Understanding ACH Participants and How They Work in Straddle

ACH transactions involve several key participants working together to move funds smoothly and securely. In Straddle, these roles are simplified into two main categories: Accounts (Originators) and Customers (Receivers). Here’s a quick and easy guide to how each participant maps into the Straddle system.

Glossary of terms and how we use them

The Originator = Account
1. What it is: The Originator is the business, company, or individual who starts an ACH transaction.
2. Example: A company paying employees via direct deposit or billing a customer for goods or services.
3. How it works in Straddle:
  1. In Straddle, the Originator is called an Account.
  2. The Account represents whoever is initiating the ACH payment or charge.

The Receiver = Customer
1. What it is: The Receiver is the person or company who gets the funds (for credits) or approves a withdrawal (for debits).
2. Example: An employee receiving their paycheck or a business receiving payment.
3. How it works in Straddle:
  1. The Receiver maps to a Customer in Straddle.
  2. The Customer is the one receiving funds or being charged, depending on the transaction type.

The ODFI (Originating Bank)
1. What it is: The bank that works with the Originator to send ACH transactions into the system.
2. Example: The bank where a company holds its payroll account.
3. How it works in Straddle:
  1. The ODFI supports the Account by handling the technical side of sending ACH files into the network.

The RDFI (Receiving Bank)
1. What it is: The bank where the Receiver has their account. This bank processes incoming ACH transactions.
2. Example: The employee’s bank receiving their paycheck.
3. How it works in Straddle:
  1. The RDFI supports the Customer by posting the funds or withdrawals to their account.

ACH Operator
1. What it is: The middleman that sorts and delivers ACH files between banks.
2. Example: The central clearinghouse ensuring ACH transactions get where they need to go.
3. How it works in Straddle:
  1. This role operates behind the scenes and doesn’t require direct action from Accounts or Customers.

Third-Party Sender (Straddle Specific)
1. What it is: A third-party company that sends ACH transactions on behalf of an Originator but without a direct agreement with the bank.
2. Example: A payroll processor managing ACH files for businesses.
3. How it works in Straddle:
  1. Straddle identifies this role as a Third-Party Sender and ensures seamless ACH processing on behalf of Accounts (Originators).

Simplified Mapping in Straddle

ACH Participant	Straddle Role	What It Means for You
Originator	Account	The business or person sending the payment.
Receiver	Customer	The person or business receiving the funds or being billed.
ODFI (Originating Bank)	ACH Facilitating Bank	Facilitates ACH file origination on behalf of the Account (Originator).
RDFI (Receiving Bank)	ACH Facilitating Bank	Handles final posting of transactions for the Customer (Receiver).
ACH Operator	Network Entity	Central clearing facility for transaction flow.
Third-Party Sender	Third-Party Sender	Entity transmitting files without direct Originator-ODFI agreement.