Glossary of Common ACH Processing Terms

For merchants seeking clarification on commonly used terms in the ACH processing world, this glossary provides clear definitions along with our blog entry.

Terminology

Originations

• This term accounts for transactions initiated by the merchant and sent to debit a customer’s bank account.
  
  

Gross Settlements

• This term describes transactions that originated and settled or completed the ACH cycle. Additionally, Processing Fees and Reserves are taken out of this amount.
  
  

Processing Fee

• In this case, this considers fees assessed for every submitted debit transactions. Correspondingly, these fees appear in the Exhibit B, signed between Actum and the merchant’s company.
  
  

Refunds/Credits

• This term accounts for any money refunded or sent to your customer’s bank accounts.
  
  

Reserve

• The amount of money (five percent) held from the amount of Originations and deposited back into a merchant’s bank account after 90 days. A reserve serves as a risk mitigation measure that Actum utilizes in ensuring any unintended fees possibly resulting from a transaction are covered. As Actum serves as an intermediary between merchants and financial institutions, Actum may be assessed with fees in the event of a chargeback or insufficient funds, for example.
  
  For example, when a client receives a $10 debit, the transaction settles and with $10 paid to the merchant. However, if a client files a chargeback, the bank charges back Actum, the intermediary. On the other hand, rolling reserves do not apply to merchants with an Up-front Reserve.
  
  

Reserve Repayment

• For any reserves held for the past 90 days, the merchant will see this reserve deposited into their bank account on the 91st day. However, this does not apply to merchants with an Upfront Reserve.
  
  

Adjustments

• These are amounts not falling into a processing fee, reserve, or any listed category. Instead, these are rare amounts in which a merchant receives notification.
  
  

Carry Over Amount

• If there are no Gross Settlements on the same day when Processing Fees occur, a negative Payout Amount generates. In addition, these “carry over” until a Gross Settlement occurs. On that note, this amount considers any assessed processing fees and reserves.
  
  

Check Net Payout

• This term describes a deposit designated for a merchant’s bank account with all fees and reserves assessed.
  
  A negative Check Net Payout amount occurs when there are no Gross Settlements and there are outstanding fees. Lastly, this negative amount carries over until a merchant receives a Gross Settlement.
  
  

Late Return

• Namely, this is a return for a debit transaction that was submitted and settled that occurs outside of a merchant account’s settlement period. For example, if a transaction submitted on Monday, Feb. 1, that settled on Monday, Feb. 8, returned on Monday, Feb. 8 or any subsequent day, this would constitute a late return.
  
  

Pre-Note

• Specifically, a pre-note is a zero dollar payment to validate the account and routing details of a bank account before debiting or crediting it. A pre-note is an alternative way to verify bank account information instead of using micro-deposit based verification such as Plaid. A pre-note is successful if there is no ACH return or Notification of Change (NOC). If the pre-note is not successful, use the information provided in the ACH return or NOC code to update the bank account information before sending another pre-note.