ACH LANGUAGE Flashcards
UNDERSTANDING ACH TERMS
A card, code or other means of access to a consumer’s account, or any combination of thereof, that may be used by the consumer to initiate electronic fund transfers. This does not include electronic devices, such as telephones, personal computers, or terminals, typically used in such transfers.
Access Device
A card or other means of access to a Consumer Account held by a Depository FI that is issued by an entity other than the Depository FI or a party that has contracted directly with the Depository FI to issue such cards or other means of access and can be used at the point of sale to initiate POS entries.
ACH Card
An electronic funds transfer system governed by the NACHA operating rules that provides for the interbank clearing of electronic entries for participating financial institutions.
ACH Network
An entity that acts as a central facility for the clearing, delivery, and settlement of entries between or among participating DFI’s. They may be a Federal Reserve Bank or an entity that executes an annual agreement with NACHA.
ACH Operator
The rate at which an Originator’s or Third-Party Sender’s debit entries are returned for administrative reasons (Return Reason Codes R02, R03, or R04), as calculated by the Rules requirement in Article Two (ODFI Return Rate Reporting Regarding and Originator’s or Third-Party Sender’s Administrative Return Rate or Overall Return Rate).
Administrative Return Rate
And ACH record that contains supplemental data related to an entry. This information may be needed to completely identify an account holder(s) or provide information concerning a payment to the RDFI and the Receiver.
Addenda Record
A contract between two entities (i.e., originating company and originating FI; originating company or Originating Depository FI and a TPSP/TPS; or Receiving Depository FI and a TPSP) that defines the operational and legal relationship between the two business entities when transferring funds electronically through the ACH network.
Agreement
The process of generating a message/data-specific code that can be used to positively identify the sender of the message/data, and to protect the message/data from insertion, modification, deletion or replay. The code is generated using a confidential set of keys and a complex mathematical algorithm (the Data Encryption Standard-DES). The code is appended to the message/data that is to protected. The message/data is in readable form.
Authentication
For most consumer debit entries, a written agreement with the originating company that is signed or similarly authenticated by an employee, customer, or member to allow payments processed through the ACH Network to be withdrawn from the Receiver’s account at a financial institution. It can also be a written agreement that defines the terms, conditions, and legal relationship between trading partners.
Authorization
An optional, variable format field of the MICR line of a check. It is positioned to the left of the routing number (or the external processing code, when such code is present). Data located within this field is bracketed by on-us symbols.
Auxiliary On-Us Field
Funds available for use on the current day
Available Balances
Funds that are available immediately to make payments, to invest, etc.
Available or Collected Funds
Schedule of deposited checks showing when the funds will be available.
Availability Schedule
Number of days required to collect items before the customer has available balances.
Availability
Any day on which a participating depository FI is open to the public during any part of the day for carrying on substantially all its banking functions. With reference to an ACH Operator, any day on which the applicable facility of such ACH Operator is being operated.
Banking Day
A group of records or documents considered as a single unit for the purpose of data processing.
Batch
The accounting entry that reflects the bank balance. It may or may not reflect funds available for immediate use.
Book or Ledger balance
The disbursement division for the US Dept of Treasury.
Bureau of the Fiscal Service
The FI or merchant that authorizes the issuance of a card to a consumer (or another organization) and is liable for the use of the card. The issuer retains full authority over the use of the card by the person to whom the card is issued. Any bank or organization that issues, or causes to be issued, bank cards to those who apply for them. Also referred to as the access device issuer.
Card Issuer
The transfer of funds from diverse accounts into a central account to effect more efficient cash management.
Cash Concentration
The transfer of funds from a central account to diverse accounts to effect more efficient cash management.
Cash Disbursement
Any item that is immediately convertible into cash such as a paper or electronic collection instrument.
Cash Item
A deposit of checks by a financial institution at another financial institution or the Federal Reserve Bank. The checks within the cash letter are drawn on various paying banks or may be drawn only on the financial institution receiving.
Cash Letter
A master file maintained by the ACH Operator to verify the file (CIF) routing numbers and other pertinent information or participating depository financial institutions.
Central Information File (CIF)
A letter, digit, or other symbol that is used as part of the organization, control, and/or representation of data.
Character
The final character of a routing number that may be used to test the validity of a specific routing number. Some financial institutions also calculate these for their account numbers.
Check Digit
Process of collecting the paper of electronic items from the drawee banks after being deposited by a customer.
Clearing
The balance of an account maintained by a FI at a Federal Reserve or correspondent bank.
