About Electronicpayments.org : Business : Glossary

For your convenience, we have provided definitions of terms and acronyms you may encounter in your electronic payments processing activities. Select the first letter of the word you wish to define to jump to the corresponding section of the glossary.

A | B | C | D | E | F | G | L | M | N | O | P | R | S | T | W | X

- A -

ACH - Automated Clearing House

The Automated Clearing House (ACH) Network refers to the batch processing, store-and-forward system that enables electronic funds processing. Transactions received by a financial institution during the day are stored and processed later in a batch mode. Rather than sending each payment separately, ACH transactions are accumulated and sorted by destination for transmission during a predetermined time. Instead of using paper to carry necessary transaction information, ACH transactions are transmitted electronically between financial institutions.

ACH Credits

ACH credit entries occur when an Originator initiates a transfer to move funds into a Receiver's account. For example, when an employer offers Direct Deposit, the employer originates the payment through the ODFI, which then initiates the credit transaction to transfer the money into the consumer/employee's account; the consumer is the Receiver.

ACH Debits

In an ACH debit transaction, funds are collected from a Receiver's account and transferred to an Originator's account, even though the Originator initiated the entry. For example, consumers authorize a cable access company to debit their accounts for their monthly bills. Once a month the cable access company initiates a debit file through its ODFI to withdraw the money from the consumers' accounts. The cable company is the Originator, and the consumers are the Receivers.

ACH Operator

An ACH Operator is the central clearing facility operated by a private organization or a Federal Reserve Bank (FRB) on behalf of a Depository Financial Institution (DFI), to or from which Participating DFIs transmit or receive ACH entries. In some cases, there are two ACH Operators involved in a transaction, one operating as the Originating ACH Operator and the other as the Receiving ACH Operator.

Addenda Record

An ACH record type that carries the supplemental data needed to completely identify an account holder(s) or provide information concerning a payment to the RDFI and the Receiver.

ADV - Automated Accounting Advice

This Standard Entry Class Code represents an optional service provided by ACH Operators that identifies automated accounting of ACH accounting information in machine-readable format to facilitate the automation of accounting information for Participating DFIs.

ARC - Accounts Receivable Entry

This Standard Entry Class Code enables Originators to convert a consumer check received via the U.S. mail or at a dropbox location for the payments of goods and services to a single-entry ACH debit. The consumer's check is used to collect the consumer's routing number, account number, check serial number, and dollar amount for the transaction. Eligible checks drawn on corporate or business accounts may also be converted to ARC entries.

Authorization

A written agreement with the originating company signed or similarly authenticated by an employee or customer to allow payments processed through the ACH Network to be deposited in or withdrawn from his or her account at a financial institution. Can also be a written agreement that defines the terms, conditions and legal relationship between trading partners. For ACH credit entries, authorization may also be by verbal or other non-written means.

- B -

Banking Day

Any day on which a participating depository financial institution is open to the public during any part of the day for carrying on substantially all its banking functions.

Batch

A group of records or documents considered as a single unit for the purpose of data processing.

BOC - Back Office Conversion

This is the standard entry class code for checks that are written at a payment location for goods or services, and converted from paper to electronic debit later at a centralized location. The consumer's check is used to collect the consumer's routing number, account number, check serial number, and dollar amount for the transaction. (Effective March 16, 2007)

- C -

CBR - Corporate Cross-Border Payment

This Standard Entry Class Code is used for the transmission of corporate cross-border ACH credit and debit entries. This SEC Code allows cross-border payments to be readily identified so that financial institutions may apply special handling requirements for cross-border payments, as desired.

CCD - Cash Concentration or Disbursement

This application can either be a credit 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.

CIE - Customer Initiated Entry

Customer Initiated Entries are limited to credit applications where the consumer initiates the transfer of funds to a company for payment of funds owed to that company, typically through some type of home banking product or bill payment service provider.

