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Clearing House

A voluntary association of depository institutions that facilitates the clearing of checks or electronic items through the direct exchange of funds among members.

Collected Funds

Funds for which final payment has been received.

Company Batch/Header Record

The records(s) contained within an ACH file, which described the originators(s) of an ACH transaction(s) and the types of transactions within that batch.

Company Identification Number

The number in the company Batch/Header Record that identifies the originating company to the ODFI.

Compensating Balances

The balances a company must maintain at a bank to compensate for credit accommodations and credit services.

Consumer

Usually refers to a natural person not engaged in commercial transactions.

Consumer Account

A deposit held by a participating DFI and established by a natural person primarily for personal, family, or household use, and not for commercial use.

Controlled Disbursement

A disbursement arrangement where a company is notified early in the day of the dollar amount of items waiting to clear the account later in the day, so they can fund the account with the exact amount to clear the items.

Correspondent Bank

A bank that accepts deposits and performs banking services for other banks. Correspondent banking arrangements exist between local banks and banks located throughout the world.

Credit

An entry to the record of an account to represent the transfer or placement of funds into the account.

Credit Risk

The risk that a party to a transaction cannot provide the necessary funds, as contracted, in order for settlement to take place. Typically, credit-risk-related losses arise from the failure or bankruptcy of a company.

Debit

An entry to the record of an account to represent the transfer or removal of funds from the account.

Depository Financial Institution

A financial institution able to receive deposits from its customers or credits from the Federal Reserve Bank.

Direct Deposit

An ACH service that provides for the electronic transfer of funds directly into the account of a payee, usually an employee receiving pay or a Social Security beneficiary receiving retirement benefits.

E-Com

Electronic Commerce (business conducted on the internet).

EBT

Electronic Benefit Transfer (EBT) is an electronic system that allows a recipient to authorize transfer of their government benefits from a Federal account to a retailer account to pay for products received. EBT is currently being used in many States to issue food stamp and other benefits. EBT has been implemented in all States since June of 2004.

ECK (Electronic Check)

A payment transaction which originally started out as a paper check, but which has been completely converted to an ACH transaction at the point of purchase(POP) or in the case of a redeposit paper check (RCK), reinsertion into the financial system. The original paper item is either returned to the check writer at the point of purchase or retained by the collection agency.

Electronic Funds Transfer

Any transfer of funds initiated through a terminal, telephone, computer or magnetic tape for the purpose of instructing or authorizing a financial institution to debit or credit an account.

Electronic Funds Transfer Act

The law passed by the US congress in 1978, which set out the rights and obligations of consumers and their financial institutions regarding the use of electronic systems to transfer funds. This act is implemented in the Federal Reserve Bank's Regulation E.

Entry

An electronic item representing the transfer of funds in the ACH system.

Exception item

Any entry that requires special attention or processing, such as return entries, stop payments, notifications of change, dishonored returns, etc.

Federal Reserve System

The central bank of the United States created by Congress, consisting of a seven member Board of Governors in Washington, D.C., 12 regional Reserve banks, and member depository institutions that are subject to reserve requirements. All national banks are members; state chartered banks may elect to become members. The Board of Governors and the Reserve Banks supervise state members. Reserve requirements established by the Federal Reserve Board apply to non-member depository institutions as well as member banks. Both classes of institutions have access to Federal Reserve discount borrowing privileges and Federal Reserve services on an equal basis.

File

A group of ACH entries stored for delivery to an ACH receiving point.

File Header Record

The last record of an ACH file containing information necessary to route, validate, and track the ACH entries contained within the file.

File Trailer Record

The last record of an ACH file indicating termination of the information within the file.

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