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Origination Education

New Fraud Challenges for Third-Party Senders

Did you know that Third-Party Senders are facing a new level of fraud threats and compliance pressure in 2026?

Explore new fraud challenges impacting Third-Party Senders in 2026, including AI-enabled scams, false pretenses and updated ACH fraud monitoring requirements.

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New Fraud Monitoring Rules for ACH Originators

Did you know… New ACH Rules coming in 2026 require ACH Originators to become Fraud Fighters?! 

That’s right, under new ACH Rules amendments, beginning in March or June 2026, depending on your Origination volume, ACH Originators must monitor for fraud, playing an important role in first-line fraud defense in the ACH Network. 

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Free Resources

Payments Insider

This quarterly e-newsletter is designed to inform businesses of all sizes of recent payment systems developments.

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Did You Know

Our Did You Know YouTube Videos are a great way to get current payments information quickly.

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Nacha End-User Resources

New Nacha Rules Take Aim at Credit-Push Fraud

Account Validation Resource Center

Third-Party Sender Roles & Responsibilities

Credit-Push Fraud

Remittance Delivery Validation Report

The Remittance Delivery Work Group has completed a successful validation phase demonstrating it is operationally feasible for an exchange framework to deliver electronic remittance information for B2B payments.

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Documents Resource

This resource will give Originators an at-a-glance view of Originator documentation retention schedule; document, presentment and authorization requirements; and ineligible source documents.

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Return Reason Code Resource

Describes the most commonly used ACH return reason codes, time frames and appropriate next steps to resolve the reason for the return.

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Why is Treasury Management Important to My Business?

Discover why Treasury Management products offered by your financial institution are important to your business and the benefits of utilizing these services.

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Business Fraud Prevention

This easy to digest, one-page document will provide ways to prevent payments fraud in your business.

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The Perks of Positive Pay

Positive pay is a great option to add security checks against fraudulent items like counterfeit checks. Ask your financial institution if they offer this service.

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ACH Risk Management Fraud Requirements

This easily digestible two-page resource breaks down ACH Risk Management requirements for fraud monitoring including what's required, who must comply, effective dates, originating company considerations, preparation and more.

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Origination Detector

The Origination Detector is an Excel-based resource that can help ODFIs or Originators review their current ACH or wire transfer originations against previously sent ACH or wire payments.

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ACH Network News

Cybersecurity for Small to Medium Size Businesses

The Payments Innovation Alliance’s tabletop exercise helps small and medium businesses prepare for ransomware attacks, improve readiness, ensure compliance and strengthen cybersecurity resilience through guided scenarios and stakeholder collaboration.

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Business Email Compromise Response Action Plan

The BEC Response Action Plan guides organizations in mitigating email scam risks, responding to incidents and implementing preventive measures to safeguard against business email compromise and enhance cybersecurity resilience through practical strategies and actionable steps.

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ACH Risk Management Handbook

For anyone working in ACH, the ACH Risk Management Handbook belongs not on your bookshelf, but on your desk. And with new transformative rules to fight credit-push fraud taking effect next year, the handbook is more important than ever in helping your bank or credit union prepare for them. Also, be sure to check out our Fraud Requirements resource above for additional information.

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Tools for Purchase

ACH Quick Reference Cards for Corporate Users

This tool is specifically designed for Corporate ACH users. This three-card series gives Originators fingertip access to critical information for the correct handling of ACH Returns, Dishonored Returns, Standard Entry Class (SEC) codes, Transaction codes and Notifications of Change (NOC). These colorful and durable desktop reference cards provide ACH basics, including prenotifications, for the Originator along with the explanations for Return Reason codes, NOC codes, SEC codes, transaction codes and solutions for handling ACH exception entries.

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Nacha Operating Rules & Guidelines

The Rules include the legal framework for the ACH Network, and the basic obligations of each ACH Network participant. Additionally, the included appendices contain details on Rules enforcement, annual audit requirements, a complete table of return reason codes and formatting specifications. The Guidelines expands on the Rules, providing complete discussions of each ACH Network participant type and its role and responsibilities, detailed overviews of the Standard Entry Class Codes and use-case examples in special topic areas, such as Third-Party Service Providers.

