration, etc.)
• If your FI needs to close an account and/or refund someone that opens an account during prod testing (or shortly post-go live), do it through your core banking system and not through Authorize.net to prevent a high return ratio that could cause issues with Authorize.net
• Become familiar with the Authorize.net portal
• Understand the roles of Authorize.net vs. Elavon - see Authorize.net vs. Elavon Platforms
• Visit Authorize.net's support center for a helpful, searchable library of additional content and instructions
• Remember—your institution has a direct relationship with Authorize.net and should feel comfortable reaching out to them directly with questions and for support related to their portal and processes