SEC Codes Reference

Overview

Every ACH batch includes a Standard Entry Class (SEC) code that tells the receiving bank what kind of transaction it is and what authorization rules apply. Choosing the correct SEC code is important because banks use it to determine how to process entries, what disclosures are required, and what return rights the receiver has.

FISTWorks supports all 12 SEC codes defined by NACHA.

Common Codes

These are the most frequently used SEC codes for everyday business payments.

PPD — Prearranged Payment and Deposit

Direction: Credit and Debit

The workhorse of ACH. PPD is used for recurring or one-time payments to or from consumer accounts where the receiver has given prior written authorization.

Typical uses:

• Payroll direct deposits (credit)
• Employee expense reimbursements (credit)
• Mortgage or loan payments (debit)
• Insurance premium collections (debit)

Authorization: Written agreement signed by the consumer before the first transaction.

CCD — Corporate Credit or Debit

Direction: Credit and Debit

CCD is the business-to-business equivalent of PPD. It moves funds between corporate accounts rather than consumer accounts.

Typical uses:

• Vendor payments (credit)
• Business-to-business invoice payments (credit)
• Franchise fee collections (debit)
• Intra-company transfers (credit or debit)

Authorization: Written agreement between the two businesses.

CTX — Corporate Trade Exchange

Direction: Credit and Debit

CTX works like CCD but includes addenda records that carry remittance information (invoice numbers, purchase order references, payment details). This is essential for businesses that need to match payments to specific invoices.

Typical uses:

• Vendor payments with remittance detail
• Supply chain payments with invoice references
• Any B2B payment where the receiver needs to know what the payment is for

Authorization: Written agreement between the businesses. Addenda records can contain up to 9,999 records of payment-related information.

WEB — Internet-Initiated Entry

Direction: Credit and Debit

WEB is used when the consumer authorizes a payment through a website or mobile app. This is the standard code for e-commerce and online bill pay.

Typical uses:

• Online bill payments (debit)
• E-commerce purchases (debit)
• Online subscription charges (debit)
• Refunds from online purchases (credit)

Authorization: Internet-based authorization (checkbox, click-through agreement). The originator must use commercially reasonable fraud detection.

TEL — Telephone-Initiated Entry

Direction: Debit Only

TEL is used when a consumer verbally authorizes a one-time debit over the phone. Credits are not allowed under TEL.

Typical uses:

• Utility payment by phone
• One-time bill payment via call center
• Donation pledges taken by phone

Authorization: Verbal authorization during a recorded phone call. The originator must either have an existing relationship with the consumer or the consumer must have initiated the call.

Check Conversion Codes

These codes are used when a paper check is converted into an electronic ACH debit. All check conversion codes are debit only.

ARC — Accounts Receivable Entry

Direction: Debit Only

ARC converts checks received through the mail (lockbox) or at a dropbox location into ACH debits. The physical check is destroyed after conversion.

Typical uses:

• Utility bill payments received by mail
• Lockbox payment processing
• Any check received where the consumer is not present

Key rule: The consumer must be notified that their check may be converted to an electronic payment (typically via a notice on the payment stub or envelope).

BOC — Back Office Conversion

Direction: Debit Only

BOC converts checks received at a point of sale or manned bill payment location. Unlike POP, the conversion happens in the back office, not at the point of sale.

Typical uses:

• Retail store check payments (converted later)
• Bill payment center collections
• Any in-person check where conversion happens after the customer leaves

Key rule: Signage must be posted at the point of sale informing consumers that checks may be converted.

POP — Point of Purchase Entry

Direction: Debit Only

POP converts a check into an ACH debit at the point of sale while the consumer is present. The check is voided and returned to the consumer immediately.

Typical uses:

• Retail checkout where the customer writes a check
• In-person bill payment at a service counter

Key rule: The consumer receives the voided check back. Maximum amount is $25,000. The check must be a single-use consumer check (not business or government).

RCK — Re-presented Check Entry

Direction: Debit Only

RCK re-presents a check that was previously returned (bounced) as an ACH debit. This gives the originator another chance to collect payment electronically.

Typical uses:

• Collecting on returned/bounced checks
• Retry of NSF (non-sufficient funds) checks

Key rule: A check may only be re-presented via RCK a maximum of 2 times. The original check amount cannot be altered.

Specialty Codes

These codes are less common and serve specific transaction network use cases.

POS — Point of Sale Entry

Direction: Credit and Debit

POS is used for transactions initiated at a point-of-sale terminal, typically involving a debit card in a shared network.

Typical uses:

• Debit card purchases at POS terminals
• PIN-based debit transactions
• POS refunds (credit)

MTE — Machine Transfer Entry

Direction: Credit and Debit

MTE is used for transactions initiated at an ATM (Automated Teller Machine).

Typical uses:

• ATM cash withdrawals (debit)
• ATM deposits (credit)
• ATM transfers between accounts

SHR — Shared Network Entry

Direction: Credit and Debit

SHR is used for transactions processed through a shared ATM or POS network where the transaction crosses network boundaries.

Typical uses:

• Cross-network ATM transactions
• Shared debit network transactions
• Point-of-sale transactions routed through shared networks

Quick Reference Table

Choosing the Right Code

• Paying employees or consumers? Use PPD
• Paying a vendor or business? Use CCD (or CTX if you need to include invoice details)
• Customer paying online? Use WEB
• Customer paying by phone? Use TEL (debit only)
• Converting a paper check? Use ARC (mail), BOC (back office), or POP (point of sale)
• Re-trying a bounced check? Use RCK

When in doubt, PPD (consumer) or CCD (business) are the safest choices for most standard payment scenarios.