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Merchant RDC Review Checklist

This interactive tool is designed to assist a financial institution in verifying its RDC client's adherence to their RDC Agreement and the FFIEC Guidance on the Risk Management of Remote Deposit Capture. Available for immediate download, the RDC Review Checklist can be completed by an institution during its onsite review of an RDC client or completed by the RDC client and sent to the institution. Questions relate to overall profiling of the RDC program, hardware, software, image quality control, security, fraud and returns processing and reports.

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Third-Party Sender ACH Audit Workbook

Third-Party Senders that perform any functions of an ODFI are required to conduct an annual ACH Rules Compliance Audit. This user-friendly workbook has been updated to incorporate ACH Rules changes and will walk Third-Party Senders step-by-step through conducting their audit. Audit questions, sample reports and complete worksheets based on the ACH Rules are all included in this helpful tool, making it easy for Third-Party Senders to assess and document their level of compliance.

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Third-Party Sender Risk Assessment Workbook

This user-friendly workbook is designed to take Third-Party Senders step-by-step through the ACH Risk Assessment process. The workbook addresses risk criteria outlined in OCC Bulletin 2006-39, the FFIEC Retail Payments Systems' IT Examination Handbook and FFIEC Guidance to Internet Banking so that your company can identify strengths and weaknesses in your ACH risk management program. Third-Party Senders will find this tool valuable as they work to assess and mitigate ACH risk.

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ODFI Audit Checklists for Originators & TPS

This tool contains a series of ODFI Audit checklists providing an efficient tool for ODFIs to gauge their Originators/Third-Party Senders understanding and compliance to the ACH Rules. These checklists can be completed by financial institution staff or sent to the Originator and/or Third-Party to complete on its own then return to the ODFI. Each Audit Checklist is a fillable PDF form for each type of ACH application. Complete or send the forms that are specific to the ACH services your institution originates.

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ACH Quick Reference Guide for Corporate Users

The purpose of the ACH Quick Reference Guide for Corporate Users is to help corporate Originators comply with the ACH Rules. It is a summary of those tasks most important to Originating ACH debits and credits. This Guide is not intended to replace the Nacha Operating Rules but to serve as a resource for corporate Originators to understand their obligations outlined within the Nacha Operating Rules.

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Corporate User Bundle

Bundle the ACH Rules with both quick reference tools to save an additional 5%. Each bundle includes the ACH Rules, ACH Quick Reference Guide for Corporate Users and Corporate ACH User Quick Reference Cards. Digital Bundle includes access to ACH Rules Online Resource.

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Guide to ACH Origination

This handy toolkit can help streamline origination processes for your financial institution, regardless of whether you have been offering origination services for years or are just getting started.

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Wire Transfer Quick Reference Guide

An everyday operational resource for wire information, this new, easy-to-use guide covers key wire concepts and provides helpful information and tips to assist with the sending and receiving of wire transfers. This guide explains key wire terminology and transaction flow, including definitions and general information. Operational processes including entering wires, utilizing tracking numbers, handling drawdown requests, international wire components, cut off times and more are also covered.

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FAQs

Explore our FAQs to get answers to common payment questions. Subsection(s) referenced in the FAQs can be found in the ACH Rules.

ACH Originator Authorizations

Generally, an Originator must obtain authorization from the Receiver to originate one or more entries to a Receiver’s account, except for credit entries for which the Originator and Receiver are both natural Persons. (Subsection 2.3.1)

The Originator of a credit entry to a consumer account of the Receiver may obtain the Receiver’s authorization in any manner permitted by applicable legal requirements. (Subsection 2.3.2.1)

The Originator of a debit entry to a consumer account of the Receiver must obtain a written authorization that is signed or similarly authenticated by the Receiver. (Subsection 2.3.2.2)

The writing and signature requirements for consumer debit entries may be satisfied by complying with the Electronic Signatures in Global and National Commerce Act (E-sign Act). An electronic authorization must be visually displayed in a manner that enables the consumer to read the communication. (Subsection 2.3.2.3)

  • Language regarding whether the authorization is for a single entry, multiple entries or recurring entries.
  • Amount of entry/entries or a reference to the method of determining the amount.
  • Timing (including start date), number and/or frequency of entries.
  • Receiver’s name or identity.
  • Account to be debited.
  • Date of the Receiver’s authorization; and
  • Language that instructs the Receiver how to revoke the authorization directly with the Originator (including time and way Receiver communication with Originator must occur).
  • For a single-entry scheduled in advance, the right of the Receiver to revoke the authorization must afford the Originator a reasonable opportunity to act on the revocation prior to initiating the entry.

