ACH Express FAQs & glossary

The following is a glossary of terms commonly used to describe Automated Clearing House transactions, workflows and functionality.

ACH Express FAQs and glossary:

• What does ACH stand for? Automated Clearing House - The Federal Reserve Bank or other organization operating as a clearing house for automated entries.
• ABA Number. A nine-digit number (eight digits and a check digit) that identifies a specific financial institution. These numbers are assigned by the Rand McNally Corporation and are listed in its annual publication "Key to Routing and Transit Numbers".
• ACH Credit. A transaction originated to pay a receiver (deposit funds into an account).
• ACH Debit. A transaction originated to remove funds from the receiver (withdrawal from account).
• Balanced ACH File. A file in which the debit entries offset the credit entries.
• Banking Day. Any day on which a participating financial institution is open to the public during any part of the day for carrying on substantially all its financial functions. With reference to an automated clearing house, any day on which the appropriate facility of the clearing house is being operated.
• Batch. A group of records or documents considered as a single unit for the purpose of data processing.
• Cash Concentration or Disbursement (CCD). A credit or debit where funds are either distributed or consolidated between corporate entities.
• Customer (Receiver). A natural person(s) that maintains an account at a Depository Financial Institution. A customer may authorize a financial institution to debit/credit his or her account in response to an ACH entry.
• Data Transmission. The electronic exchange of information between two data processing points (computers).
• DFI. Depository Financial Institution.
• Direct Debit. A method of ACH collection used where the debtor gives authorization to debit (withdrawal from account) his or her account upon the receipt of an entry issued by a creditor.
• Effective Entry Date. The date placed on an ACH transaction by the Originator of the transaction. It is normally the date the originator intended the transfer to take place.
• Electronic Funds Transfer. A generic term used whenever money is moved without the use of a check or draft.
• File Header. The first record of an ACH file containing information necessary to route, validate and track the ACH transactions contained within the file.
• NACHA. National Automated Clearing House Association. A body which oversees all ACH activities and procedures and is composed of all local ACHs.
• ODFI. Originating Depository Financial Institution. A member institution which is responsible for the origination of ACH transactions. This institution may deposit items directly with an ACH or may work through a processing center which is the actual sending point.
• Originating Company. An organization or company that produces an ACH file and delivers it to an ODFI for introduction into the ACH network.
• Prearranged Payment and Deposit (PPD). A credit or debit entry initiated by an organization to affect a transfer of funds to or from a consumer account.
• Prenotification (Prenote). A zero-dollar entry that must be sent through the ACH at least ten calendar days prior to any live entries affecting an account at a receiving institution. The prenotification (prenote) allows the receiving institution to validate entry information.
• RDFI. Receiving Depository Financial Institution. A receiving financial institution is an ACH transaction's final destination. The receiving financial institution may receive the items directly from an ACH or may work through a processing center, which is the actual receiving point.
• Settlement Date. The day on which settlement occurs, i.e., funds actually change hands as a result of an ACH entry.
• Trace Number. A number assigned to every ACH entry by an originating institution that uniquely identifies that entry with a specific ACH file. First eight digits of the trace number are transit/routing number of ODFI and last seven digits are sequence numbers assigned by the originator.
• Transit Routing Number. A nine-digit number (eight digits and a check digit) that identifies a specific financial institution. These numbers are assigned by the Rand McNally Corporation and are listed in its annual publication "Key to Routing and Transit Numbers".
• Canadian Payments Association (CPA) Resources. Information regarding the CPA Standards for AFT files can be found on the CPA's website. The standard is defined in the association's publication, Standard 005. Information regarding valid data center identifications can be found in the association's publication, Rule F2.