Introducing Professional Services. Learn how we can help accelerate your payments transformation.Learn more →
An SEC code is a three letter code that describes how a payment was authorized by the consumer or business receiving an ACH transaction. SEC stands for 'Standard Entry Class'. SEC codes are defined and maintained by NACHA, the governing body for the ACH network.
For example, the recurring ACH debit for your monthly utility bill will use the SEC code PPD which stands for 'Prearranged Payment and Deposit Entry' when the utility company debits money from your account. Some banks will also include this code on the transaction entry in your bank statement.
It is mandatory for all ACH payments to include a SEC code. Both ACH credits and ACH debits must have a SEC code. Since they tend to be specific to a particular use case, most companies will only use a few different SEC codes in their payments.
SEC codes don’t have anything to do with the Securities and Exchange Commission, the three letter agency most often associated with this acronym.
How do SEC Codes work in practice?
It is the responsibility of the Originating Depository Financial Institution or ODFI to include the correct SEC code in the ACH payment. SEC codes are attached to the ACH payment request since they are a part of the NACHA file format.
It is also the responsibility of the business using the ODFI for ACH, also known as the Originator, to have the proper authorization in place from the Receiver. The nature of this authorization depends on the SEC code and whether funds are being debited or credited. For example:
- Most ACH debits require written authorization from the recipient while most ACH credits do not.
- Debits authorized on a phone call need to use the SEC code TEL and require the company originating the payment maintain a recording of the customer's verbal authorization. Alternatively, they need to follow up with the customer for a written confirmation of the authorization before initiating the payment.
Including the incorrect SEC code could result in an ACH Return. The ODFI is then responsible for any return fees and resubmitting the payment with the correct code.
SEC Codes
NACHA currently allows 13 SEC codes on ACH payments. Note that some codes can be used either for ACH credits and debits, while others can only be used for one. Similarly, certain codes can be used for both one-time and recurring payments while others can only be used for one-time payment authorization. Certain SEC codes can only be used for consumer or retail transactions, while others are reserved for business and government transactions. You will also notice that certain codes like WEB (for online authorizations) and TEL (for phone authorizations) describe where the transaction was authorized.
| SEC Code | Title | Transaction Type | Account Type | Agreement or Authorization |
|---|---|---|---|---|
ACK | ACH Payment Acknowledge | Non-Monetary (Acknowledges CCD Credit Entry) | N/A | N/A |
ADV | Automated Accounting Advice | Non-Monetary | N/A | Agreement: ODFI/RDFI and ACH Operator |
ARC | Accounts Receivable Entry | Debit Single Entry | Consumer or Non-Consumer | Authorization: Written Notice |
ATX | Financial EDI Acknowledgment | Non-Monetary (Acknowledges CTX Credit Entry) | N/A | N/A |
BOC | Back Office Conversion Entry | Debit Single Entry | Consumer or Non-Consumer | Authorization: Posted Notice and Written Notice |
CCD | Corporate Credit or Debit Entry | Credit or Debit Single Entry or Recurring Entry | Non-Consumer | Agreement: Originator and Receiver |
CIE | Customer Initiated Entry | Credit Single Entry | Consumer Originated | Agreement: Originator and Receiver |
COR | Notification of Change, or Refused Notification of Change | Non-Monetary | Consumer or Non-Consumer | N/A |
CTX | Corporate Trade Exchange | Credit or Debit Single Entry or Recurring Entry | Non-Consumer | Agreement: Originator and Receiver |
DNE (Federal Govt. Agency Use Only) | Death Notification Entry | Non-Monetary | Consumer | N/A |
ENR | Automated Enrollment Entry c | Non-Monetary | Non-Consumer (Federal Govt. Agency) | Request by Receiver / RDFI Use Only |
IAT | International ACH Transaction | Credit or Debit Single Entry or Recurring Entry | Consumer or Non-Consumer | Agreement: Originator and Receiver (Corporate); Authorization: In writing and signed, or similarly authenticated (Consumer Debit); Authorization: Orally or other non-written means (Consumer Credit) |
MTE | Machine Transfer Entry | Credit or Debit Single Entry | Consumer | Authorization: In writing and signed, or similarly authenticated |
POP | Point of Purchase Entry | Debit Single Entry | Consumer or Non-Consumer | Agreement: Posted Notice and in writing and signed, or similarly authenticated |