For a single-entry authorized by a Receiver, Originator must make an audio recording of the oral authorization or provide the Receiver with written notice confirming the oral authorization prior to settlement of entry and retain the original or a copy of the written notice confirming oral authorization for two (2) years from date of authorization. For a recurring entry authorized by the Receiver, Originator must comply with the requirements of Regulation E for the authorization of preauthorized transfers, including the requirement to send a copy of the authorization to the Receiver and retain for two (2) years from the termination or revocation of the oral authorization, the original or duplicate audio recording of oral authorization and evidence that a copy of the authorization was provided to the Receiver in compliance with Regulation E. For a standing oral authorization, Originator must make audio recording of oral authorization or provide Receiver with written notice confirming oral authorization prior to settlement of the first subsequent entry and retain the original or duplicate audio recording of oral authorization or the original/copy of the written notice confirming the oral authorization for two (2) years from termination or revocation of standing authorization. (Subsection 2.3.2.4)

Yes, an Originator must retain the original or a copy of each written authorization of a Receiver, or a readily and accurately reproducible record evidencing any other form of authorization. (Subsection 2.3.2.5 (a))

An Originator must retain the original or a copy of each written authorization of a Receiver, or a readily and accurately reproducible record evidencing any other form of authorization, for two (2) years from the termination or revocation of the authorization.

With respect to a standing authorization, Originator must retain original or a copy of each standing authorization for two (2) years following the termination or revocation of the authorization, as well as proof that the Receiver affirmatively initiated each payment in accordance with the terms of the standing authorization for two (2) years following the settlement date of the entry. (Subsection 2.3.2.7)

Upon the request of an ODFI (Originating Depository Financial Institution), an Originator must provide the original, copy or other accurate record of the Receiver’s authorization, including, with regard to a standing authorization, evidence of the Receivers affirmative action to initiate a subsequent entry in accordance with the terms of the standing authorization. Originator must provide in such time and manner as to enable the ODFI to deliver the authorization to a requesting RDFI (Receiving Depository Financial Institution) within ten (10) banking days. (Subsection 2.3.2.7 2(c)

By providing the Receiver with a conspicuous notice including the following or substantially similar language prior to the receipt of an Eligible Source Document (i.e. check):
“When you provide a check as payment, you authorize us either to use information from your check to make a one-time electronic fund transfer from your account or to process the payment as a check transaction.” Copy of notice must be provided to Receiver at the time of transaction. (Subsections 2.5.1.2 and 2.5.10.2)

By providing the Receiver with a conspicuous notice including the following or substantially similar language prior to the receipt of an Eligible Source Document (i.e. check): “When you provide a check as payment, you authorize us either to use information from your check to make a one-time electronic fund transfer from your account or to process the payment as a check transaction. For inquiries, please call (retailer phone number.)” Copy of notice must be provided to Receiver at the time of transaction. (Subsection 2.5.2.2)

ACH Prenotifications

No, according to the ACH Rules you may originate a prenotification entry to a Receiver’s RDFI prior to the first transaction you send. (Subsection 2.6.1)

An Originator that has originated a prenotification entry may initiate subsequent entries as soon as the third banking day following the settlement date of the prenotification entry, provided the ODFI has not received a return or notification of change related to the prenotification. (Subsection 2.6.2)

Notification of Change

An ODFI must provide the Originator with the NOC information within 2 banking days of settlement date of the NOC or corrected NOC. (Subsection 2.11.1)

Yes, an Originator must make the changes specified in the NOC or corrected NOC within 6 banking days of notification receipt or prior to initiating another entry, whichever is later.
An Originator may choose, at its discretion, to make changes specified in any NOC or corrected NOC received with respect to any ARC, BOC, POP, RCK and Single-Entry TEL or WEB.
For an NOC received in response to a prenotification, the Originator must make the changes prior to originating a subsequent entry if the NOC is received by the ODFI by the opening of business on the 2nd banking day following the settlement date of the prenotification. (Subsection 2.11.1)

ACH Returns

It is important for businesses to watch their accounts closely as the RDFI has only 2 banking days from settlement date to return CCD and CTX transactions that post to a non-consumer account. The RDFI may request a copy of the authorization for the transaction and ask the ODFI to accept a late return but the ODFI is not required to take a late return. This would only be an attempt to the recover the money. The Originator and Receiver may also deal directly with one another to resolve the issue.

