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Legal Agreements Necessary


All ACH transactions between Originators and Receivers must be backed by valid authorizations. Authorization requirements differ for the various ACH transactions. While a verbal or other non-written form of authorization is permitted for consumer credit transactions, a written authorization form provides proper authorization for consumer debits. This authorization must be readily identifiable as a debit authorization, the terms must be clearly stated and procedures for revoking authorization must be explained. The authorization may specify that transactions will be for a fixed or variable amount.

Corporate (non-consumer) applications require more complex agreements that address the processing of payment-related data or the transfer of large dollars. The required authorization is generally included within a trading partner agreement that defines the responsibilities of each party under the agreement.


Originators must enter into an agreement with their Originating Depository Financial Institution. All participating financial institutions, by act of receiving or sending ACH entries, agree to comply with the applicable ACH rules and agree that those rules shall govern relationships between the sending and receiving institutions (and other parties involved in items covered by those rules). Financial institutions execute an agreement with the Federal Reserve Bank (or ACH Operator), that defines their processing relationship.

Originating companies are legally bound to comply with the ACH rules through written agreement with the Originating Depository Financial Institution. The rules as they apply to originating companies should be addressed in this agreement. The agreement binds companies to the ACH rules and covers such items as compensation, communication between the parties and error resolution.

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