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Third Party Processor

A party, which processes ACH files and or items on behalf of one of the participants in the ACH system. Examples of third party processors are payroll processing companies which create ACH files for transmission to the ACH Operator on behalf of an Originator or ODFI, a data processing company which receives incoming ACH files and processes them for an RDFI, or a correspondent bank which processes ACH files for its correspondent. Under the ACH rules, third party processors are essentially invisible; the party they are processing for bears virtually all of the liability and risk for their third party processor's actions.

Transaction Risk

The possibility that a loss will be sustained due to the incorrect transfer on funds. Transaction risk usually arises when a large dollar transaction is treated as if it were a small dollar transaction without transferring all the procedures and security associated with the large dollar transaction to the small dollar system. An example of this would be a transaction that would normally be processed as a wire transfer, with all of the normal associated security procedures for wire transfers, converting to an ACH transaction without having the same security procedures in place.

TRC (Truncated Check Entry)

An entry that originally represented a check, in which the actual check is safe, kept by one of the financial institutions in the chain of deposit and the MICR information is converted to an electronic entry and processed through the ACH network back to the issuing institution. These items carry the Standard Entry Class code TRC.

TRX (Truncated Extended Check Entry)

A series of TRC entries put together as addenda records with the payment item representing the total settlement of the TRC entries for that batch.

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