This means the Receiver did not know the identity of the Originator, had no relationship with the Originator or did not authorize the Originator to debit their account. For an ARC or BOC entry it means the signature on the source document (check) is not authentic, valid or authorized. For a POP entry it means the signature on the written authorization is not authentic, valid or authorized.

This means the Receiver has a relationship and authorization for debit with the Originator, however; an error in the payment exists such that the entry does not conform to the terms of the authorization you obtained from the Receiver. For example, the entry is for a different amount than authorized, the entry was initiated for settlement earlier that authorized, the entry is part of an incomplete transaction, the debit entry was improperly reinitiated and for an ARC, BOC or POP entry, the source document was ineligible, notice was not provided or the amount was not accurately obtained from the source document. It could also mean that the reversing entry was improperly initiated or the Receiver did not affirmatively initiate a subsequent entry in accordance with the terms of a standing authorization.

An R10 return generally requires a new authorization, however; an Originator may reinitiate a return entry (other than an RCK) if:
  • Entry was returned insufficient or uncollected funds
  • Entry returned stop payment and reinitiation has been separately authorized by the Receiver
  • Originator has taken corrective action to remedy the reason for return
The Originator must reinitiate the entry within 180 days after the settlement date of the original entry. An Originator receiving an R11 return may correct, if possible, the error or defect in the original entry and transmit a new entry that conforms to the terms of the original authorization, without the need for a new authorization. New entry must be transmitted within sixty (60) days after the settlement of the return entry.

If a consumer Receiver completes a Written Statement of Unauthorized Debit form, the RDFI may return a consumer transaction within 60 calendar days. The Originator must not reinitiate the entry. They can settle the matter with the consumer outside of the ACH Network or gain a new authorization and send another transaction through.

ACH Origination

Utilizing the proper SEC code is paramount for several reasons:

  • Returns are based on SEC code. For example, a business originates a debit to another business for supplies they have shipped, and they use the PPD code. This transaction should be coded as a CCD. Since the PPD code was utilized, the business Receiver of the transaction now has 60 days to dispute the transaction as unauthorized versus the 2 days for a CCD transaction.
  • There are different authorization requirements depending on the SEC code. Utilizing the correct SEC code for a transaction tells the RDFI what type of authorization was received.
  • When your company signed an ODFI/Originator agreement you agreed to originate certain SEC codes based on that agreement.

Reversing Entries (Section 2.9)

An Originator may initiate a reversing entry to correct an erroneous entry previously initiated to a Receiver’s account. An authorization is not required for a reversal entry if all the requirements of Section 2.9 of the ACH Rules are followed.

Appropriate Reason to Send a Reversal (Subsection 2.9.1)

Must Not Use Reversal Process (Subsection 2.9.5)
Duplicate file or entry Failed to fund entry*
  • Originator
  • Third-Party Sender
Payment in wrong amount Outside of 5 banking days of Settlement Date of erroneous entry
Payment destined to wrong Receiver *Effective 6-30-21
Employee received both a separation check and a direct deposit
Error in Effective Entry Date*

For each reversing entry, the content of the following fields must remain unchanged from the original, erroneous entry to which the Reversal relates:

  • Standard Entry Class Code
  • Company Identification/Originator Identification; and
  • Amount

The description “REVERSAL” must replace the original content of the Company Entry Description field transmitted in the original batch, including content otherwise required by the ACH Rules.

Real-time Payments (RTP®)/Faster/Instant Payments

Real-time payments (RTP®) are payments initiated and settled nearly instantaneously. A real-time payments rail is the digital infrastructure that facilitates real-time payments. Real-time payment networks provide 24x7x365 access, which means they are always online to process transfers. This includes weekends and holidays.

In the United States, the most prominent example of a real-time payments network is The Clearing House’s RTP network.

The term real-time payments should not be used interchangeably with the term faster payments. While they are similar, there are some key differences. Faster payments solutions, such as Nacha’s Same Day ACH, post and settle payments faster than traditional payment rails, but faster does not mean instantaneously.

Other payment solutions, like Mastercard and Visa’s push payment solutions will message transactions within seconds or minutes. However, because they do not also settle transactions quickly, push payments are considered a faster but not real-time payment.

