Receiver, in the US Automated Clearing House (ACH) network, is the formal name for the individual, company or other organisation whose bank account is credited or debited by an ACH entry. The Receiver has authorised the Originator, such as an employer, a utility or a lender, to send the entry to its account at its bank. An employee whose salary arrives by direct deposit and a customer whose monthly bill is collected by debit are both Receivers.
The term is defined in the Nacha Operating Rules, which govern the ACH network, and is written with a capital letter there. It sits in a set of five participant roles: the Originator, the Originating Depository Financial Institution (ODFI), the ACH Operator, the Receiving Depository Financial Institution (RDFI) and the Receiver. The word has other meanings in finance, notably a court-appointed receiver who takes control of a failing business, which is unrelated to payments.
The Receiver's role in an ACH payment
An ACH payment starts with the Originator, which creates an ACH entry and sends it through its ODFI. The ODFI passes it to an ACH Operator, which sorts entries and delivers them to the RDFI holding the Receiver's account. The RDFI then posts the entry to that account. For an ACH credit, such as payroll or a tax refund, money is added to the Receiver's balance. For an ACH debit, such as an insurance premium or a loan repayment, money is taken from it.
The Receiver has no direct contract with the ACH Operator or the ODFI. Its relationships are with the Originator, through the authorisation, and with its own bank, through the account agreement. The RDFI acts on the Receiver's behalf within the network, including when entries need to be returned.
Authorisation
The Nacha rules require the Originator to obtain the Receiver's authorisation before initiating an entry. For consumer debits, the authorisation must be clear and readily understandable, must be in writing and signed or similarly authenticated, and the Originator must give the Receiver a copy. Authorisations can be obtained on paper, online, over the telephone with specific recording or confirmation rules, or by other permitted methods. Business-to-business entries rely on an agreement between the Originator and the Receiver, often part of a wider trading contract. Details are covered in the entry on ACH authorization.
For credits, authorisation usually takes the form of a direct deposit enrolment form or account details supplied to the payer. The Receiver can generally revoke an authorisation by notifying the Originator, and for consumer debits can also instruct its bank to stop a payment.
Consumer and non-consumer Receivers
The rules distinguish between consumer Receivers, using personal accounts, and non-consumer Receivers, using business or corporate accounts. The distinction matters most for disputes. A consumer whose account is debited without authorisation can sign a written statement with the RDFI and have the entry returned for an extended period, measured from the settlement date. A business Receiver has a much shorter window, generally a matter of banking days, because companies are expected to review their accounts closely and can use tools such as an ACH debit block or ACH positive pay to prevent unwanted debits.
Consumer Receivers also benefit from the federal Electronic Fund Transfer Act and Regulation E, which give rights to error resolution and limit liability for unauthorised transfers. These laws generally do not apply to business accounts.
Returns initiated for the Receiver
When an entry cannot be posted or is disputed, the RDFI sends an ACH return back through the network with an ACH return code. Common codes connected to the Receiver include R01 for insufficient funds, R02 for an account that has been closed, R03 when no account can be located, R10 when a consumer says the debit was not authorised, and R29 when a corporate Receiver says the same. Returns for unauthorised debits count towards return-rate thresholds that Nacha monitors for each Originator.
Equivalent roles in other payment systems
Other systems use different names for the same position. Wire transfer and SWIFT terminology speaks of the beneficiary or beneficiary customer; SEPA and UK direct debit schemes use the term payer for the account holder debited and payee for the business collecting. Within the ACH network, though, Receiver applies to both credits and debits, which is why it can seem confusing that a Receiver may be the one paying.