SEC Codes
ACH Standard Entry Class (SEC) Codes and Authorizations
ARC - Accounts Receivable Entry
Using an image scanner, this code allows originators to convert checks received via the U.S. mail or in a drop-box into a one-time ACH debit. The amount of the check must not be over $25,000.00 and may be used for consumer and non-consumer (as long as the check does not have an auxiliary on-us field) accounts. The original check must not be presented for payment once it has been converted into an ACH transaction.
The image of the check must be retained for two (2) years from the settlement date and the original check must be destroyed within fourteen (14) days from the settlement date.
The authorization for this type of entry is obtained through notice provided to the check writer. It must be posted in a prominent and conspicuous location. Examples for drop boxes, in a newsletter, on the drop box itself, or on a bulletin board near the drop box. Example for U.S. mail is in the customer’s statement or bill.
A sample of authorization is as follows: “When you provide a check as payment, you authorize us either to use information from your check to make a one-time electronic funds transfer from your account or to process the payment as a check transaction. When we use information from your check to make an electronic fund transfer, funds may be withdrawn from your account as soon as the same day we receive your payment, and you will not receive your check back from your financial institution.”
BOC - Back Office Conversion Entry
Using an image scanner, this code allows originators to convert checks received at the point of purchase into a one-time ACH debit. The amount of the check must not be over $25,000.00 and may be used for consumer and non-consumer (as long as the check does not have an auxiliary on-us field) accounts. The original check must not be presented for payment once it has been converted to an ACH transaction.
The image of the check must be retained for two (2) years from the settlement date. The originator must use commercially reasonable methods to securely store the original checks until they are destroyed as well as all banking information relating to the BOC entries.
The authorization for this type of entry is obtained through notice provided to the check writer both posted and a copy given to the check writer (i.e. on the receipt). It must be posted and written in a prominent and conspicuous location.
A sample of the authorization (both posted and copy to check writer is as follows:
“When you provide a check as payment, you authorize us either to use information from your check to make a one-time electronic fund transfer from your account or to process the payment as a check transaction. For inquiries please call <your phone number>. When we use information from your check to make an electronic fund transfer, funds may be withdrawn from your account as soon as the same day you make your payment, and you will not receive your check back from your financial institution.”
CCD - Corporate Credit or Debit
This code is to be used by organizations to transfer funds to accounts within the organization itself or to another organization. An agreement must be in place, which includes that both parties agree to be bound by the rules of NACHA ACH Rules.
POP - Point-of-Purchase Entry
Using an image scanner, this code allows originators to convert checks received by a customer in-person (point-of-purchase) into a one-time ACH debit. The amount of the check must not be over $25,000.00 and may be used for consumer and non-consumer (as long as the check does not have an auxiliary on-us field) accounts.
Prior to the purchase, there must be a posted notice in a prominent and conspicuous location (i.e. at the cash register) that checks will be converted to ACH debit transactions (see below for a sample). The signed check must be scanned using an image scanner, then stamped “void” and returned to the check writer.
The check writer’s receipt must include the following information:
- Originator (merchant) name
- Originator (merchant) telephone number
- Date of transaction
- Transaction amount
- Check serial number
- Originator (merchant) number (or other unique number that identifies the location of the transaction)
- Terminal city
- Terminal state
It is also recommended, but not required, to include the following:
- Merchant address
- Merchant ID number
- Receiver’s (check writer) financial institutions routing number
- Receiver’s (check writer) truncated account number*
- Receiver’s (check writer) truncated ID number*
- Transaction reference number
*Note: The Receiver’s (check writer) complete account number and complete ID number are not permitted to be placed on the receipt.
A sample of the posted authorization is as follows:
“When you provide a check as payment, you authorize us either to use information from your check to make a one-time electronic fund transfer from your account or to process the payment as a check transaction. When we use information from your check to make an electronic fund transfer, funds may be withdrawn from your account as soon as the same day you make your payment.”
PPD - Prearranged Payment and Deposit Entry
This code is used for one-time or recurring debits and credits to consumer accounts initiated by an organization.
An authorization for this type of transaction must be in writing and signed by the consumer. It must clearly and conspicuously state its terms, as well as indicate that the consumer may revoke the authorization by notifying the Originator in a manner specified in the authorization. The authorization must be retained for two (2) years from the settlement date, or for recurring transactions, two (2) years from the termination date or the last settlement date (whichever is the latter).
RCK - Re-presented Check Entry
An RCK transaction only relates to physical checks that have returned for insufficient funds or uncollected funds (this or comparable language must be indicated on the face of the check).
The amount of the check must be less than $2,500.00, and the check must relate to a consumer account only and cannot be dated later than 180 days.
RCK is limited to two re-presentments, unless the physical check has already been processed twice, then you may only re-present the item once as an RCK item. It is also prohibited to alter the amount of the original check amount.
The originator must retain a copy of the front and back of the check for seven (7) years from the settlement date.
The authorization for this type of transaction is written notice posted clearly and conspicuously.
A sample of the posted authorization is as follows:
TEL - Telephone Initiated Entry
This is a one-time ACH transaction where the authorization has been received orally from a consumer. The originator (or merchant) must use commercially reasonable procedures to verify the identity of the consumer. The originator must also use commercially reasonable procedures to verify that the routing numbers are valid before processing the ACH transaction.
There must be an existing relationship between the originator and the consumer, outgoing telemarketing is prohibited from processing TEL ACH transactions. If there is not an existing relationship, then the consumer must initiate the call in order for the transaction to be a TEL ACH transaction.
When obtaining a consumer’s authorization orally, it must be readily identifiable as an authorization and must clearly state its term. The originator must either tape record the oral authorization or provide the consumer with written notice confirming the oral authorization prior to the settlement date of the ACH item. A copy of the written notice or the recorded authorization must be retained for two (2) years from the settlement date.
The minimum information that must be included as a part of the authorization is as follows:
- the date on or after which the ACH debit to the consumer’s account will occur
- the amount of the transaction
- the consumer’s name
- a telephone number for the consumer inquiries that is answered during normal business hours
- the date of the consumer’s oral authorization
- a statement by the originator that the authorization obtained from the consumer is for a single-entry ACH debit
WEB - Internet Initiated Entry
This is a one-time or recurring ACH transaction where the authorization is obtained via the Internet from the consumer.
Originators using the internet to obtain authorization must use a commercially reasonable fraudulent transaction detection system to screen each entry. Commercially reasonable methods of authentication to verify the identity of the consumer must be used by the originator. The originator must also use commercially reasonable procedures to verify that the routing numbers are valid before processing the ACH transaction.
Annual audits are required to ensure that financial information obtained from consumers is protected by security practices and procedures that include, at a minimum, adequate levels of (1) physical security to protect against theft, tampering, or damage, (2) personnel and access controls to protect against unauthorized access and use, and (3) network security to ensure secure capture, storage and distribution.