While all real-time payments can be considered a form of faster payments, not all faster payments are conducted in real time.

The first reason is obvious: they are faster. Payments that settle instantaneously are available just as quickly. For individuals or businesses needing funds ASAP, instant access can be a game changer.

Real-time payment rails also bring end-to-end communication. Historically, communication has flowed in one direction: from the payer to the payee. If the two parties want to exchange information back and forth, they must do so outside of the payments system. Real-time payments connect the payment with payment data together in a single transaction.

Additionally, lag times and a lack of transparency surrounding the arrival of the funds can hinder communication. All in all, a fragmented communication process comes with challenges impacting everything from business flow to liquidity and risk management.

Fortunately, payments made in real time solve these challenges. Bilateral communication through integrated information flows, instant payment confirmation notifications, and settlement finality result in a more efficient payment journey. With real-time payments, financial control, cash positioning, and liquidity management are now in reach.

Beyond communication improvements, The Clearing House (TCH) real-time payments rail has shown that a number of use cases exist for making payments in real time. Real-time payments are also irrefutable, meaning once payments are received, they cannot be taken back or reclaimed by the sender.

As merchants, businesses, and banks recognize the value of real-time payments, adoption will continue to increase and use cases will continue to emerge. Organizations of different types and sizes see real-time payments in a positive light and are eager to adopt them.

It’s a payments network that improves the flow of commerce in the digital age by enabling consumers, businesses, and governments to send and receive funds in real-time, anytime to and from their secure bank account. It has unique capabilities that improve efficiency and cash flow, such as real-time posting, immediate confirmation and secure two-way messages with relevant data, that serve as a foundation for bank services.

The characteristics of a real-time payment on the RTP network are:

  • 24/7 – The RTP® network is live and operates 24/7. This allows financial institutions to send or receive payments at any time.
  • Immediate Availability – Recipients receive the payment within seconds of the sending bank initiating the transaction. The RTP® network receiving financial institutions are required to make funds available immediately, except for risk management or legal compliance purposes.
  • Payment Certainty – Sending financial institutions (FI) are not able to revoke or recall a payment once it has been authorized and submitted to the RTP network. However, there is a process to facilitate FI-to-FI communication around return of funds sent in error.
  • Ubiquity – All federally insured depository institutions can be RTP® network participants, regardless of size.
  • Extensibility – Rich, flexible messaging functionality is included to support value-added products. For example, the RTP® network provides messaging that enables a request for payment of a bill or an invoice.
  • Convenience – Customers of RTP® network financial institution participants can initiate payments from their existing accounts.
  • Cash Flow Control – The ability to send and receive immediate payments gives customers more control over cash flow, which may be particularly important for cash-constrained small businesses and consumers.
  • Adaptability – The RTP® network has a flexible architecture to adapt to changing market needs.

No, but your federally insured depository financial institution must be an RTP® network participant.

No, the RTP® network is designed to address unmet customer needs across all customer segments (B2B, B2C, C2B, P2P, A2A, G2C, etc.). Consumers, businesses, and the government can use the RTP® network.

Today, RTP® delivers efficient real-time payments for several use cases, including:

B2B

  • A small business paying an urgent invoice in order to receive goods or services.
  • A restaurateur who pays for farm-fresh produce from the local supplier to serve that evening's dinner specials.

B2C

  • Insurance companies and healthcare plans pay claims with immediate confirmation.
  • A retail bank distributing personal loan proceeds to a dealership on behalf of a customer who is at the showroom buying a new car.

C2B

  • Consumer pays utility bill in response to Request for Payment from the biller.
  • A busy working individual paying for general services around the house such as childcare provider, plumber or other repair service.

P2P

  • College roommates splitting monthly rent and utility payments.
  • A head of household sending emergency funds to a family member on vacation.

A2A

  • A retail investor sending real-time money transfers to his or her investment account.

RTP® allows for several B2B use cases and has the ability to move rich data (via ISO 20022 adoption) that can provide actionable insights into corporate client needs. Examples are as follows:

  • Confirmation of payment
  • Improved control over payments timing
  • Liquidity management
  • Instant bill payment
  • Remittance data availability

No. RTP® payments are not intended to be a wholesale replacement for any other payment type (ACH, Wire, Card or Check).

Instead, banks and their corporate clients are looking to types of services or activities that use one of these other networks that could benefit from the real-time and messaging characteristics of RTP® payments to enhance or replace existing services—like real-time disbursements and reimagined bill payment.

