eCheck Transaction Types

There are several ways that eCheck transactions may be originated or received. Each of these transactions is governed by requirements established by the National Automated Clearinghouse Association (Nacha).
Your ability to process any or all of the supported eCheck transaction types depends on the underwriting and risk profile of your eCheck account.
The type of eCheck transactions that you process also depends on your business model. For example, if you are a mail order/telephone order (MOTO) merchant, you might need to process only transactions initiated over the telephone. However, if you submit transactions exclusively through your e-commerce website, you may need the ability to process all transaction types except for telephone-initiated transactions.

Cash Concentration or Disbursement

A Cash Concentration or Disbursement (SEC code CCD) is a charge or credit transaction against a customer’s business checking account. One-time or recurring CCD transactions are typically fund transfers to or from corporate entities.
  • CCD transactions may be submitted only against business or corporate checking accounts.
  • An authorization agreement from the corporate customer is required for CCD transactions.

Prearranged Payment and Deposit

A Prearranged Payment and Deposit (SEC code PPD) is a charge or credit transaction initiated by a merchant against a customer’s personal checking or savings account. All credit transactions to personal banking accounts must be submitted as PPD, regardless of the original transaction type. These considerations apply:
  • PPD transactions may be submitted only against personal checking and savings accounts. PPD transactions may be originated only when payment and deposit terms between the merchant and the customer are prearranged and in writing. The terms and transaction schedule are arranged between the customer and the merchant in advance of the actual date and time at which the transaction is submitted. PPD transactions cannot be used for telephone-initiated or internet-initiated transactions or for converting a paper check into an electronic payment.
  • A written paper authorization from the customer is required for one-time transactions. A written paper authorization agreement indicating that the customer is authorizing a recurring charge to their bank account is required for recurring transactions. For PPD transactions, the customer’s payment authorization may NOT be received by telephone or the internet.
  • For recurring PPD transactions, the customer may revoke the standing payment authorizations (for example, calling a given telephone number or writing to a given address). Merchants are required to notify customers in writing at least 10 calendar days in advance of when the date or amount of an eCheck transaction is changed.

Telephone-Initiated Entry

A Telephone-Initiated Entry (SEC code TEL) is a one-time or recurring charge transaction against a customer’s personal checking or savings account.
  • TEL transactions may be originated only when a business relationship between the merchant and the customer already exists. If no relationship exists, TEL entries can be originated only when the customer initiates the telephone call to the merchant. An existing business relationship is defined as follows:
    • A written agreement is in place between the merchant and the customer.
    • The customer has purchased goods or services from the merchant within the past 2 years.
  • Affiliates or partners of the merchant are not considered to have an existing relationship with a customer by association. A TEL transaction may not be used by a merchant when there is no existing relationship between the merchant and the customer and the merchant has initiated the telephone call.
  • Payment authorization is obtained from the customer via the telephone for each TEL transaction. Prior to the eCheck transaction, authorizations must be either:
    • audio-recorded by the merchant or
    • provided to the customer in writing.
For an oral authorization obtained over the telephone to be valid, the merchant must record a clear statement of the following:
  • that the customer is authorizing a charge to their bank account
  • that the customer understands the terms of the authorization, including:
    • customer’s name
    • date of the authorization
    • date on or after which the customer’s banking account will be charged
    • amount to be charged
    • telephone number that is available to the customer during normal business hours
Either a copy or the original audio recording of the authorization or the written notice of authorization must be retained for two (2) years from the date of the authorization.

Internet-Initiated/Mobile Entry

An Internet-Initiated / Mobile Entry (SEC code WEB) is a charge against a customer’s personal checking or savings account. One-time or recurring WEB transactions may be initiated by using the internet or a mobile device on a wireless network.
WEB transactions may only be submitted against personal checking and savings accounts. Merchants are responsible for preventing potentially fraudulent transactions by ensuring that WEB transactions are received from customers whose identities are authenticated, whether it is a PIN at the time of checkout or some other means required by the merchant.
For a WEB entry, authorization is received from the customer from the internet or a mobile device on a wireless network during the payment or checkout process. Implementation of payment authorization language is up to the merchant, as long as it complies with the authorization requirements stated below. We recommend that payment authorization language appear on the same page that collects the customer’s banking account information.
The customer’s payment authorization must meet these requirements:
  • Be displayed on a computer screen or other visual display that permits the customer to read or print it.
  • Be readily identifiable as an authorization.
  • Clearly and conspicuously state its terms including the dollar amount, the effective date of the transfer, and whether the authorization is for a one-time purchase or for a recurring transaction.
For obtaining payment authorizations associated with WEB transactions, an authorization statement combined with a clickable button should be considered. It should clearly state that by clicking the button, the customer is providing authorization.
For recurring WEB transactions, the merchant must also provide a notice that the customer may revoke the standing payment authorization by notifying the merchant as specified in the payment authorization (for example, calling a given telephone number or writing to a given address). Merchants are required to notify customers at least 10 calendar days in advance of when the date or amount of a recurring eCheck transaction is changed. This notification need only be given once, in advance of the next recurring transaction.