Automated Clearing House origination for United States businesses and platforms.
Embank Financial originates ACH debit and credit entries on behalf of businesses and the software platforms that serve them, and manages the full lifecycle of each entry through settlement, returns and notifications of change.
FedACH, operated by the Federal Reserve, and EPN, operated by The Clearing House.
Maximum value of a single Same Day ACH entry under the Nacha Operating Rules.
Most returns must be transmitted by the RDFI by the opening of business on the second banking day.
Consumer unauthorized returns may be transmitted for up to 60 calendar days from settlement.
What the ACH network is
The Automated Clearing House is the batch-based electronic funds transfer network used for the majority of recurring payments in the United States. It connects depository financial institutions through two operators — FedACH, operated by the Federal Reserve, and the Electronic Payments Network, operated by The Clearing House.
Entries are assembled into files, transmitted to an operator on a fixed schedule, sorted and delivered to the receiving institution, and settled on a defined settlement date. All participants are bound by the Nacha Operating Rules, which govern authorization, formatting, warranties, return rights and timeframes.
An entry always travels from the Originator toward the Receiver. Whether funds move toward the Receiver or toward the Originator depends on whether the entry is a credit or a debit.
Participants and core terms
Standard Entry Class codes
Every entry carries a SEC code identifying the account type and how the authorization was obtained. The codes below are those most commonly used in commercial origination.
| Code | Name | Account | Typical use and authorization |
|---|---|---|---|
| PPD | Prearranged Payment and Deposit | Consumer | Recurring consumer debits and credits under a written authorization. Used for rent, dues, tuition plans and payroll. |
| CCD | Corporate Credit or Debit | Business | Business-to-business entries under an agreement between the parties. Used for vendor payments and invoice collection. |
| WEB | Internet-Initiated / Mobile | Consumer | Consumer debits authorized over the internet or a mobile channel. Subject to account validation requirements. |
| TEL | Telephone-Initiated | Consumer | Consumer debits authorized orally by telephone, requiring either a recording or written notice to the Receiver. |
| CTX | Corporate Trade Exchange | Business | Business entries carrying structured remittance information in addenda records for automated reconciliation. |
| IAT | International ACH Transaction | Either | Entries where the underlying payment transaction is transmitted to or from a party outside the United States. Carries additional screening obligations. |
Authorization requirements, formatting rules and return rights differ by SEC code. Selecting the correct code is the responsibility of the Originator and its ODFI.
Settlement timing
ACH is a batch network. Entries are transmitted to an operator against fixed deadlines, and the deadline an entry meets determines its settlement date.
Deadlines shown are the network submission deadlines published for Same Day ACH. An Originator's own cutoff with its ODFI or payment provider precedes the network deadline.
| Processing option | Submission deadline | Settlement | Notes |
|---|---|---|---|
| Same Day — Window 1 | 10:30 AM ET | 1:00 PM ET | Same banking day settlement. |
| Same Day — Window 2 | 2:45 PM ET | 5:00 PM ET | Same banking day settlement. |
| Same Day — Window 3 | 4:45 PM ET | 6:00 PM ET | Same banking day settlement. |
| Standard | Per ODFI schedule | Next banking day | Credits may also be originated for two-banking-day settlement. |
Settlement occurs only on banking days. Entries transmitted after the final Same Day window, or on a weekend or federal holiday, settle on the next banking day. Same Day ACH entries are limited to $1,000,000 each.
Returns and notifications of change
An entry that has settled has not necessarily completed. The RDFI may transmit a return within the timeframe applicable to the return reason code, or a notification of change correcting the information carried on the entry.
| Code | Reason | Category | Handling |
|---|---|---|---|
| R01 | Insufficient funds | Funding | Eligible for re-presentment within the limits set by the Nacha Operating Rules. |
| R02 | Account closed | Administrative | Not eligible for re-presentment. A new authorization and account are required. |
| R03 | No account or unable to locate | Administrative | Not eligible for re-presentment. Account information must be re-verified. |
| R07 | Authorization revoked by customer | Unauthorized | Further entries must cease. Subject to the 60 calendar day timeframe. |
| R10 | Customer advises originator is not known or entry not authorized | Unauthorized | Supported by a written statement from the Receiver. Subject to the 60 calendar day timeframe. |
| R29 | Corporate customer advises not authorized | Unauthorized | Applies to entries to business accounts. Commonly resolved by a debit filter authorization at the RDFI. |
| C01–C07 | Notification of change | Correction | Corrected account or routing information supplied by the RDFI. The Originator must apply the correction before the next entry. |
The Nacha Operating Rules establish return rate thresholds that Originators are expected to remain below, including thresholds for administrative returns, unauthorized returns and overall debit returns. Sustained rates above those thresholds are subject to review.
What the rules require of an Originator
Obtain and retain authorization
The Originator must obtain the Receiver's authorization in the form required for the SEC code used, retain proof of that authorization, and provide it on request.
Validate the receiving account
Consumer debits authorized through an internet or mobile channel are subject to an account validation requirement for the first entry to a given account.
Honor revocation
Once a Receiver revokes an authorization, the Originator must cease originating entries under it within the time the rules allow.
Apply notifications of change
Corrected account or routing information supplied by the RDFI must be applied within the period the rules prescribe, before further entries are originated.
Observe re-presentment limits
Entries returned for insufficient or uncollected funds may be re-presented only within the limits the rules establish for the number and timing of attempts.
Monitor return rates
The Originator is expected to monitor its administrative, unauthorized and overall debit return rates and remain below the thresholds the rules set.
What we provide
Embank provides the origination layer between a business or software platform and its sponsoring financial institution relationships: entry submission against each processing window, account verification, authorization records, return and notification of change handling, and settlement reporting.
Pricing is quoted per relationship on the basis of volume, average entry value, return profile and funding arrangement.
Debit and credit origination
Consumer and business entries across the SEC codes used in commercial origination, with the processing window selected per entry.
Account verification
Instant account verification, micro-deposit verification and prenotification entries, with routing number validation applied at submission.
Authorization records
Authorization language, method, timestamp and identifiers retained against each mandate and exportable in full.
Return and NOC handling
Return reason codes classified on receipt, re-presentment scheduled within rule limits, and notifications of change applied automatically.
Risk controls
Velocity and value limits by originator and by mandate, return rate monitoring against Nacha thresholds, and screening at submission.
Settlement reporting
Each entry carries a timestamped state history, reconciled to the settlement entry that resulted from the file it was carried in.
Request pricing
Provide your monthly volume, average entry value and billing frequency, and a member of the Embank team will respond within one business day.