POS | Point of Sale Entry | Credit or Debit Single Entry | Consumer | Agreement: In writing and signed, or similarly authenticated |
PPD | Prearranged Payment and Deposit | Credit or Debit Single Entry or Recurring Entry | Consumer | Authorization: In writing and signed, or similarly authenticated (Consumer Debit); Authorization: Orally or other non-written means (Consumer Credit) |
RCK | Re-presented Check Entry | Debit Single Entry | Consumer | Authorization: Posted Notice |
SHR | Shared Network Transaction | Credit or Debit Single Entry | Consumer | Agreement: ODFI and RDFI |
TEL | Telephone-Initiated Entry | Debit Single Entry or Recurring Entry | Consumer | Authorization: Orally authorized over telephone |
TRC | Truncated Entry | Debit Single Entry | Consumer or Non-Consumer | Agreement: ODFI and RDFI |
TRX | Truncated Entry Exchange | Debit Single Entry | Consumer or Non-Consumer | Agreement: ODFI and RDFI |
WEB | Internet Initiated/Mobile Entry | Debit or Consumer to Consumer Credit Single Entry, or Recurring Entry | Consumer | Authorization: In writing and signed, or similarly authenticated (Debit WEB entries) |
XCK | Destroyed Check Entry | Debit | Consumer or Non-Consumer | N/A |
Modern Treasury currently lets you use 6 SEC codes — PPD, CCD, CTX, IAT, CIE and WEB when making payments. If you don't specify a code, we will default to using PPD if the recipient is an individual. If the recipient is a business, we will default to using CCD.
Try Modern Treasury
See how smooth payment operations can be.
Learn
ACH (Automated Clearing House) is a payment processing network that’s used to send money electronically between banks in the United States.
ACH APIs enable companies with high transaction volumes to write software that automates payments over the ACH network.
An ACH credit refers to the process of electronically depositing, or “pushing,” funds into a bank account using ACH.
In an ACH debit, funds are electronically withdrawn, or “pulled,” from a bank account using ACH.
A Notification of Change (NOC) is used to notify the sender of an ACH payment to correct or change information related to a customer’s bank account.
A return is a credit or debit entry initiated by the Receiving Depository Financial Institution (RDFI) that returns a previously originated payment to the Originating Depository Financial Institution (ODFI).
ACH return codes identify the reason an ACH payment was returned by the recipient's bank. They make it easier to spot and resolve payment failures.
An ACH reversal refers to an erroneous ACH payment that a payment originator requests to take back, or reverse.
Credits and debits are two kinds of ACH transactions. Whereas a credit involves depositing, or “pushing,” funds into a bank account, for a debit, funds are withdrawn, or “pulled,” from an account.
FedACH is the automated clearing house (ACH) service of the Federal Reserve Banks.
Part of the FedACH system, FedGlobal ACH offers low-cost and efficient cross-border ACH payments.
The two kinds of financial institutions in the ACH network are ODFIs (Originating Depository Financial Institution) and RDFIs (Receiving Depository Financial Institutions).
A Standard Entry Class or SEC code is a three letter code that describes how a payment was authorized by the consumer or business receiving an ACH transaction.
US companies moving money internationally will likely weigh the pros and cons of SWIFT vs. Global ACH when it comes to attributes like speed and cost.
Payment rails are the underlying systems and networks that facilitate the movement of funds between parties in financial transactions.
ACH (Automated Clearing House) is a payment processing network that’s used to send money electronically between banks and financial institutions in the United States.
An electronic funds transfer (EFT), also known as a direct deposit, is the digital transfer of money between bank accounts. As digital transfers, they reduce the need for manual input and paper documents.
Global ACH can help companies move money from US-domiciled accounts across borders using local rails. Learn how and when to use this payment rail.
A Request for Payment (RFP) is an ACH Network message that can be used by businesses to send electronic invoices to their customers.
Same-Day ACH is an improvement to the ACH network that allows the processing of credit, debit, and return transactions several times a day.
A pre note or prenotification is a zero dollar payment to validate the account and routing details of a bank account before debiting or crediting it.
An International ACH Transfer—also known as Global ACH—is an ACH payment made cross-border from a US-domiciled account.
Subscribe to Journal updates
Discover product features and get primers on the payments industry.