ACH Education – SEC Codes
UNDERSTANDING SEC CODES FOR ACH APPLICATIONS
10/17/2023Standard Entry Class (SEC) codes are integral to ensuring that Automated Clearing House (ACH) debit and credit entries are properly transmitted in accordance to National Automated Clearinghouse Association (NACHA) guidelines. Understanding which codes to use for different transfers will reduce instances of returned entries and help avoid NACHA violations.
Important ACH Application SEC Codes
ACH applications allow originators to identify debit and credit entries that are transmitted to corporate or consumer accounts at Receiving Depository Financial Institutions (RDFIs). SEC codes are used to recognize applications and determine the specific record layout used to carry the payment and related information. The following are common application types and codes:
ACH
|
SEC
|
Application Use |
Debit/
|
Consumer/
|
Authorization
|
Corporate Credit or Debit |
CCD |
Make regular payments or distribute or consolidate funds between corporate entities. |
Credit or Debit |
Corporate |
Agreement |
Corporate Trade Exchange |
CTX |
Transfer funds within a trading partner relationship, including payments-related information. |
Credit or Debit |
Corporate |
Agreement |
Direct Deposit |
PPD |
Payroll, expense reimbursement, etc. |
Credit |
Consumer |
Oral or non-written means |
Direct Payment |
PPD |
Preauthorized bill payment |
Debit |
Consumer |
Written |
Avoiding return entries and penalties
The improper use of SEC codes can result in increased return entries, delaying ACH transactions and incurring additional fees. In extreme circumstances, using the wrong SEC code on an application can result in receiving a rules violation from NACHA. Rules violations may carry fines or a suspension from originating entries.
Questions?
If you have any questions about ACH applications or SEC codes, do not hesitate to contact your bank representative. We are committed to properly executing transactions in a timely manner.
