FOLLOWING ARE SOME
OF THE MORE COMMONLY USED ACH TERMS:
ACH - the Automated Clearing House is an electronic payment Network which exchanges funds via Electronic Funds Transfer (EFT) throughout the U.S. fifty states and territories. Over 98% of the nation's banks including the Federal Reserve belong to the ACH.
ACH Associations - provide rules and guideline for the efficient operation of the ACH Network. There are 36 regional ACH associations whose memberships include financial institutions and affiliates. NACHA, the National Automated Clearing House Association forms the governing foundation for the regional associations.
Addenda Records - records that may be attached to certain ACH entries for the purpose of carrying additional information.
Authorization - refers to the authorization of an ACH transaction by a consumer or company. Most authorizations must be in writing and must be retained for a period of two years. There are 3 types: recurring, non-recurring, one-time.
BOC - The standard code for Back Office Conversion transactions transmitted by the ACH.
Back Office Conversion - Effective March 16, 2007 this ACH service enables merchants to convert all checks received by their companies at a Point of Sale using batch mode in their back office.
Cash Concentration - Companies that have decentralized units use the ACH to concentrate cash into a centralized bank account - replaces wire transfer.
Check 21 - Checks deposited using check 21 legally remain as paper checks but are processed through the banking system as electronic data and images.
Check Truncation - stopping or truncating a paper check by turning it into an electronic item at the Point of Sale (POD) or in lockbox check truncation.
Corporate Payments - business to business ASH Network collection and disbursement of funds. The Federal government is mandating this form of payment for corporate taxes and payments to government vendors.
Direct Deposit - is the disbursement of funds to consumer accounts. Includes payroll, interest, trust disbursements, expense payments, dividends, pension payments, etc. This is the most widely used ACH service.
Direct Payment - the collection of funds from consumer of business accounts. This normally would be used to collect payments for monthly dues as in: health club membership, rent, phone, utility bills, newspaper bills, trash collection, mortgage payments, lease payments, etc.
EFT - Electronic Funds Transfer is the transfer of funds from one bank account to another bank account utilizing the ACH Network.
Electronic Check Representment - An ACH Network service that allows for the electronic representment of a returned paper check marked non sufficient funds (NSF). Provided that certain guideline are fulfilled the check can be collected electronically.
IRD - Image Replacement Document is a check printed from an electronic data and image and legally is a replacement for the original paper document.
Internet Initiated Entries - (WEB) a consumer authorizes a Receiver or Merchant to debit their account via the internet.
Lockbox Check Truncation - also called Accounts Receivable Truncation System (ARTS) is the process of turning checks received in the mail by a biller into electronic items.
NACHA - The National Automated Clearing House Association is the chief rules making and interpretation body of the ACH. NACHA is the cooperative governing body for 36 regional ACH associations.
Non-Recurring Payment Authorization - an individual or company authorizes the debit of their account for a varying period and/or amount. Notification must be sent 10 days before the effective date with the amount to be debited.
NSF Check - A paper check that has been returned by the banking system due to Non Sufficient Funds. These can be electronically represented through the ACH Network using Electronic Check Representment.
ODFI - is the Originating Depository Financial Institution, the bank that initiates an Electronic funds transfer through the ACH Network on behalf of the Originator.
One Time Payment Authorization - an individual or company authorizes a one-time debit of their account. The authorization is usually a written authorization but in some instances a recorded telephonic authorization may be used.
Originator - an individual or a company that initiates an ACH transaction.
Original Entry - a debit or credit ACH transaction directed to an account at an RDFI.
NOC - Notification of Change is an advice from an RDFI to an ODFI that entry information requires corrections and includes the correction details.
POS - Point of Sale is a term used to describe an ACH transaction at the time of purchase - for example at the supermarket check out counter.
Prenotification - or Prenote is an ACH entry with no value that is sent to an RDFI to verify account information prior to sending a live entry.
RCK - Refers to Returned Check and represents the electronic check process for electronic representment of paper NSF checks - Electronic Check Representment.
Recurring Payment Authorization - an individual or company authorizes the periodic debit of their account for the same period and amount.
Receiver - the individual or company that holds an account to which an ACH entry is sent.
Remote Deposit - Web Based check conversion system that enables banks and merchants to deposit checks from their back office. Checks are converted using a web based check imager connected to a PC. Services that can use Remote Deposit are Accounts Receivable Conversion (ARC), Back Office Conversion (BOC), and Check21/IRD.
Return Reason Codes - or R Codes are rejections of original ACH entries by the RDFI.
RDFI - is the Receiving Depository financial Institution, the financial institution that receives an ACH transaction for a holder of an account.
Return Entry - the return of an original entry that either could not be posted or was not able to be identified by the RDFI - closed account, NSF, wrong account number, etc.
TEL - Telephone Initiated Entry
Telephone-Initiated Entry - (TEL) is an entry initiated through a telephone authorization for a one time debit for collection of funds for payment of goods and services. A TEL is valid only when their is an existing relationship between the parties or if no existing relationship, the consumer initiates the telephone call.
Third Party Processor - any processor that participates in a relationship within the ACH processing flow - usually as an Originator of transactions for clients.
Truncation - in ACH it normally refers to stopping or truncating a paper check as in POS or lockbox check truncation and turning that paper check into an electronic item.
WEB
- Internet Initiated Entries
