ACH Transactions
Types of ACH Transactions
In general, there are two types of ACH transactions sent through the ACH Network:
Commercial—Entries originated by the private sector, including state and local government entities.
Government—Entries originated by federal government agencies (i.e., Social Security Administration, Veteran’s Affairs, Civil Service, etc.).
Commercial ACH entries can further be classified as follows:
Direct Deposit via ACH—Credit entries deposited into a consumer’s account. Direct Deposit includes payments such as payroll, travel reimbursements, government benefits, tax and other refunds, and annuities and interest payments. The deposits arrive and are made available more quickly than paper checks, and can be automatically divided among different accounts based on the Receiver’s direction.
The various ACH applications are discussed in greater detail throughout this Guide. For a complete listing of ACH transaction types and their uses, see the Operating Guidelines of the ACH Rules.
Direct Payment via ACH—Credit or debit entries sent or received by individuals or organizations for making a payment. Basically, any ACH payment that is not a Direct Deposit is known as Direct Payment. Direct Payment includes recurring and single-entry payments such as prearranged ACH payments, Internet-initiated ACH transactions and check conversion into the ACH Network. Direct Payment saves time by eliminating check writing, and since payments are automated, the potential for missing or forgetting payments is reduced.
Increasingly, companies are realizing the benefits of Direct Payment for business-to-business payments. These payments reduce check preparation and distribution expenses, eliminate postage costs, improve cash flow and cash forecasting, can improve payment discounts and simplify account reconciliation. Additionally, payments can accommodate payment-related information in addenda records in standard electronic data interchange (EDI) formats or in Nacha-endorsed banking conventions.
The ACH Network can also be used by consumers and businesses to exchange funds and payment-related information internationally. In the international payment environment, a new participant, the Gateway, acts as the contact point for a financial institution. The Gateway assumes responsibility for foreign exchange conversion and settlement, format mapping and translation of data.
Transaction Codes
The ACH Network supports a number of different credit and debit applications. A Transaction Code identifies an entry as a debit or credit, and indicates the type of account to which the transaction is intended, i.e. checking, savings, financial institution general ledger or loan account. Only credit entries can be transmitted to loan accounts. Commonly used Transaction Codes are listed:
Demand Credit Records
21 Automated Return or NOC for a Demand Credit 22 Demand Credit 23 Prenote for a Demand Credit 24 Zero Dollar Entries w/Remittance Data (for CCD and CTX Entries Only)
Demand Debit Records
26 Automated Return or NOC for a Demand Debit 27 Demand Debit 28 Prenote for Demand Debit 29 Zero Dollar Entries w/Remittance Data (for CCD and CTX Entries Only)
Savings Account Credit Records
31 Automated Return or NOC for a Savings Credit 32 Savings Credit 33 Prenote for a Savings Credit 34 Zero Dollar Entries w/Remittance Data (for CCD and CTX Entries Only)
Savings Account Debit Records
36 Automated Return or NOC for a Savings Debit 37 Savings Debit 38 Prenote for a Savings Debit 39 Zero Dollar Entries w/Remittance Data (for CCD and CTX Entries Only)