ACH Authorization Requirements

ACH Authorization

The Smart Way to Receive and Make Payments

ACH online payments are an efficient way business can:

  • Pay employees via direct deposit
  • Pay invoices to vendors or
  • Receive payments from customers with preauthorized debit transactions.

While it may be hard to believe, setting up paperless ACH transactions still often require a physical signature on a standard form for compliance purposes (NACHA rules).

Below we’ve provided ACH Originators a quick list of requirements for various transactions along with links to Bank Midwest’s sample ACH forms that you can easily download and use for your company.

Authorization Requirements for Consumer (PPD) Transactions

Debit Entry Authorization
  • Must be in writing and signed or similarly authenticated
  • Needs to be easily identified as an authorization and state the terms clearly (amount and timing of debits)
  • Must state how the Consumer can revoke the authorization
  • A copy of the authorization must be provided to the Consumer
  • Try this general sample debit form or create your own:
    ACH Debit_generic form
Credit Entry Authorization

Credit transactions or Direct  Deposit  via  ACH  is  the  deposit  of  funds  to  a  consumer’s  account  for  payroll,  employee  expense reimbursement, government benefits, tax and other refunds, and annuities and interest payments.

  • It’s not required to be in writing but a Company may choose to get an authorization in writing. Bank Midwest highly recommends Companies obtain credit authorizations.
  • Try this generic sample form or create your own:
    ACH Credit_generic form
Retention Requirements
  • An original or copy of each authorization must be retained by the Company for two years from the termination or revocation of the authorization
  • The company must be able to make a copy of the authorization available to Bank Midwest upon request

Authorization Requirements for Commercial Transactions (CCD & CTX)

  • A written agreement must be in place between the two companies doing business together
  • Authorizations do not have a specific format requirement but the Originating Company must obtain the Receiving Companies agreement to be bound by the NACHA Operating Rules
  • Trading Partner Agreement should contain authorization requirements and procedures as agreed upon by the parties

Learn more about ACH payments at NACHA’s site: .