ACH
ACH Processing
The Platform manages the ACH Scheduling NACHA file creation and distribution to the Fed in the appropriate ACH window.
ACH ODFI
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For ACH Debit Fraud see ACH Fraud/AML PreventionOur API’s allows for ACH origination in 2 ways
1. Consumer Credits/Debits
2. Commercial Payments
Consumer Credits/Debits
Consumer Credits are enabled for externally verified accounts. We use data aggregator services from Envestnet Yodlee to OAuth into the end user’s external account and server to server communication, between Envestnet and our platform to transfer the Account and Routing Numbers. This ensures the most secure transfer of information and guarantees that the Account and Routing number have not been tampered with. Once an external account is linked the consumer is free to make ACH Credit Transfers for either Same-day or Standard ACH, in both cases the ACH Credit will have a pending hold on the Consumer’s Account until NACHA file is sent to the Fed, at which time the ACH Credit is settled on our virtual account.
Consumer Debits are also enabled through an externally verified account, however, these have a clearing period that is set up at the Product level, based on FinTech’s customer segment’s risk profile. There are separate clearing periods for Same-day ACH and Standard ACH
Commercial Payments
Commercial ACH Credits these typically occur for Payroll or Vendor Payment, and for commercial payments we allow for a Payee to be created that can be reused by the business and we manage the Payee information including name, account number and routing number for ease of use.
Commercial ACH Debits are typically Direct Debits that require the business to charge a business or consumer periodically. We allow for Recipients to be created for direct debits and enable the functionality at the Product level. The ACH Debits are still subject to the Same-day and Standard Clearing periods.
SEC Codes
For ODFI we support the following 3 SEC codes:
| SEC Code | Description |
|---|---|
| WEB | The WEB SEC Code stands for Internet Initiated/Mobile Entry. This code is used for ACH transactions that are authorized by consumers over the internet or via mobile devices. WEB SEC Code is primarily used for debit transactions, but can also be used for consumer-to-consumer credit transactions. Commonly used for online bill payments, online purchases, and other electronic fund transfers initiated by consumers. |
| PPD | The PPD SEC Code stands for Prearranged Payment and Deposit Entry. This code is used for ACH transactions that involve direct deposits and preauthorized bill payments. PPD SEC Code is used for both credit and debit transactions. Commonly used for direct deposits of payroll, social security benefits, and other recurring payments. It is also used for preauthorized consumer bill payments, such as utility bills or loan payments. |
| CCD | The CCD SEC Code stands for Corporate Credit or Debit Entry. This code is used for ACH transactions between corporate entities. CCD SEC Code is commonly used for business-to-business payments, such as vendor payments, payroll direct deposits, and intra-company transfers. |
ACH RDFI
For RDFI we support all ACH SEC Codes as mandated by the NACHA.org. For RDFI there is no additional clearing period the ACH will settle based on ACH Settlement Date.
SEC Codes
| SEC Code | Description |
|---|---|
| WEB | The WEB SEC Code stands for Internet Initiated/Mobile Entry. This code is used for ACH transactions that are authorized by consumers over the internet or via mobile devices. WEB SEC Code is primarily used for debit transactions, but can also be used for consumer-to-consumer credit transactions. Commonly used for online bill payments, online purchases, and other electronic fund transfers initiated by consumers. |
| CCD | The CCD SEC Code stands for Corporate Credit or Debit Entry. This code is used for ACH transactions between corporate entities. CCD SEC Code is commonly used for business-to-business payments, such as vendor payments, payroll direct deposits, and intra-company transfers. |
| PPD | The PPD SEC Code stands for Prearranged Payment and Deposit Entry. This code is used for ACH transactions that involve direct deposits and preauthorized bill payments. PPD SEC Code is used for both credit and debit transactions. Commonly used for direct deposits of payroll, social security benefits, and other recurring payments. It is also used for preauthorized consumer bill payments, such as utility bills or loan payments. |
| POS | The POS SEC code stands for Point-of-Sale Entry. This code is used in the context of Automated Clearing House (ACH) transactions, which are electronic payments or collections made through the ACH network. The POS Code specifically relates to debit card transactions at point-of-sale terminals. POS SEC Code is typically used for transactions where a debit card is used to make a purchase at a point-of-sale terminal, such as in retail stores, restaurants, or other physical locations. |
