1. Sign Up

Your customers or donors authorize your company in writing or online to debit payments from their checking or savings accounts and provide their account information. Download sample authorization forms »

2. Test

Your company may perform a test run by sending your customers' checking or savings account information, but no dollar amount, to their financial institutions via the ACH Network. This entry is called a pre-notification. You will be notified if any entries can't be posted or if any changes need to be made to the account information so that the first payment is collected successfully.

3. Notify

If the amount of the recurring payment varies, your company must send customers notification of the payment amount at least 10 days prior to the payment transaction or receive permission from your customers to waive their rights to notification. Similarly, if the date of the debit varies or is not specified in the authorization, a notice must be sent to your customers at least 7 days prior to the debit date. If the recurring payment has a set amount and date, the initial identification is all that is needed.

4. Post

After making any necessary changes, your company processes the live ACH transactions by delivering an ACH file, usually by transmission, CD-ROM or diskette to your financial institution. You will need to wait at least six banking days between sending the pre-notification and sending the first live entry.

5. Transact

Your company's financial institution processes the ACH file, extracting any transactions for accounts at its institution and delivering the remaining transactions for network distribution one day prior to the Direct Payment date.

6. Credit

Your company's financial institution credits your company's account with the total amount of the Direct Payment transactions that were on the file on the same date the transactions are debited from your customers' accounts.

7. Confirm

Your customers' financial institutions report the transactions on their monthly account statement.

8. Reconcile

Your financial institution will notify you if any Direct Payment transaction is sent back for NSF or account closed, as they do today for checks you have deposited.