Glossary

EFX Provides Clarity And Convenience

In the interest of providing the best possible customer experience we can, we’ve put together this glossary of commonly used industry terms

for our customers’ use and convenience. You may click on the links below or on the left side navigation to access each page of terms.

This application can be either a credit card or debit application where funds are either distributed or consolidated between corporate entities. This application can serve as a stand-alone funds transfer, or it can support a limited amount of payment related data with the funds transfer. Initially designed for intra-company cash concentration and disbursement transactions, the CCD format was revised as of March 16, 2007, to clarify that CCD entries are used more broadly for transfers between unrelated corporate entities.

• CCD is the standard entry class code

• Entries to or from Corporate Accounts only

• Can be one time entry or recurring transactions

• If there is no preexisting relationship between the parties a written authorization must be obtained prior to debit or credit to the corporate account.

Direct deposit is a credit application that transfers funds into a consumer’s account at the Receiving Depository Financial Institution. The funds being deposited can represent a variety of products, such as payroll, interest, pension, dividends, etc.

• PPD is the standard entry class code

• Entries are to consumer accounts only

• Entries can be one time or recurring transactions

• Written authorization must be obtained from receiver prior to debit or credit to account

Preauthorized payment is a debit application. Companies with billing operations may participate in the ACH through the electronic transfer (direct debit) of bill payment entries. Through standing authorizations, the consumer grants the company authority to initiate periodic charges to his or her account as bills become due. This concept has met with appreciable success in situations where the recurring bills are regular and do not vary in amount — insurance premiums, mortgage payments, and installment loan payments being the most prominent examples. Standing authorizations have also been successful for bills where the amount does vary, such as utility payments.

• PPD is the standard entry class code

• Entries are to consumer accounts only

• Entries can be one time or recurring transactions

• Written authorization must be obtained from receiver prior to debit or credit to account

These two Standard Entry Class Codes represent point of sale debit applications in either a shared (SHR) or non-shared (POS) environment. These transactions are most often initiated by the consumer via a plastic access card.

• POS is the Standard Entry Class Code

• Consumer presents a plastic access card (debit card) at the point of sale for a single-entry debit transaction. A PIN number is typically required.

• Consumer signs an authorization form permitting the financial institution/store to debit his/her account for ACH transactions originated by the debit card.

• The debit card is swiped through a POS terminal, capturing account data from the magnetic strip on the back of the debit card. Using the ATM network, an authorization of available funds is received. The consumer is given a receipt for his/her purchase.

• These transactions are conducted within a non-shared environment (No contractual agreement between ODFI and RDFI).

• The retail store sends the POS information to the ODFI/Third Party Processor, who then sends the info electronically to the FED. The FED credits the ODFI’s account and debits the RDFI’s accounts on settlement day. The ODFI credits the retail store’s accounts and the RDFIs debit the consumer’s accounts.

These two Standard Entry Class Codes represent point of sale debit applications in either a shared (SHR) or non-shared (POS) environment. These transactions are most often initiated by the consumer via a plastic access card.

• SHR is the Standard Entry Class Code

• Consumer presents a plastica access card at the Point of Sale for a single-entry debit transaction in a shared (SHR) environment. A PIN number is typically required.

• These transactions are conducted in a shared environment (There is an existing agreement between the ODFI and the RDFI).

This Standard Entry Class Code is used for the origination of debit entries (either recurring or Single-entry) to a consumer’s account pursuant to an authorization that is obtained from the Receiver via the internet. This SEC code helps to address unique risk issues inherent to the internet payment environment through requirements for added security procedures and obligations.

• Web is the standard entry class code

• Authorization is obtained from the Receiver via the internet

• Debit to a Consumer Account Only

• Transaction can be either single entry or recurring items

• Originator must employ a commercially reasonable fraudulent transaction detection system to screen each entry

• Originator must use commercially reasonable methods of authentication to verify the identity of the Receiver

• Originator must use commercially reasonable procedures to verify that routing numbers are valid

• Originator must complete, or have completed by an outside source, a website security audit

This Standard Entry Class Code enables Originators to convert to a Single-entry ACH debit an eligible check received via the U.S. mail or at a dropbox location for the payment of goods and services. The Receiver’s source document (i.e. the check) is used to collect the Receiver’s routing number, account number, check serial number, and dollar amount for the transaction. Authorization for an ARC entry is obtained through notice provided to the Receiver by the payee and the Receiver’s going forward with the transaction.