| MTE | The MTE SEC Code stands for Machine Transfer Entry. MTE SEC Code is specifically used for transactions initiated by terminal-based systems, such as ATMs or self-service kiosks, that are protected by PIN security. MTE SEC Code can be used for both ACH credits and ACH debits. |
| XCK | The XCK SEC code stands for Destroyed Check Entry. XCK SEC Code specifically used for a single debit entry to collect funds from a check that has been lost, destroyed, or is otherwise cannot be processed. |
| BOK | The BOC SEC code stands for Back Office Conversion Entry. BOC SEC Code is specifically used to convert checks presented at the point-of-purchase or at manned bill payment locations into ACH debits during back-office processing. |
| ARC | The ACR SEC code stands for Accounts Receivable Entry. ARC SEC Code is specifically used for converting checks received via mail or dropbox into ACH debits. |
| POP | The POP SEC code stands for Point of Purchase Entry. POP SEC Code is specifically used for converting checks presented at the point of purchase into ACH debits. POP SEC Code is commonly used in retail environments where customers prefer to pay by check, but the merchant wants to process the payment electronically for faster and more efficient handling. |
| RCK | The RCK SEC code stands for Re-presented Check Entry. RCK SEC code specifically relates to the electronic re-presentation of a check that was previously returned due to insufficient funds (NSF). |
| TRC | The TRC SEC Code stands for Truncated Entry. TRC SEC Code is used when a physical check is truncated, meaning the original check is converted into an electronic transaction. The physical check is not returned to the issuer but is instead used to create an electronic record for processing. Specifically used to streamline the handling of checks and enhances the efficiency of the payment system. |
| TRX | The TRX SEC code stands for Truncated Entry Exchange. TRX SEC Code is used for transactions where multiple checks are truncated and converted into a single electronic file for batch processing through the ACH network. This allows for efficient handling of large volumes of check conversions. Specifically used to streamline the processing of multiple transactions, reducing the time and effort required for individual check handling. |
| SHR | The SHR SEC code stands for Shared Network Transaction Entry. SHR SEC code is used for transactions that involve shared networks, such as those used by automated teller machines (ATMs) or point-of-sale (POS) networks. These transactions are processed by a network shared among multiple financial institutions. Specifically used to streamline the processing of transactions across shared networks, making it easier for financial institutions to handle these types of payments efficiently. |
| TEL | The TEL SEC Code stands for Telephone-Initiated Entry. This code is used for single-entry debit transactions to a consumer’s account, authorized via a phone call. TEL SEC Code is particularly useful for businesses that handle transactions over the phone, such as telemarketing or customer service payments. |
| CIE | The CIE SEC Code stands for Customer Initiated Entry. CIE SEC Code is used in the ACH (Automated Clearing House) network to denote transactions where a consumer initiates a credit entry to a non-consumer account. CIE SEC Code is typically used for bill payments or other types of payments initiated by the consumer, often through online banking or bill pay services. CIE SEC Code is particularly useful for consumers who want to manage their payments directly, such as paying utility bills or other recurring expenses. |
| IAT | The IAT SEC Code stands for International ACH Transaction. IAT SEC Code is used in the ACH (Automated Clearing House) network to denote transactions that involve the transfer of funds to or from a financial institution outside the United States. Transactions using the IAT SEC Code must comply with various regulations, including those from the Office of Foreign Assets Control (OFAC) and the Financial Action Task Force (FATF). IAT transactions require additional information, such as the identity of the foreign correspondent bank and other details to ensure compliance with international standards. |
| CTX | The CTX SEC Code stands for Corporate Trade Exchange. This code is used in the ACH (Automated Clearing House) network for transactions between businesses or government entities. CTX SEC Code is specifically used to transfer funds between trading partners and includes extensive remittance information. |
ACH Returns
For ACH Returns we have an automated process for responses and a manual triaging process, based on the R-Codes that we see.
Auto-Response R-Codes
The following 4 R-Codes are returned immediately by our platform
| Return Code | Description |
|---|---|
| R01 | Insufficient Funds |
| R02 | Account Closed |
| R03 | Unable to locate account or no account |
Case Management R-Codes
Our Admin Console has a Case Management utility managed by the Banking Operations/Compliance Teams and for ACH the following Cases are managed through it.
