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Resources | Glossary
ABA Number
A nine digit number composed of eight digits and a check digit that identifies a specific financial institution. These numbers are assigned by the Thomson Financial Publishing and are listed in its annual publication Key to Routing and Transit Numbers.
ACH Association
An organization formed by financial institutions to regulate and support the exchange of electronic transactions among member institutions.
ACH Credit
A transaction through the ACH network originated to pay a receiver by depositing funds into an account.
ACH Debit
A transaction through the ACH network originated to remove funds from the receiver by withdrawing from an account.
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Account Number Field
A nine digit number composed of eight digits and a check digit that identifies a specific financial institution. These numbers are assigned by the Thomson Financial Publishing and are listed in its annual publication Key to Routing and Transit Numbers.
Automated Clearinghouse (ACH)
An automated clearinghouse network is an electronic batch processing system by which payment orders are exchanged among financial institutions. Such electronic transactions can be substituted for paper checks. The Federal Reserve Banks operate an automated clearinghouse, as do some private-sector firms.
Automated Deposit
A deposit made directly to an account at a depository institution through the ACH network, such as payroll deposits, social security payments, or retirement benefits.
Batch
A group of records or documents considered as a single unit for the purpose of data processing.
Check
A check is a written order from one party (the payor) to another party (the payee) requiring the payor to pay a specified sum on demand to the payee or to a third party specified by the payee.
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Check Clearing
The process by which both the data on and the image of on a conventional paper check are captured electronically at the first point in the clearing process. The essential pieces of information gathered by this process are the routing and transit number, the customer account number, the check serial number, and the dollar amount of the check. The electronic data, not the paper check, is then sent though the clearing system.
Check Conversion
The process by which both the data on and the image of on a conventional paper check are captured electronically at the first point in the clearing process. The essential pieces of information gathered by this process are the routing and transit number, the customer account number, the check serial number, and the dollar amount of the check. The electronic data, not the paper check, is then sent though the clearing system.
Check Truncation
Check truncation is the practice of holding a paper check at the bank at which it was deposited and then electronically forwarding that check's essential information to the bank on which it was written. A truncated check is not returned to the writer.
Clearance
A clearing house is a voluntary association of depository institutions that facilitates the exchange of payment transactions such as checks, automated clearinghouse transactions, and large-value funds transfers and the settlement of participants' net debit or credit positions.
Clearing House
A clearing house is a voluntary association of depository institutions that facilitates the exchange of payment transactions such as checks, automated clearinghouse transactions, and large-value funds transfers and the settlement of participants' net debit or credit positions.
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Company
A business entity which creates paperless entries for introduction into the ACH network.
Courtesy Amount Recognition or Read (CAR)
A function of a computer that gives it the ability to locate, recognize, and analyze handwritten or machine-printed amounts on documents.
Customer Initiated Entry (CIE)
These are ACH entries initiated by a consumer through direct contact with an originator such as a bill payment system
Data Transmission
The electronic exchange of information between two or more computers acting as data processing points.
Decryption
Decryption is the process of converting encrypted data back into its original form, so that it can be understood.
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Demand Deposit
A deposit payable on demand, or a time deposit with a maturity period or required notice period of less than 14 days, on which the depository institution does not reserve the right to require at least 14 days written notice of intended withdrawal. A checking account is the most common form of demand deposit.
Depositary Bank
A nine digit number composed of eight digits and a check digit that identifies a specific financial institution. These numbers are assigned by the Thomson Financial Publishing and are listed in its annual publication Key to Routing and Transit Numbers.
Depository Institution
A Depository Institution is a financial institution that obtains its funds mainly through deposits from the public. This includes commercial banks, savings and loan associations, savings banks, and credit unions.
Electronic Check Presentment (ECP)
ECP is a process by which the MICR-line information is sent electronically to the paying bank.
Electronic Fund Transfer Systems (EFTS)
A generic term used whenever money is moved between accounts using an electronic terminal, telephone, computer, magnetic tape, or other means besides checks or other paper.
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Electronic Funds Transfer (EFT)
A generic term used whenever money is moved between accounts using an electronic terminal, telephone, computer, magnetic tape, or other means besides checks or other paper.
Encode
A device, such as a sorter, encodes a document by printing information on the document. The information helps speed the processing of the document and gives evidence of transaction and processing information.
Encryption
Encryption is the process of electronically converting information into a complex code to prevent it being accessed by unauthorized parties. Decryption is the process of reconverting this information back into readable form.
Endorsement
One of the twelve operating arms of the Federal Reserve System, located throughout the nation, that together with their twenty-five Branches carry out various System functions, including operating a nationwide payments system, distributing the nation's currency and coin, supervising and regulating member banks and bank holding companies, and serving as banker for the U.S. Treasury.
Federal Reserve Bank
One of the twelve operating arms of the Federal Reserve System, located throughout the nation, that together with their twenty-five Branches carry out various System functions, including operating a nationwide payments system, distributing the nation's currency and coin, supervising and regulating member banks and bank holding companies, and serving as banker for the U.S. Treasury.