Clearing Balance
A voluntary association of depository institutions that facilitates the clearing of checks or electronic items through the direct exchange of funds between members.
Clearing House
A large dollar wire transfer system operated by the Clearing House Interbank Payments System Company.
CHIPS
An individual, sole proprietorship, or corporation engaged in commercial enterprise.
Company
The record contained within an ACH file that describes the Originator(s) of an ACH transaction.
Company Batch/Header Record
The balances a company must maintain at a bank to compensate for credit accommodations and credit services.
Compensating Balances
A validation process that is used to ensure that a transmission complies with ASC X12 syntax rules.
Compliance Checking
Usually refers to an individual engaged in transactions other than commercial.
Consumer
A deposit account held by a FI and established by a natural person primarily for personal, family, or household use and not for commercial purposes.
Consumer Account
A bank that accepts deposits and performs banking services for other banks. These banking arrangements exist between local banks and banks located throughout the world.
Correspondent Bank
The department within a financial institution that is responsible for establishing credit policies and procedures.
Credit Department
An entry to the record of an account to represent the transfer or placement of funds into the account.
Credit Entry
A maximum amount a customer is allowed to borrow or become obligated to pay based on the customer’s credit rating, historical or predicted funding requirements, and the type of obligation.
Credit Limit
Classification of a customer’s ability to repay debts and various obligations.
Credit Rating
The risk that a party to a transaction cannot provide the necessary funds, as contracted, in order for settlement to take place.
Credit Risk
This occurs when the movement of fraudulent or illegal payment transactions from one payments channel to another is met with inconsistent risk management practices and lack of information sharing across payment channels about fraud.
Cross-Channel Risk
The basic units of information in the EDI standards, containing a set of values that represent a singular fact. They maybe single character codes, literal descriptions, or numeric values.
Data Element
Converting plain text using a key and a transformation technique into scrambled text, which protects the confidentiality of the information being transferred.
Data Encryption
The electronic exchange of information between two data processing points.
Data Transmission
A card that resembles a credit card in its uses but results in a debit to the consumer’s transaction account in response to the consumer’s purchases. a debit card may be machine readable, allowing for the activation of an automated teller machine or other automated payment equipment.
Debit Card
An entry to the record of an account to represent the transfer or removal of funds from the account.
Debit Entry
A data element separator in an Addenda Record, designated by an asterisk (*).
Delimiter
Regulation E requires a financial institution receiving ACH transactions to make available a periodic statement with descriptive information included. See Regulation E for details on the requirements.
Descriptive Statements
A situation in which the Originator or third-party (either a DFI’s TPSP or and Originator’s TPS) transmits ACH files (transactions) directly to an ACH operator using a financial institution’s routing and transit number and settlement account.
Direct Access
An electronic transfer of funds into a customer’s checking or savings account from an employer, another company, or a government agency. The funds being deposited can represent a variety of products, such as payroll, interest, pension, dividends, etc.
Direct Deposit
The electronic transfer of funds for making payments, whether the customer send or receives a payment. Customers can pay bills or tuition, donate to a favorite charity, make a purchase, or send money to a friend or family member electronically from a checking or savings account. Customers can initiate a payment from their bank or credit union’s online bill payment service, or they can authorize the company or government agency that they pay to initiate a payment on a recurring or one-times basis.
Direct Payment
A check clearing process in which a bank sends checks directly to the drawee bank or Federal Reserve Bank. Used to accelerate the collection of checks. Also refers to the arrangement where financial institutions exchange payment files with each other that use the NACHA formats (or are covered by the NACHA Operating Rules) but without using an ACH Operator.
Direct Send
The exchange of data from the computer of the sending party directly to computer of the receiving party. A third party value-added service is not used.
Direct Transmission
To alter, adapt or refine information, especially to bring about conformity to a standard or to suit a particular purpose or function. Based on the NACHA Operating Rules, ACH Operators are responsible for editing all ACH files submitted for processing. However, the ACH Operator does not make the changes but may reject the file indicating editing changes are required or may pend the file based on its agreement.
Edit
The banking day specified by the Originator on which it intends a batch of entries to be settled.
Effect Entry Date
A generic term used to describe any ACH, wire, or consumer debit card transaction.
Electronic Funds Transfer (EFT)
An electronic sound, symbol, or process attached to or logically associated with an agreement, authorization, WSUD, or other record and executed or adopted by a person with the intent to sign the record.
