Electronic Fund Transfer and the ACH

Examples of ACH payments are direct deposit of payroll, Social Security and other government benefits, Federal and State tax payments and refunds, direct payments of consumer mortgages, loans, utility bills and insurance premiums, business-to-business payments, E-checks, E-commerce and Internet retail payments. In short, ACH payments are an option for virtually any business, public or commercial entity that receives payments.

ACH Payments include:

  • e-Commerce Payments
  • Business-to-business Payments
  • Direct Deposit of payroll, Social Security and other government benefits, and tax refunds
  • Direct Payment of consumer bills such as mortgages, loans, utility bills and insurance premiums
  • Federal, State and Local tax payments

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Originator
Any individual, corporation, or other entity that initiates entries into the Automated Clearing House Network.

Originating Depository Financial Institution (ODFI)
A participating financial institution that initiates ACH entries at the request of and by agreement with its customers. ODFIs must abide by the provisions of the NACHA Operating Rules and Guidelines.

Receiving Depository Financial Institution(RDFI)
Any financial institution qualified to receive ACH entries that agrees to abide by the NACHA Operating Rules and Guidelines.

Receiver
An individual, corporation, or other entity who has authorized an Originator to initiate a credit or debit entry to an account held at an RDFI.

Returns
Any ACH entry that has been returned to the ODFI by the RDFI or by the ACH Operator because it cannot be processed. The reason for each return is included with the return in the form of a "return reason code."

Notification of Change(NOC)
Information sent by an RDFI to notify the ODFI that previously valid information for a receiver has become outdated or that the information contained in a prenotification is erroneous. The standard entry class code is COR.