| Case Type | Return Code | Description |
|---|---|---|
| ACH Return | R04, R05, R06, R07, R08, R09, R10, R11, R12, R14, R15, R16, R17, R20, R21, R22, R23, R24, R29, R31, R33, R37, R38, R39, R50, R51, R52, R53 | This case is manually created when RDFI chooses to return a posted entry back to ODFI. RDFI Ops can triage the case, to approve or deny the ACH Entry. |
| ODFI: ACH Return Inbound | R61, R62, R67, R68, R69, R70 | This case is systematically created when ODFI receives an inbound Return Entry from RDFI. ODFI Ops can triage the case, to approve or deny the ACH Return entry. In case of deny, ODFI selects a R Code and sends a dishonored return entry back to RDFI. |
| ACH Dishonored Return | Corrected dishonored codes: R04, R05, R06, R07, R08, R09, R10, R11, R12, R14, R15, R16, R17, R20, R21, R22, R23, R24, R29, R31, R33, R37, R38, R39, R50, R51, R52, R53 Contested dishonored codes: R71, R72, R73, R74, R75, R76, R77 | This case is systematically created when RDFI receives an inbound Dishonored Return Entry from ODFI. RDFI Ops can triage the case, to approve or deny the ACH Dishonored Return entry. In case of deny a contested dishonored return entry is sent back to ODFI. In case of approve a corrected dishonored entry is sent back to ODFI. |
| ACH Contested/Corrected Return | Not Applicable | This case is systematically created when ODFI receives an inbound Contested/Corrected Dishonored Return Entry from RDFI. ODFI Ops can triage the case, to approve or deny the case. |
| ACH Notification of Change | C05 | This case is manually created when RDFI chooses to return a posted entry back to ODFI. RDFI Ops can triage the case, to approve or deny the ACH Entry. |
| ACH Refused Notification of Change | C61, C62, C63, C64, C65, C66, C67, C69 | This case is systematically created when RDFI receives an inbound entry with COR SEC Code. RDFI Ops can triage the case, to approve or deny the ACH entry. |
| ACH Acknowledgement Notice | Not Applicable | This case is systematically created when ODFI receives an inbound entry with ACK SEC Code. ODFI Ops can triage the case, to approve or deny the ACH entry. |
| ACH Refused Acknowledgement Notice | A1, A2, A3 | This case is systematically created when RDFI receives an inbound entry with ACK SEC Code. RDFI Ops can triage the case, to approve or deny the ACH entry. |
| Stop Payment | R08 | This case is systematically created when RDFI receives an inbound entry and cannot post it if there is a valid Stop Payment Order in effect. RDFI Ops can triage the case to approve or deny the ACH entry. |
| ACH Notification of Death | Not Applicable | This case is systematically created when RDFI receives an inbound entry with DNE SEC Code. RDFI Ops can triage the case, make necessary changes to the customer or account records and close the case. |
| ACH Exceptions | R04, R09, R14, R15, R16 | This case is systematically created when RDFI receives an inbound entry and cannot post it for these reasons. RDFI Ops can triage the case to approve or deny the ACH entry. |
| ACH Rejected Reclaim Notice | R04, R06, R08, R12, R14, R15, R16, R17, R20, R22, R23, R24, R29 | This case is systematically created when ODFI receives a Return Entry in relation to a Reclaim Entry. ODFI Ops can triage the case, to approve or deny the ACH entry. |
| IAT - OFAC Check | Not Applicable | This case is systematically created on ODFI when an ACH entry cannot be created because of an OFAC match or either the originator or receiver |
ACH Fraud/AML Prevention
For ACH Fraud Prevention the platform uses multiple strategies to ensure that Fraud is being prevented through-out the ACH pipeline:
- Instant Account Verification (IAV): For consumer ACH we ensure all external accounts have gone through verification, by OAuth. We do have failovers for Micro-Deposit Verification and Manual Verification through Banking Operations when required. No Consumer can add an Account and Routing Number without it being verified.
- External Account Bank Funding Fraud (Optional): Based on the Product’s and the Product’s customer segment we can run the External Account credentials through Bank Funding Fraud which uses Early Warning System (EWS) for fraud detection.
- ACH Debit Fraud Clearing: Every ACH Debit will be subject to a clearing period defined based on the risk profile of the customer segment for that Product. A different clearing period can be defined for Same-day ACH vs. Standard.
- Real-Time ACH AML(Optional): On every Originated ACH we can run a real-time check for anti-money laundering and ensure that the recipient account has not moved to a sanction list since the last time the account was used.
- Transaction Monitoring (Batched): The platform provides a data lake extract for use in any transaction monitoring system, for offline AML checks. If the Bank’s Compliance teams detect an issue with a Transaction, they then will block the account for further transactions until the investigation is resolved.
- RDFI IAT OFAC Check: For all received international ACH’s the platform will run an OFAC check on the sender’s account to ensure they are not a Specially Designated National (SDN).