ACH Transactions
ACH Credits:“Push” of funds from the Originator’s account at the ODFI to the Receiver’s account at the RDFI. A common ACH credit application is direct deposit of payroll.
- Originator initiates an Entry to push funds into a Receiver’s account
- Receiver’s account is credited
- Originator’s account is debited (this is considered the offset/settlement Entry)
ACH Debits:”Pull” of funds from the Receiver’s account at the RDFI to the Originator’s account at the ODFI. A common ACH debit application is payment of an insurance premium.
- Originator initiates an Entry to pull funds from a Receiver’s account
- Receiver’s account is debited
- Originator’s account is credited (this is considered the offset/settlement Entry)
ACH Entries:Categorized as either consumer payments or non-consumer payments, depending on the account type of the Receiver involved in the transaction. As there is no consistent way to know whether an account is coded as a consumer or business account, the burden of proof is on the Originator to ensure the type of account for which they have obtained authorization.
Account Validation: There are various methods available to verify an account number is open and accepting transactions, including prenotification entries, or various external services that use various methods to validate an account number and its attributes, such as ownership and address.
Prenotification:A prenotification is a non-monetary Entry (i.e. no funds move as a result of the transaction) that precedes the first live entry. Apart from the dollar amount and transaction code, the prenotification entry should look identical to the subsequent live-dollar entries. This allows the RDFI to verify the accuracy of the account data. Prenotification entries are optional for all Standard Entry Class (SEC) Codes.
Corporate Transaction Types
Corporate transactions are ACH Entries sent between corporate, business, and other non-consumer entities, which can include various amounts of remittance information (addenda).
Corporate Credit or Debit (CCD)
A CCD entry is a single-entry or recurring ACH credit or debit originated to a corporate account. CCDs are commonly used by Originators to pay vendors, concentrate funds from outlying accounts (cash concentration), to fund payroll, petty cash, or other disbursem*nt accounts. A CCD entry can contain a single addenda record to relay payment-related information.
Corporate Trade Exchange (CTX)
A CTX entry is a single-entry or recurring ACH credit or debit originated to a corporate account that supports up to 9,999 addenda records. CTXs are commonly used in trading partner relationships because a full ANSI ASC X12 message or payment-related UN/EDIFACT information can be sent with the CTX entry.
ConsumerTransaction Types
Consumer transactions are ACH Entries sent from an Originator to consumers (individuals). The following are the most common SEC codes for consumer ACH transactions.
Prearranged Payment and Deposit (PPD)
A PPD entry is a single-entry or recurring ACH credit or debit sent by an Originator to a consumer account to make or collect a payment, where authorization is obtained in writing.
Internet-Initiated/Mobile Entries (WEB)
Internet-initiatedEntries(WEB) can be either a singleentryor a recurringACHdebit that takes place when the consumer’s authorization for a transfer of funds is received via the internet or mobile device.
Telephone Initiated Transactions (TEL)
Telephone-initiatedEntries(TEL) can be either a singleor a recurringACHdebit that occurs when the consumer’s authorization for a transfer of funds is received orally via the telephone.
Authorizations
Each Originator has the responsibility to obtain proper authorization to transact against an account. The method to prove authorization is dependent upon the payment’s SEC Code. It is the responsibility of the Originator to be able to prove that they have permission to transact with an account and be able to provide copy of that proof within 10 days of a request.
Consumer Authorizations:For consumers, a debit authorization must be in writing or similarly authenticated. The authorization must have clear and readily understandable terms. For recurring ACH Debits, the Originator must provide instructions on how a receiver can revoke authorization for future transactions.
Nacha Rules also require the Originator to notify consumer customers of any changes in date or amount debited. The Rules require:
- A seven calendar-day notice for a change of date (consumer and corporate).
- A 10calendar-day notice for a change of amount (consumer only).
Note:For businesses, there must be an agreement between the two business partners. The Rules do not specify what must be in the agreement, other than both parties must be bound to the Rules.
