Businesses can conduct proper transactions across the ACH network through iCheckGateway.com: PPD Transactions (Prearranged Payment and Deposit Entries), TEL Entries, (Telephone-Initiated Entries), and WEB Entries, (Internet Initiated/Mobile Entries) .
While these transactions typically occur between a business account and a consumer account, this post will cover how to properly obtain authorization for business-to-business credit transactions (Cash Concentration or Disbursement).
Before conducting a transaction with another business, the contracted merchant must obtain written permission from that business before crediting or debiting its bank account.
That authorization can be obtained in a written document or electronically as long as it contains the business name, their bank account information, their consent to debit or credit the account, their contact information, a statement that the merchant enabled the bank account for ACH, and their acceptance of the National Automated Clearing House Association’s operating rules.
The contract includes whether the business agrees the business processes as recurring transactions or a one-time transaction. The overriding agreement should indicate the method of obtaining authorization for individual transactions. Methods for authorization include writing, calling, faxing, or emailing.
NACHA requires businesses to keep all authorizations for two years to remain in compliance. This requirement also further protects merchants in case customers dispute a transaction.
So, exactly what should a CCD authorization look like? Here are some recommendations:
For all types of CCD Entries
Below signature: I certify that I am an authorized representative of the Company indicated above and that I have the authority to enter into this Agreement on the Company’s behalf.
Company understands that this authorization will remain in effect until it is canceled in writing, and agrees to notify Company Name in writing at least 15 days in advance of any changes in its account information or termination of this authorization. Company Name understands that because these are electronic transactions, these funds may be withdrawn from its account as soon as the date an individual transaction is authorized, and that it will have limited time to report and dispute errors.
In the case of an ACH Transaction being rejected for Non-Sufficient Funds (NSF) Company understand that Company Name may at its discretion attempt to process the charge again within 30 days, and agrees to an additional $ XX amount charge for each attempt returned NSF which will be initiated as a separate transaction from the authorized payment. Company Name has certified that the above business bank account is enabled for ACH transactions, and agrees to reimburse Merchant Name for all penalties and fees incurred as a result of Company Name’s bank rejecting ACH debits or credits as a result of the account not being properly configured for ACH transactions. Company Name acknowledges that the origination of ACH transactions to its account must comply with the provisions of U.S. law.
For overriding agreements that will contain CCD authorization
Above form: This agreement governs ACH transactions initiated by authorize Merchant Name to credit or charge the authorize Company Name indicated below.
Both parties agree to be bound by NACHA Operating Rules as they pertain to all ACH transactions initiated by authorize Merchant Name that credit or debit the company bank account listed below, and acknowledge that the origination of ACH transactions to the listed account must comply with provisions of U.S. law.
This agreement provides authorization for individual or recurring CCD transactions to be initiated by Merchant Name when individually authorized using the methods designated below. This agreement will remain in effect until Company Name cancels it in writing.
Both parties agree that this agreement, in conjunction with any of the designated methods constitutes authorization to debit Company Name’s business bank account, and Company Name agrees not to dispute any debits with its bank provided the transaction(s) correspond to the terms indicated in this agreement.
For one-time payment agreements
Above form: Sign and complete this form to authorize Merchant Name to make a one-time ACH debit to your business bank account. By signing this form, you give us permission to debit your account for the amount indicated on or after the indicated date. This is permission for a single transaction only and does not provide authorization for any additional unrelated debits or credits to your account.
Agreement: Company Name authorizes Merchant Name to charge its business bank account indicated below for $ XX amount on or after date.
For a recurring payment
Agreement: Company Name authorizes Merchant Name to charge its business bank account indicated below for $XX amount on the day or date of each frequency.
For a variable recurring payment
Agreement: Company Name authorizes Merchant Name to debit the bank account indicated below on the day or date of each frequency. Company Name understands that it will only receive advanced notice of the charge if it exceeds $XX amount.
For a set payment schedule
Agreement: Company Name authorizes Merchant Name to charge the account indicated below to discharge the above debt using installment payments in the amount and schedule indicated.
iCheckGateway.com‘s encourages merchants to learn how to properly obtain authorizations for various types of ACH transactions. For a refresher on the three other types of authorization requirements, click here.
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