ACH Transactions

Types of ACH transactions

The ACH Network carries two types of transactions.

Type	Who originates the entries
Commercial	The private sector, including state and local government entities
Government	Federal government agencies, such as the Social Security Administration, Veterans Affairs, and Civil Service

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Commercial ACH entries

Commercial ACH entries fall into two further classifications.

Direct Deposit via ACH

Direct Deposit entries are 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.

Direct Payment via ACH

Direct Payment entries are credit or debit entries sent or received by individuals or organizations for making a payment. 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 because payments are automated, the potential for missing or forgetting payments is reduced.

Business-to-business payments

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. Payments can also carry payment-related information in addenda records, either in standard electronic data interchange (EDI) formats or in Nacha-endorsed banking conventions.

International payments

Consumers and businesses can also use the ACH Network 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.

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Transaction codes

The ACH Network supports a number of different credit and debit applications. A transaction code identifies an entry as a debit or a credit, and indicates the type of account the transaction is intended for: checking, savings, financial institution general ledger, or loan account. Only credit entries can be transmitted to loan accounts.

The following tables list commonly used transaction codes by record type.

Demand credit records

Code	Description
21	Automated return or Notification of Change (NOC) for a demand credit
22	Demand credit
23	Prenote for a demand credit
24	Zero dollar entries with remittance data

Demand debit records

Code	Description
26	Automated return or NOC for a demand debit
27	Demand debit
28	Prenote for a demand debit
29	Zero dollar entries with remittance data

Savings account credit records

Code	Description
31	Automated return or NOC for a savings credit
32	Savings credit
33	Prenote for a savings credit
34	Zero dollar entries with remittance data

Savings account debit records

Code	Description
36	Automated return or NOC for a savings debit
37	Savings debit
38	Prenote for a savings debit
39	Zero dollar entries with remittance data

Zero dollar entries with remittance data (codes 24, 29, 34, and 39) apply to CCD and CTX entries only.