Consumer Account

A deposit account held by a financial institution and established by a natural person primarily for personal, family, or household use and not for commercial purposes.

COR - Automated Notification of Change or Refused Notification of Change

This SEC Code is used by an RDFI or ODFI when originating a Notification of Change or Refused Notification of Change in automated format. It is also used by the ACH Operator that converts paper Notifications of Change to automated format.

Corporate to Corporate Payments

Any of the class of automated payment formats developed for the ACH Network that allows concurrent exchange of funds and remittance information between trading partners.

Credit Entry

An entry to the record of an account to represent the transfer or placement of funds into the account.

CTX - Corporate Trade Exchange

The Corporate Trade Exchange application supports the debit or credit of funds within a trading partner relationship in which a full ANSI ASC X12 message or payment related UN/EDIFACT information is sent with the funds transfer.

- D -

Data Transmission

The electronic exchange of information between two data processing points.

Debit Entry

An entry to the record of an account to represent the transfer or removal of funds from the account.

Direct Debit

See Direct Payment.

Direct Deposit

An ACH service that provides for the electronic transfer of funds directly into the account of a payee, usually an employee receiving pay or a Social Security beneficiary receiving retirement benefits.

Direct Payment

A method of collection used in the ACH Network for certain claims, generally those that are repeated over a period of time, for which the debtor gives the Originator an authorization to debit his or her account.

DNE - Death Notification Entry

This application is utilized by a federal government agency (e.g., Social Security Administration) to notify a Depository Financial Institution that the recipient of a government benefit payment has died.

- E -

EDI Payment

The computer-to-computer transmission of a payment and related information in a standard format.

Effective Entry Date

The date the originating company expects payment to take place. The ACH Operator reads the effective entry date to determine the settlement date.

Electronic Funds Transfer (EFT)

A generic term used to describe any ACH or wire transfer.

ENR - Automated Enrollment Entry

This optional SEC Code allows a Depository Financial Institution to transmit ACH enrollment information to federal government agencies via the ACH Network for future credit and debit applications on behalf of both consumers and companies.

Entry

An electronic item representing the transfer of funds in the ACH.

- F -

Field

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.

File

A group of ACH batches initiated into the ACH Network or sorted for delivery to ACH receiving point(s). A file must be transmitted electronically via data transmission between the sending point and the receiving point. A file may be delivered to an end point via direct data transmission or magnetic tape.

Financial EDI

Electronic data interchange for financial transactions/applications between companies and financial institutions, including payment and remittance advice, account analysis, and balance reporting.

Funds Availability

The time at which the funds resulting from a funds transfer are made available to the customer.

- G -

Green Book

A publication assembled by 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.

- L -

Live Dollar Entry

"Live" refers to an entry that affects a funds transfer rather than non-dollar entries, such as prenotifications.

- M -

MTE - Machine Transfer Entry

The ACH Network supports the clearing of transactions from Automated Teller Machines, i.e., Machine Transfer Entries (MTE).

MICR Line

The magnetic ink character recognition inscription at the bottom of a paper check. The MICR line typically contains the routing number of the drawee bank or credit union, the account number and the check serial number.

- N -

NACHA - National Automated Clearing House Association

The national association that establishes the standards, rules and procedures that enable depository financial institutions to exchange payments on a national basis.

NACHA Formats

The ACH record format specifications described in the NACHA Operating Rules are the accepted and warranted payment format standards for payments delivered through the ACH.

NOC - Notification of Change

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

- O -

On Us Entry

Entry within an ACH file destined for an account held at the ODFI.

ODFI - Originating Depository Financial Institution

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.

Originator

Any individual, corporation or other entity that initiates entries into the ACH Network, according to an arrangement with a Receiver. The Originator is usually a company directing a transfer of funds to or from a consumer's or another company's account. In the case of a Customer Initiated Entry (CIE), the Originator may be an individual initiating funds transfer activity from his or her own account.