Electronic Signature
A data security technique used to protect information from unauthorized inspection or alteration. Information is encoded so that data appears as a meaningless string of letters and symbols during delivery or transmission. Upon receipt, the information is decoded using an encryption key.
Encryption
An electronic request representing the transfer of funds or a non-monetary transaction in the ACH network.
Entry
A entry that is (a) a duplicate of an entry previously initiated by the Originator or ODFI; (B) orders payment to or from a Receiver different than the Receiver intended to be credited or debited by the Originator; or (c) orders payment in a dollar amount different than was intended by the Originator , or (d) orders payment of a debit entry on a date earlier than the Receiver was intended to be debited by the Originator, or payment of a credit entry on a date later than the Receiver was intended to be credited by the Originator.
Erroneous Entry
Procedures required for resolving a consumer’s allegation that entries were improperly charged to the consumer’s account. Regulation E outlines minimum error resolution requirements and the liability and consequences for the bank and its customers.
Error Resolution
An entry that requires special attention or processing. Examples include return entries, stop payments, notification of change, dishonored return claims, etc.
Exception Entry
Any point in time that (A) a written agreement between an Originator and a Receiver is in effect; or (B) the Receiver has purchased goods or services from the Originator within the two-year period immediately preceding such point in time.
Existing Relationship
An entry initiated by an RDFI that die to the return reason has a longer return timeframe than the normal two-day window. A return entry that must be transmitted to its ACH Operator so that it is available to the ODFI by opening of business the banking day following the 60th calendar day following the settlement date of the original entry.
Extended Return Entry
The time that transpires between the granting and receiving of availability on items deposited for clearing at the Federal Reserve Bank by financial institutions.
Federal Reserve Bank Float
This directory provides basic routing information for FedWire Funds Service, Fedwire Securities Service, and FedACH transactions. This information is synchronized with the Federal Reserve FedACH and FedWire databases daily and is provided solely as a service to financial institutions and other authorized users to help process and settle their transactions efficiently.
Federal Reserve Banks’ E-payments Routing Directory
The central bank of the United States was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. It consists of a seven-member Board of Governors in Washington, DC, twelve regional Reserve bank districts, and member depository institutions that are subject to reserve requirements.
Federal Reserve System
A wire service operated by the Federal Reserve Bank to move funds electronically via the wire network for real time gross settlement.
Fedwire Funds Service
One or more consecutive character positions within an ACH entry mapped to contain specific information. For credit, debit, or ATM cards, a defined area within an information track of the magnetic stripe of fixed or variable length.
Field
A group of ACH batches initiated into the ACH network or sorted for delivery to ACH receiving point(s). It must be transmitted electronically via data transmission between the sending point and the receiving point. It may be delivered to an endpoint via direct data transmission or other agreed upon secure media. It may contain one or more batches of entries.
File
The first record of an ACH file containing information necessary to route, validate, and track the ACH entries contained within the file.
File Header Record
The risk that a payment transaction will be initiated or altered in an attempt to misdirect or misappropriate funds.
Fraud Risk
The time at which the funds resulting from a funds transfer are made available to the Receiver.
Funds Availability
An ACH Operator or a Participating DFI that acts as an entry point to or exit point from the United States for ACH payment transactions. Also known as a “Gateway Operator” or “GO”.
Gateway
A publication assembled by the Bureau of the Fiscal Service of the U.S. Department of the Treasury that specifies the procedures to be used in ACH transactions originated on behalf of the United States Federal Government.
Green Book
A payment to an intended third-party payee that was not made or completed by the Originator, Third Party Sender, or ODFI of a corresponding debit entry authorized by the consumer Receiver (or any Receiver with respect to an ARC, BOC, or POP entry) for the purpose of funding the payment to the third-party payee. This would NOT be a partial or erroneous payment to the intended third-party payee.
Incomplete Transaction
The number used by the originator to identify the receiver for a CIE entry. This is the account number by which the originator or payor is known to the receiver or payee for a web credit or P2P entry. This is the name of the consumer originator.
Individual identification number
The date used in the ACH network for the settlement date inserted by the ACH operator. It is equivalent to the number of elapsed days since the beginning of the current year. For example, January, one of any given year would be Julian date 001 and a non-leap year December 31 would be Julian date 365.
Julian date
A set of instructions governing the enciphering and deciphering of messages.
Key
The administrative responsibility for the distribution of unique data, security keys.
Key management
Live refers to an entry that affects the funds transfer rather than a non-monetary entry such as a pre-notification.
