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SEC Codes

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.