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Glossary of US Direct Debit Terms

Chris Hooper
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Last editedApr 2023

Term Meaning More details
ACH ACH (Automated Clearing House) is a network used for electronically moving money between bank accounts across the United States. It’s run by an organization called Nacha, and may also be referred to as the ACH network or ACH scheme. What is ACH?
ACH Debit A type of ACH payment where funds are pulled from a customer's bank account into a business' bank account, by the business. Types of ACH transfers
ACH Debit Authorization Consent given by a customer for a business to collect future payments from them. Before a business can begin collecting ACH Debit payments from a customer, they must receive an ACH Debit authorization from them. What is an ACH Debit authorization?
ACH payment An ACH payment is a type of electronic bank-to-bank payment in the US. It’s made via the ACH network, rather than going through the card networks such as Visa or Mastercard. An ACH payment is also commonly referred to as an ACH transfer or ACH transaction. What is an ACH payment?
Advance Notice Notice that must be given, under the ACH scheme rules, to customers when the frequency or amount of a regular Direct Debit payment changes. ACH customer payment notifications
Company ID An ACH company ID is a 10-digit unique identifier used for identifying entities, called originators, collecting payments via ACH debit. Similar to a mailing address, an ACH company ID helps ensure an ACH Debit is delivered to the correct account holder. All communications with Nacha will use this ID. Using company IDs
Direct Debit mandate Alternative name for an ACH Debit Authorization. What is an ACH Debit authorization?
Due date The date a payment is due to be debited from a payer's account. ACH payment processing times
Nacha The organization that runs the ACH network (also known as ACH scheme). They were previously known as NACHA - National Automated Clearing House Association. What is ACH?
Originating Depository Financial Institution (ODFI) An ODFI is a financial institution that acts as an interface between the business wanting to take a Direct Debit payment and the ACH network itself. Direct access to the ACH network
Paperless Direct Debit Process for authorising a Direct Debit Instruction over the phone or online, instead of with a paper form. Paper vs. Paperless Direct Debit
Return An ACH return is when, for a variety of reasons, a requested ACH Debit (i.e. Direct Debit) cannot be made and is undone. Guide to ACH return codes
Routing number A 9-digit, unique numeric ID assigned to each banking institution in the US. It’s needed for banks to identify where payments should be taken from and sent to. The routing number is used in conjunction with an account number to send or receive an ACH payment. What is an ACH routing number?
Third-Party Payments Processor (TPPP) An organization that helps businesses take Direct Debit payments, where that business cannot access the ACH network directly through an ODFI (or, alternatively, does not want to deal with the complexity of it). Indirect acess to the ACH network

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