- P -

PBR - Consumer Cross-Border Payment

This Standard Entry Class Code is used for the transmission of consumer cross-border ACH credit and debit entries, allowing cross-border payments to be readily identified so that financial institutions may apply special handling requirements for cross-border payments, as desired. The PBR format accommodates detailed information unique to cross-border payments (e.g., foreign exchange conversion, origination and destination currency, country codes, etc.).

POP - Point-of-Purchase Entry

This ACH debit application is used by Originators as a method of payment for the in-person purchase of goods or services by consumers. These single-entry debit entries are initiated by the Originator based on a written authorization and account information drawn from the source document (a check) obtained from the consumer at the point-of-purchase, which is then voided by the merchant and returned to the consumer, also at the point-of-purchase. Eligible checks drawn on corporate or business accounts may also be converted to POP entries.

POS/SHR - Point of Sale Entry/Shared Network Transaction

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.

Posting

The process of recording debits and credits to individual account balances.

Prenotification

A non-dollar entry that may be sent through the ACH Network by an Originator to alert an RDFI that a live-dollar transaction will be forthcoming and that verification of the Receiver's account number is required.

- R -

RCK - Re-presented Check Entry

A re-presented check entry is a single entry ACH debit application used by Originators to re-present a check that has been processed through the check collection system and returned because of insufficient or uncollected funds.

RDFI - Receiving Depository Financial Institution

The Receiving Depository Financial Institution (RDFI) is the DFI that receives ACH entries from the ACH Operator and posts the entries to the accounts of its depositors (Receivers).

Receiver

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

Receiving Depository Financial Institution (RDFI)

Any financial institution qualified to receive ACH entries that agrees to abide by the NACHA Operating Rules.

Receiving Point

A site where entries are received from an ACH Operator for processing. It may be the RDFI, its data center or a data processing service bureau authorized to receive entries on behalf of a RDFI.

Regulation E

A regulation promulgated by the Federal Reserve Board of Governors in order to ensure consumers of a minimum level of protection in disputes arising from electronic funds transfers.

Return

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."

Reversal

Any ACH entries or files sent within required deadlines to "correct" or reverse previously originated erroneous entries or files.

Routing Number

A nine-digit number (eight digits and a check digit) that identifies a specific financial institution. Also referred to as the ABA number or Routing/Transit number.

- S -

Sending Point

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 private data processing service bureau on behalf of the ODFI.

Settlement

A transfer of funds between two parties in 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 Network usually occurs through the Federal Reserve.

Settlement Date

The date on which an exchange of funds with respect to an entry is reflected on the books of the Federal Reserve Bank(s).

Standard Entry Class Codes

Three character code within an ACH Company/Batch Header record that identifies payment types within an ACH batch (e.g., CCD, CTX, etc.).

- T -

TEL - Telephone-Initiated Entry

This SEC Code is used for the origination of a single entry debit transaction to a consumer's account pursuant to an oral authorization obtained from the consumer via the telephone. This type of transaction may only be originated when there is either an existing relationship between the Originator and the Receiver, or no existing relationship between the Originator and the Receiver, but the Receiver has initiated the telephone call.

Third-Party Service Provider

A Third-Party Service Provider is an entity other than the Originator, ODFI, or RDFI that performs any functions of behalf of the Originator, ODFI, or RDFI with respect to the processing of ACH entries. A function of ACH processing can include, but is not limited to, the creation of ACH files on behalf of an Originator or ODFI, or acting as a Sending Point or Receiving Point on behalf of an ODFI or RDFI, respectively.

Transaction Code

The two-digit code in the ACH record that determines whether an entry is a debit or a credit to a DDA account, savings account, or general ledger account, or whether an entry is a credit to a loan account.

- W -

WEB - Internet-Initiated Entry

This SEC 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 addresses unique risk issues inherent to Internet payment through requirements for added security procedures and obligations.

- X -

XCK - Destroyed Check Entry

This application can be utilized by a collecting institution for the collection of certain checks when those checks have been destroyed.