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Sample PPD Authorizations for ACH

The number of transactions across the ACH Network has increased dramatically over the last decade. Nacha (National Automated Clearing House Association) oversees these transactions with several rules and regulations to detect and prevent fraud. The association also provides guidelines that require specific authorizations to process funds between two accounts on the network. These authorizations can be written, verbal, or electronic, depending upon the type of transaction. Learn more about these different types of authorization forms.

To simplify processes, we offer support for getting the proper authorizations, thereby protecting their merchants should future disputes arise over transactions. This blog talks about the written authorization type, PPD authorization.

 

How to Obtain a PPD Authorization

PPD Transactions (Prearranged Payment and Deposit Entries) allow businesses to debit or credit a customer’s bank account using only their bank’s routing and account numbers. However, before conducting the transfer, business owners should get authorization from the customer on a signed form that includes details on:

  • Transaction amount
  • Date to process the transaction 
  • Bank account information for the transfer

For recurring transactions, such as payments for utility bills, monthly membership fees, or loans, the authorization form should also include:

  • Frequency of the payments
  • No-to-exceed amount for variable recurring amounts
  • Number of payments and total due

 

Sample Details for a Recurring PPD transaction

At the top of the form:

Sign and complete this form to authorize Merchant Name to make regularly scheduled charges to your bank account. By signing this form, you give us permission to debit your account for the amount indicated below each billing period until the designated expiration date. You agree that no prior notification will be provided unless the date or amount changes, in which case you will receive notice from us at least 10 days prior to the payment being collected. 

Below customer’s signature:

I understand this authorization will remain in effect until I cancel it in writing and I agree to notify Merchant Name in writing of any changes in my account information or termination of this authorization at least 15 days prior to the next billing date. If the above noted periodic payment dates fall on a weekend or holiday, I understand that the payment may be withdrawn from my account as soon as the above noted periodic transaction dates. In the case of an ACH Transaction being rejected for Non-Sufficient Funds (NSF), I understand that MerchantName may attempt to process the charge again within 30 days, and agree to an additional $XX charge for each attempt returned NSF which will be initiated as a separate transaction from the authorized recurring payment. I acknowledge that the origination of ACH transactions to my account must comply with the provisions of U.S. law. I agree not to dispute this recurring billing with my bank so long as the transactions correspond to the terms indicated in this authorization form.


Sample Details for a One-Time PPD transaction 

Sign and complete this form to authorize Merchant Name to make a one-time debit to your bank account. By signing this form, you give us permission to debit your account for the amount indicated on or after the date indicated. This permission is only for a single transaction and does not provide authorization for any additional unrelated debits or credits to your account. 

Learn how to fill out an ACH authorization form.

 

Nacha's Requirements

Nacha doesn’t specify precisely HOW a merchant can obtain a customer’s bank information for PPD transactions. For example, some merchants ask customers to write their routing and account numbers on the form. Other merchants ask customers to provide a corresponding voided check or bank letter to reduce potential errors.

Nacha rules require merchants to keep copies of ACH authorization for at least two years following the termination or revocation of the authorization. Merchants should retain the documents as an electronic record that 

  • Accurately reflects the information in the record, and
  • Can be accurately reproduced for later reference. 

A customer’s bank could request proof of authorization from a merchant, especially for disputed transactions. Our team offers assistance for four different types of authorizations: 

  • PPD Transactions (Prearranged Payment and Deposit Entries), 
  • TEL Entries (Telephone-Initiated Entries), 
  • CCD Transactions (Cash Concentration or Disbursement), and 
  • WEB Entries (Internet Initiated/Mobile Entries).

Want to get started with reliable, tech-savvy, innovative payment solutions for your business? Schedule a call with our experts to discuss your requirements today!

 

Date Originally Published: August 24, 2016

Date Updated: July 26, 2022

By By ICG Digital

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