ACH 101

Resources to introduce businesses to the basics of the concepts and players in payments

A Guide to Understanding Who’s Who in the Payments Networks

 ACH Network Check Processing  Fedwire®  Card Network 
Originator Payee  Originator  Merchant 
Originating Depository Financial Institution (ODFI)

Bank of First Deposit

Depositary Bank Payee’s Depository

Financial Institution 

Originator’s bank

Originator’s depository Bank 

Acquirer

Processor 
ACH Operator 

Correspondent Bank

Federal Reserve Bank

Clearing House 
Federal Reserve Bank  POS / ATM / Credit Card Network 
Receiving Depository Financial Institution (RDFI)  Paying Bank 

Beneficiary’s Bank

Beneficiary’s depository Bank 
Card Issuer 
Receiver 

Payor

Drawer 
Beneficiary  Card Holder 

A Picture is Worth a Thousand Words
Third-Party Sender Model

A Third-Party Sender is one type of Third-Party Service Provider when acting as an intermediary between its Originator and the Financial Institution (ODFI).In this type of relationship, the Third-Party Sender process entries on the behalf of and for the benefit of the Originator through an agreement with their ODFI. The Third-Party Sender has an agreement with both the Originator and the ODFI. The ODFI does not have a direct agreement with the Originator.

Third-Party Service Provider Model

In this model the merchant (Originator) has an ACH Origination Agreement directly with the Financial Institution (ODFI) and an agreement with the Third-Party Service Provider for some aspect of ACH Processing. In some cases, the ODFI may require the Originator to identify the Third-Party Service Provider in a Tri-Party Agreement.

Sending Point Model

In this model there are two Third-Party Service Providers, one offers a service to the Originator based on an agreement the Originator holds with the ODFI and the second Third-Party Service Provider acts as a Sending Point for the ODFI.

Nested Third-Party Sender Model

In this model the Third-Party Sender has an agreement with both the ODFI and Nested Third-Party Senders. Nested Third-Party Senders hold Agreements with their Originators which are the ultimate beneficiary of entries.

Third Party Sender Identification Tool
Need more help? Nacha has created a Third-Party Sender Identification Tool to assist with identification. 

Still not sure? Contact ePayAdvisors @ Focus@epayresources.org