PPD
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.
What is Standard Entry Class (SEC) Code PPD?
SEC code PPD stands for Prearranged Payment and Deposit Entry. This SEC code is used in the context of Automated Clearing House (ACH) transactions, which are electronic payments or collections made through the ACH network. The transaction type for PPD is a single entry ACH credit or ACH debit or a recurring entry.
PPD specifically relates to transactions that involve direct deposits (such as payroll, pension, or government benefits) and pre-authorized bill payments (such as utilities, mortgages, or insurance premiums). PPD is used for transactions where payments are made directly to an individual’s bank account—such as salary, social security, or other types of benefits—or where recurring payments are authorized by the consumer—such as monthly utility bills or loan payments.
SEC code PPD indicates that the transaction is a prearranged payment or deposit, ensuring that both the originating (ODFI) and receiving (RDFI) financial institutions understand the nature of the transaction. PPD is one of the most common SEC codes used in ACH transactions due to its applicability to a wide range of direct deposit and recurring payment scenarios.
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