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 payment debit vs credit