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Federal Reserve System
The monetary authority of the U.S., established in 1913, and governed by the Federal Reserve Board located in Washington, D.C. The system includes 12 Federal Reserve Banks and is authorized to regulate monetary policy in the U.S. as well as to supervise Federal Reserve member banks, bank holding companies, international operations of U.S. banks, and U.S. operations of foreign banks.
File
A file is a group of entries transmitted by originating institutions or to receiving institutions by ACH operators. A file may contain one or more batches of entries.
File Header
The first record of an ACH file containing information necessary to route, validate and track the ACH contained within the file.
Float
Float is checkbook money that appears on the books of both the check writer and the check receiver while a check is being processed.
Funds Availability
The time at which funds associated with paperless entries have been made available to the customer.
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Grey Levels
A measure used by computers to determine the depth of an image in shades of gray. Although binary (black & white) images are more common, 16 or 256 gray levels are sometimes used in check imaging applications.
Image Character Recognition (ICR)
A function of a computer that gives it the ability to locate, analyze, and recognize alpha and numeric characters from an electronic image.
Legal Amount Read (LAR)
A function of a computer that gives it the ability to locate, analyze, and recognize handwritten or machine-printed legal amounts on documents.
Lockbox Check Conversion
The process of converting checks received in the mail by a bilker into electronic items.
MICR-Line Information
MICR-line information refers to the data characters at the bottom of a check. The magnetic ink character recognition (MICR) line at the bottom of a check includes the routing number of the payor bank, the amount of the check, the number of the check, and the account number of the customer.
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Magnetic Ink Character Recognition (MICR)
MICR-line information refers to the data characters at the bottom of a check. The magnetic ink character recognition (MICR) line at the bottom of a check includes the routing number of the payor bank, the amount of the check, the number of the check, and the account number of the customer.
National Automated Clearinghouse Association (NACHA)
A body that oversees all ACH activities and procedures; is comprised of all local ACHs.
Net Settlement
The settlement, through an actual transfer of funds, of the net effect of a series of financial transactions involving customers of two or more banks.
OCR Reader
A reader that can visually process the letters and numbers of the scan line of a check and interpret them for a transport.
On-Us Check
A check payable from funds on deposit at the same bank where it is presented for collection.
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On-Us Entries
Entries on an ACH file that belong to the originating financial institution. These entries may be stripped from the file and posted internally before a file is sent to the ACH.
Optical Character Recognition (OCR)
Recognition by devices of special graphic characters printed on documents, using an optical read head. OCR characters are easily read by the human eye and are the most common type of character used in remittance processing.
Originating Company
An organization or company that produces an ACH file and delivers it to an ODFI for introduction into the ACH network.
Originating Depository Financial Institution (ODFI)
A member institution which is responsible for the origination of ACH transactions. This institution may deposit items directly with an ACH or may work through a processing center which is the actual sending point. ODFIs must abide by the provision of the NACHA Operating Rules and Guidelines.
Originating Depository Institution
An originating depository institution is a depository institution that initiates and warrants electronic payments processed through the ACH network on behalf of its customers.
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Originator
An originator is the person or organization that initiates an ACH entry.
Participating Depository Financial Institution
A Participating Depository Financial Institution is any financial institution that is authorized to originate and receive ACH entries.
Paying Bank
A paying bank is the bank at which a check is payable and to which it is sent for payment or collection.
Processing Day
A Processing Day is any day that a member institution is open to the public to conduct business, or on which an ACH facility is being operated.
Proof of deposit (POD)
A kind of workflow in which a transaction, consisting of the set of documents in a single customer transaction (one credit plus one or more accompanying debits), is accepted and balanced at the customer point-of-contact.
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Return Item
A return item is a transaction that has been returned by a receiving depository institution because it cannot be posted.
Routing & Transit Number (R/T Number)
A field on the check that identifies the Federal Reserve District, FED office, and financial institution on which the check is drawn.
Secure Electronic Transactions
A method of electronic communication that uses standardized digital signatures to ensure secure credit card transactions over the Internet.
Server
A server is a computer that stores information that is retrieved by other computers.
Service Charge
A component of some finance charges, such as the fee for triggering an overdraft checking account into use.
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Settlement
Settlement banks are banks that maintain the settlement accounts for clearing members whereby payments and deposits are made.
Settlement Bank
Settlement banks are banks that maintain the settlement accounts for clearing members whereby payments and deposits are made.
Settlement Date
The day on which settlement occurs, the day that funds actually change hands as a result of an ACH entry.
Tagged Image File Format (TIFF)
One of several universal file formats for electronic graphics. This format is commonly used for check image storage.
Trace Number
A number assigned to every ACH entry by an originating institution that uniquely identifies that entry with a specific ACH file. First eight digits of the trace number are transit/routing number of ODFI and last seven digits are sequence numbers assigned by the originator.
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Transit Routing Number
A nine digit number composed of eight digits plus a check digit that identifies a specific financial institution. These numbers are assigned by the Thomson Financial Publishing and are listed in its annual publication Key to Routing and Transit Numbers.
Transport
A financial document processor, or a hardware device that has some combination of these capabilities: sorts checks, reads their MICR and OCR information, captures data from the front and back of the checks, endorses, and encodes.
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