🧾 ACH SEC Code Breakdown
SEC Codes define the type of ACH transaction being initiated—what kind of party is involved (consumer or business), how authorization was obtained, and whether additional data (like invoice information) is included. Using the correct SEC code ensures compliance with NACHA rules and proper handling by the receiving bank (RDFI).
🔹 PPD (Prearranged Payment and Deposit Entry)
- Used for: Consumer transactions (e.g., payroll, direct deposit, utility billing)
Authorization: Written or electronic consent from the individual
Supports: Both credits and debits
Addenda Records: Optional
🔹 CCD (Corporate Credit or Debit Entry)
Used for: B2B payments between corporate entities
Authorization: Must be agreed upon between the two companies
Supports: Both credits and debits
Addenda Records: One optional addenda record
🔹 CTX (Corporate Trade Exchange Entry)
Used for: Corporate payments with multiple addenda records
Authorization: Business-to-business authorization
Supports: Complex remittance and invoicing information
Addenda Records: Up to 9,999 (supports EDI data)
🔹 WEB (Internet-Initiated Entry)
Used for: Consumer transactions authorized online
Authorization: Must be through a secure online process
Supports: Typically debits (recurring or one-time)
Addenda Records: Optional
🔹 TEL (Telephone-Initiated Entry)
Used for: Consumer transactions authorized over the phone
Authorization: Oral authorization required and must be recorded or documented
Supports: Debits only (no credits)
Addenda Records: Optional
🔹 XCK (Destroyed Check Entry)
Used for: ACH entry created to replace a check that was lost, damaged, or destroyed
Authorization: Original check must have been presented and then lost/damaged before processing
Supports: Debits only
Notes: Only used when original check is unavailable but would otherwise qualify for processing
🔹 ARC (Accounts Receivable Entry)
Used for: Converting a check received by mail into an ACH debit
Authorization: Provided by the check itself and customer notice
Supports: Debits only
Notes: Common for utility or bill payments
🔹 BOC (Back Office Conversion Entry)
Used for: Converting checks received in person at point-of-sale into ACH entries
Authorization: Customer must be notified at time of check acceptance
Supports: Debits only
🔹 POP (Point-of-Purchase Entry)
Used for: Converting checks presented at the point of sale into ACH entries
Authorization: Written consent required at the time of transaction
Supports: Debits only
🔹 IAT (International ACH Transaction)
Used for: ACH entries involving a foreign bank or international party
Authorization: Must comply with U.S. and international banking rules
Supports: Both credits and debits
Notes: Includes additional data for cross-border compliance (OFAC, BSA, etc.)
✅ Best Practices When Using SEC Codes
Use the correct code for each transaction type to avoid NACHA violations or ACH returns.
Maintain proper authorization documentation—requirements vary by code.
Educate your team or clients on the differences, especially when switching processors or updating billing systems.
Partner with a processor (like Durango Merchant Services!) that supports a wide range of SEC codes and understands their specific use cases.