• ARC is the standard entry class code

• Single-entry debit to convert a consumer’s check to an ACH item

• Check must be received via the U.S. mail or at a dropbox location

• Notice must be provided to the receiver by the originator, clearly and conspicuously stating that the receipt of the source document will authorize an ACH debit entry to the Receiver’s account in accordance with the terms of the source document

• The source document (check) must:

    • Contain a pre-printed serial number
    • Not contain an Auxiliary On-Us filed in the MICR line
    • Be in an amount of $25,000 or less
    • Be completed and signed by the receiver

• Ineligible Source Documents

    • Checks or sharedrafts that contain an Auxiliary On-Us field in the MICR line
    • Checks or sharedrafts in an amount greater than $25,000
    • Third-party checks or sharedrafts
    • Demand drafts and third-party drafts that do not contain the signature of the receiver
    • Checks provided by a credit card issuer for purposes of accessing a credit card account or checks drawn on home equity lines of credit
    • Checks drawn on an investment company as defined in the Investment Company Act of 1940
    • Obligation of a financial institution (traveler’s checks, cashier’s checks, official checks, money orders, etc.)
    • Checks drawn on the Treasury of the United States, a Federal Reserve Bank, or a Federal Home Loan Bank Checks drawn on a state or local government that are not payable through or at a participating DFI
    • Checks or sharedrafts payable in a medium other than U.S. currency

 

• During initial processing of an ARC entry, the Originator may not key-enter the routing number, account number or check serial number from the source document. The routing number, account number and check serial number must be captured using a reading device (scanner). Originator may key-enter such information to correct errors relating to MICR misreads, misencoding or processing rejects

• The amount of the entry, the routing number, the account number and the check serial number must be in accordance with the source document

• The source document to which the ARC entry relates may not be presented for payment unless the ARC entry is returned by the RFDI

• Originator must retain a reproducible, legible, image, microfilm, or copy of the front of the Receiver’s source document for each ARC entry for two years from the Settlement Date of the ARC Entry.

This Standard Entry Class code enables Originators, during back office ACH processing, to convert to a Single-entry ACH debit an eligible check received at the point of purchase or manned bill payment location for the in-person purchase of goods or services. The Receiver’s source document (i.e. the check) is used to collect the Receiver’s routing number, account number, check serial number, and dollar amount for the transaction. Authorization for a BOC entry is obtained through notice provided by the Originator at the point of purchase or manned bill payment location and the Receiver’s going forward with the transaction.

• BOC is the standard entry class code

• A Check or sharedraft is provided by the receiver at the point of purchase and is used as the source document

• The source document is used to provide the receiver’s routing number, account number, check serial number and dollar amount

• The originator must use a reading device to capture the Receiver’s routing number, account number and check serial number from the MICR line of the source document. This information may not be key entered by the Originator. An Originator may key-enter such information to correct errors relating to the MICR misreads, misencoding or processing rejects.

• Source documents must:

    • Contain a pre-printed serial number
    • Not contain an Auxiliary On-Us Field in the MICR line
    • Be in an amount of $25,000 or less
    • Be completed and signed by the Receiver

• Ineligible Source Documents:

    • Checks or sharedrafts that contain an Auxiliary On-Us Field in the MICR line
    • Checks or sharedrafts in an amount greater than $25,000
    • Third-party checks or sharedrafts
    • Demand drafts and third-party drafts that do not contain the signature of the receiver
    • Checks provided by a credit card issuer for purposes of accessing a credit card account or checks drawn on home equity lines of credit
    • Checks drawn on an investment company as defined in the Investment Company Act of 1940
    • Obligations of a financial institution (traveler’s check, cashier’s check, official checks, money orders, etc.)
    • Checks drawn on the Treasury of the United States, a Federal Reserve Bank, or a Federal Home Loan)
    • Checks drawn on a state or local government that are not payable through or at a participating DFI
    • Checks or sharedrafts payable in a medium other than U.S. currency

