For example, users of Plaid-connected apps can choose to share their account balance information, which can confirm whether they have enough funds for an ACH debit transaction. Though there are now also non-card-based solutions that can similarly get around ACH’s speed constraints. Cases that require on-the-spot balance verification and debiting must happen by other means.ĭebit cards use a separate real-time network for authorization, which ensures that funds are successfully decremented from the purchaser’s account before ATMs/merchants need to hand over cash or valuable products. While the ACH network can be used to settle transactions initiated by debit cards, its design doesn't allow for transactions to be authorized in real-time. WEB (Internet-initiated Entry) - Debiting consumer bank accounts for transactions originated online or through a mobile app or crediting consumer bank accounts for P2P payments.

TEL (Telephone-initiated Entry) - Debiting consumer bank accounts for transactions originated over the phone. PPD (Prearranged Payment & Deposit Entry) - Directly debiting or crediting a consumer account based on an authorization from the Receiver (account holder). POS (Point-of-Sale Entry) - Debiting bank accounts for card payments made via an electronic terminal. POP (Point-of-Purchase Entry) - Immediately converting physical checks received in person from the payer into an ACH transaction, where the check is voided and immediately returned. Some of the most common SEC codes for ACH debit are:ĪRC (Accounts Receivable Entry) - Converting physical checks received by mail or dropbox into ACH debit transactions (more on this later).īOC (Back Office Conversion) - Converting physical checks received from the payer in person into ACH transactions during back office processing.ĬCD (Corporate Credit or Debit Entry) - Debiting or crediting to or from one business bank account to another. Each is identified by its own Standard Entry Class (SEC) code representing a specific use case.

The ACH system supports different types of debit. The ODFI then releases funds for settled transactions to the payee.

The ODFI or the processing partner then passes these requests on to the ACH network.Ħx per business day, the ACH network breaks down these incoming bundles into individual messages (each representing a transaction) and rebundles them for quick delivery to each Receiving Depository Financial Institution (RDFI).Įach RDFI imports their transactions into their system, executes or queues them, and sends back any return codes with their next regular batch of ACH transactions. The payee (aka the originator) or their processing partner gives an Originating Depository Financial Institution (ODFI) the payer’s account information along with the amount to be debited, a categorization code, and a target effective entry date. Then it sends a message to the ACH network asking it to collect said payment and move the funds into their account. To make that happen, the party receiving payment obtains an authorization from the party being debited. In an ACH debit transaction, one party agrees to pay another. → Looking to reduce NSF fees and ACH returns? Plaid Balance allows companies to verify account balances in real-time to ensure users have enough funds to make successful payments. This means it’s not an ACH debit-despite money being debited from their account. If instead, a consumer sends money as a one-off transfer from their online banking portal, they’re asking the network to 'push' money for them. And because that request is for the system to pull money, it's considered an ACH debit.

For most consumer billing scenarios, the biller is the one initiating (or “originating”) the ACH request. Whether it gets categorized as an ACH debit depends on who initiated the request. Of course, every transfer requires pulling money from someone’s account, meaning a debit is always happening on one side or the other. When a given request in one of those new batches asks that an account be debited some amount of money, that's an ACH debit request. Then, six times per business day, the network sorts them into new bundles and delivers them accordingly. The ACH network constantly takes in batches of push and pull requests from banks and their intermediaries. Any ACH transaction structured as an ACH debit 'pulls' money from one account and moves it to another-such as from a consumer's personal account to that of a business or government agency.

Ach debit or credit