Live dollar entry
Describes data in a form that is processable by a mechanical device without the need for further translation such as MICR.
Machine readable
A data element or segment requirement designator that indicates the presence of a specified data element is necessary to ensure processing. Any mandatory field not included in an ACH record will cause the ACH operator to pend or reject that entry, batch, or file.
Mandatory
An interim procedure in which credits and debits are recorded in individual accounts in a manner that allows financial institutions to reflect deposit information prior to actual posting.
Memo posting
A procedure between two parties that allows each party to verify that received data is genuine and has not been altered.
Message authentication
The magnetic ink character, recognition inscription at the bottom of a paper check.
MICR line
A transaction in which the sending and receiving accounts are both at the same financial institution, the transaction need not be sent through the ACH network, but may instead be retained by the financial institution and posted to the appropriate account.
On – us entries
The risk that a transaction is altered or delayed due to an unintentional error.
Operational risk
A participating depository financial institution that transmits entries directly or indirectly to an ACH operator for transmittal to an RDFI. ODFIs must abide by the provisions of the NACHA operating rules.
Originating depository financial institution(ODFI)
An organization or natural person that has authorized an ODFI directly or through a third-party sender to transmit for the account of that organization or natural person a credit entry, debit entry, or non-monetary entry to the receivers account at the RDFI.
Originator
The rate at which an originators or third-party senders debit entries, excluding RCK entries, our returned, regardless of reason, as calculated in accordance with the rules, Article 2 ODFI return rate reporting regarding an originators or third-party senders administrative return rate or overall return rate.
Overall Return rate
An overall return rate of 15%.
Overall return rate level
Negative balances in customers, demand deposit or savings accounts after the close of business and following the posting of all transactions to the demand deposit system.
Overdrafts
An association of member financial institutions and business entities organized develop and enhance the ACH payment mechanism. Through the association, members receive standardized, specifications, illegal framework for the protection of participants, a link to the nationwide, ACH network and educational programs and materials.
Payment association
Any device, instrument, or system that accomplishes the transfer of money. Payment mechanisms include cash, checks, ACH network, automated, teller, and point of sale or card systems.
Payment mechanism
A communications system having the provisions to provide settlement information.
Payment system
A file containing ACH injuries for future release into the ACH network, according to effective entry date.
Pending file
A summary report provided to the account holder at specific intervals, usually monthly, containing information concerning the posting of credits and debits to a transaction account. When an account has ACH activity, a statement must be provided at least monthly showing such activity.
Periodic statement
A summary report provided to the account holder at specific intervals, usually monthly, containing information concerning the posting of credits and debits to a transaction account. When an account has ACH activity, a statement must be provided at least monthly showing such activity.
Periodic statement
A credit entry initiated by or on behalf of a holder of a consumer account that is intended for a consumer account of a receiver. The entry may be a transfer of funds to the originators own consumer account at another FI or it may be a transfer of funds to another receivers consumers account. A P2P entry uses the Internet initiated mobile entry WEB standard entry class code.
Person to person or P2P
This is the requirement to pay in advance or immediately for all ACH transactions to be processed by the financial institution/ODFI. The funds must be good funds and settled prior to the ODFIs processing date.
Pre-funding
The physical delivery of a negotiable instrument by a holder to the drawee for payment or acceptance.
Presentment
Any organization performing data processing services regarding ACH transactions, including service, bureaus, third-party service providers, AC operators, etc.
Processor
Agency of the federal government, responsible for determining entitlement and authorizing a payment to be made, such as the Social Security administration.
Program agency
The non-public personal information NPPI, including financial information, of a natural person used to create, or contained within, and entry and any related agenda record.
Protected information NPPI
An individual, corporation, or other entity, who has authorized an originator to initiate a credit entry, debit entry, or non-monetary entry to the receivers account held at the RDFI.
Receiver
A participating depository financial institution that receives ACH entries from the ACH operator to the account of receivers. And RDFI must agree to abide by the NACHA operating rules.
Receiving depository financial institution or RDFI
A site where entries are received from an ACH operator for processing. It may be the RDFI, it’s data center or a data processing service bureau authorized to receive entries on behalf of an RDFI.
Receiving point
A person authorized by the government to receive recurring payments from the government.
Recipient
A procedure to recover funds from a financial institution that were paid to that financial institution on behalf of a deposit or after the deposit or death or legal incapacity.
Reclamation
Any ACH batch or file that has not been accepted by an ACH operator because it cannot be processed, usually because of technical error. Also a term used for entries that do not post automatically to receivers accounts with the RDFI example: exception entries.