• Notice to receiver must be given prior to receipt of source document:

    • Notice must state that when a check is provided as payment, you authorize us to either use the information from your check to make a one-time debit electronic funds transfer from your account or to process the payment as a check transaction
    • The notice must be posted in a prominent and conspicuous location and a copy of such notice, or language that is substantially similar, must be provided to the Receiver at the time of the transaction
    • Until January 1, 2010, the posted notice must also include the following or substantially similar, additional language, although such language need not be included on the copy provided to the Receiver. “When we use information from your check to make an electronic fund transfer, funds may be withdrawn from your account as soon as the same day you make your payment, and you will not receive your check back from your financial institution.
    • Notice must contain a customer service telephone number that is answered during normal business hours for receiver inquiries
    • The source document to which the BOC entry relates may not be presented for payments unless the BOC entry is returned by the RDFI

• Originator must retain a reproducible, legible, image, microfilm, or copy of the front of the Receiver’s source document for each BOC entry for two years from the Settlement Date of the BOC Entry

This ACH debit application is used by Originators as a method of payment for the in-person purchase of goods or services by Receivers. These Single-entry debit entries are initiated by the Originator based on a written authorization between the Originator and Receiver and notice provided by the Originator at the point of purchase. The source document, which is voided by the merchant and returned to the Receiver at the point-of-purchase, is used to collect the Receiver’s routing number, account number, and check serial number that will be used to generate the debit entry to the Receiver’s account.• 

• POP is the standard Entry Class Code

• The source document must be voided by the Originator and returned to the receiver at the point-of-purchase

• The source document is used to provide the receiver’s routing number, account number, check serial number and dollar amount

• The originator must use a reading device to capture the Receiver’s routing number, account number, and check serial number from the MICR line of the source document. This information may not be key entered by the Originator. An Originator may key-enter such information to correct errors relating to MICR misreads, misencoding or processing rejects.

• Source document must:

    • Contain a pre-printed serial number
    • Not contain an Auxiliary On-Us Field in the MICR line
    • Be in an amount of $25,000 or less
    • Be completed and signed by the Receiver

• Ineligible Source Documents

    • Checks or sharedrafts that contain an Auxiliary On-Us in the MICR line
    • Checks or sharedrafts in an amount greater than $25,000
    • Third-party checks or sharedrafts
    • Demand drafts and third-party drafts that do not contain the signature of the receiver
    • Checks provided by a credit card issuer for purposes of accessing a credit card account or checks drawn on home equity lines of credit
    • Checks drawn on an investment company as defined in the Investment Company Act of 1940
    • Obligations of a financial institution (traveler’s checks, cashier’s checks, official checks, money orders, etc.)
    • Checks drawn on the Treasury of the United States, a Federal Reserve Bank, or a Federal Home Loan Bank
    • Checks drawn on a state or local government that are not payable through at a participating DFI
    • Checks or sharedrafts payable in a medium other than U.S. currency

• An Originator must provide to each Receiver a receipt containing the following information with respect to each POP entry to the Receiver’s account:

    • Originator name (merchant)
    • Company (merchant) third-party service provider telephone number
    • Date or Transaction
    • Transaction Amount
    • Source document check serial number
    • Merchant number (or other unique number that identifies the location of the transaction)
    • Terminal City and
    • Terminal State

• The National Association strongly recommends, but these rules to not require, that the Originator also provide the following information on the receipt provided to the Receiver:

    • Merchant address
    • Merchant identification number
    • Receiver’s financial institution routing number
    • Receiver’s truncated account number
    • Receiver’s truncated identification number
    • Transaction reference number

• The Receiver’s complete account number and complete identification number are not permitted to be placed on the receipt

• Receipt must be signed by receiver

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