Rejects
Occurs when negative publicity regarding an institutions business practices leads to a loss of revenue or litigation.
Reputation risk
A portion of a financial institutions funds that must be in the form of cash or readily available securities for the protection of depositors. Reserve or clearing balances are used to affect settlement between financial institutions.
Reserve requirement
A financial institution that sends ACH entries to a correspondent bank.
Respondent
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.
Returns
ACH entries or files sent within required deadlines to correct or reverse previously originated, erroneous entries or files.
Reversals
A nine digit number eight digits and a check digit, that identifies a specific financial institution also referred to as the ABA number. Numbers are assigned by official ABA registrar.
Routing number
A processing site from which entries are transmitted to the ACH operator. It may be the ODFI on its own behalf or a financial institution or a third-party service provider on behalf of the ODFI.
Sending point
A transfer of funds between two parties and cash, or on the books of a mutual depository institution, to complete one or more prior transactions, made subject to final accounting. Settlement for the ACH system occurs through the federal reserve bank system.
Settlement
The date on which in exchange of funds with respect to an entry is reflected on the books of the federal reserve bank. With respect to non-monetary entries, the date specified in the settlement date field of the entry. The ACH operator inputs the settlement date and Julian date format.
Settlement date
Three character code within an ACH company batch header record that identifies payment types within an ACH batch.
Standard entry class codes
In advanced authorization by a receiver, a future entries to the receivers consumer account that requires further affirmative action by the receiver to initiate those future entries.
Standing authorization
The advice, either paper or electronic, prepared by the ACH operator stating the dollar value of an ACH file. This advice may include multiple files presented that day.
Statement of ACH activity
An entry to a consumer account that is initiated by a receivers affirmative action in accordance with the terms of a standing authorization
Subsequent entry
The society for worldwide international financial telecommunication is a worldwide interbank telecommunications network.
SWIFT
An electronic mechanism that routes transaction data captured from a plastic card and an electronic funds transfer terminal to the authorizing data processor in order to obtain the authorization of the card issuing institution
Switch
The risk that the inability of one’s funds transfer system participant to settle its commitments will cause the other participants to be unable to settle their commitments
Systematic risk
The end of a segment in an addenda record, designated by a backslash or tilde.
Terminator or segment terminator
A 15 character code uniquely identifying each entry with a batch in an ACH file. The first eight characters constitute the routing number of the ODFI without the ninth character check Digit. The last seven characters represent a number assigned, in ascending order to entries with each batch, by the ODFI.
Trace number
The two digit code in the ACH record the determines whether an entry is a debit or a credit to a savings, DDA, or general, ledger account, a credit to a loan account, or a debit to a loan account/reversal entries only or a non-monetary entry to any of the previously listed accounts
Transaction code
A fee paid by an ODFI to the respective RDFI for a debit entry, except for a debit IAT entry, that is returned to the ODFI with a return reason code of R05, R07, R10, R11, R29, or R51
Unauthorized entry fee
The rate at which an originators or third-party senders debit entries, are returned on the basis that they were unauthorized as calculated in accordance with article 2, subsection 2.18.2.4D
Unauthorized entry return rate
An unauthorized entry return rate of 1/2 of one percent 0.5%.
Unauthorized entry return rate threshold
Funds deposited that are not yet collected by the depository bank.
Uncollected funds
Storage of pending files to release for a particular settlement date, or storage of entries received until settlement date, and posting to the receivers account.
Warehouse
The term that generically refers to large dollar, real time, gross settlement, electronic funds, transfers. Examples of domestic payment systems offering these services include clearing house, interbank payment system(CHIPS), offered by the clearing house, and fed wire, provided by the federal reserve system.
Wire transfer
A written notice submitted to the RDFI by a receiver, requesting recredit to the receivers account with the RDFI for a debit to the receivers account that was not authorized by the receiver; was improper; was part of an incomplete transaction; or was in improperly reinitiated entry.
Written statement of unauthorized debit/WSUD
Return on investment, usually expressed as a percentage of investment.
Yield
A non-monetary entry transmitted by an originator to the account of a receiver to convey payment related remittance data to the receiver. This type of entry must 1. use an appropriate zero dollar entry transaction code and 2. be transmitted as a CCD or CTX entry to a non-consumer account of the receiver or an IT entry to the account of any receiver. Must be accompanied by at least one addenda record.
Zero dollar payment