The receipt of RTP® payments does not require implementation by corporations as their bank will deposit funds into their accounts automatically. A company may want to integrate RTP® payments received into its accounts receivable process, but it is not required. To send RTP® payments, each company will be structured differently depending on their infrastructure and bank products.

No, the RTP® network is strictly “credit push,” meaning that the person making the payment instructs its financial institution to make the payment. Credit push transactions reduce certain types of fraud risk.

The irrevocability of a payment sent over the RTP® network enables immediate, final settlement to the payee, which is the key element of real-time payments.

No, the RTP® network is not Same Day ACH. It is a separate and new infrastructure built for the digital age. RTP® network payments clear and settle individually in real time with immediate finality. Same Day ACH payments are cleared in batches and settled after the payments clear.

Federally insured U.S. depository institutions have the option to directly connect to the RTP® network. Depository institutions can connect also to the RTP® network using an electronic connection provided by a third-party service provider (i.e.core processor, banker’s bank or corporate credit union). Contact your financial institution to see if they are connected to the RTP® network.

The RTP® network's Participation and Operating Rules apply to all network messages and are available on The Clearing House website.

Yes, the credit transfer limit on the RTP® network is currently $1 million.

FedNow®

The FedNow® Service is a new instant payment infrastructure developed by the Federal Reserve that allows eligible depository institutions of different sizes across the U.S. to provide instant payment services.

Through financial institutions participating in the FedNow Service, businesses and individuals can send and receive instant payments in real time, around the clock, every day of the year.

Financial institutions and their service providers can use the service to provide innovative instant payment services to customers, and recipients will have full access to funds immediately, allowing for greater financial flexibility when making time-sensitive payments.

The FedNow® Service maintains uninterrupted 24x7x365 processing of credit transfers with security features to support payment integrity and data security. The service has a 24-hour business day each day of the week, including weekends and holidays. End-of-day balances are reported on Federal Reserve accounting records for each participating depository institution on each FedNow® Service business day. Access to intraday credit is provided to participants in the FedNow Service during its business day under the same terms and conditions as for other Federal Reserve services.

The FedNow® Service began operating on July 20, 2023.

As with all Federal Reserve Bank services, the FedNow® Service is available to depository institutions eligible to hold accounts at the Reserve Banks under applicable federal statutes and Federal Reserve rules, policies, and procedures. Participants are able to designate a service provider or agent to submit or receive payment instructions on their behalf. Participants are also able to settle payments in the account of a correspondent, if they choose to do so. Merchants, consumers, or non-bank payment service providers can access the service through depository institutions as they do today with other payment systems.

The FedNow® Service supports only domestic payments between U.S. depository institutions.

Account-to-Account (A2A)

  • Corporate Cash Pooling – Corporations can consolidate funds into a single account for payroll or other purposes.

Consumer-to-Business (C2B) Bill Pay

  • Pay Bills – Individuals and businesses can pay bills such as loans, utilities and more and feel confident their payment is posted to the biller’s account in seconds. This can help people and companies avoid late fees and better manage cash flow.
  • E-Invoicing – Billers can send a request for payment to their customers through the FedNow® Service. Customers can respond by initiating a credit transfer through an end-user interface offered by the financial institution. The payment will include the applicable remittance detail from the request which facilitates posting of the transaction.

Business to Business (B2B)

  • On-Demand Payment – Businesses can free up working capital by paying suppliers upon receipt of products or services.
  • E-Invoicing – Businesses can send an e-invoice and a request for payment that includes all the information they will need when their customer remits the requested payment.

Business to Consumer (B2C)

  • One-Time Payments – Non-recurring disbursements such as insurance payouts or rebate claims can be paid instantly.
  • Immediate Payroll – Payroll instructions for expedited payments can be initiated immediately rather than scheduled in advance.

Business customers can improve real-time money management and cash flow by using instant payments. Here are some examples of the scenarios for which instant payments are particularly useful:
  • Small merchants who accept instant payments can receive the funds from these sales immediately, increasing cash on hand and potentially reducing the need for costly loans.
  • A building contractor can more quickly obtain needed materials by instantly paying suppliers that require payment in advance of shipment.
  • A utility company can send customers a request for payment and receive the funds immediately once the customer authorizes the payment. Because the responding payment can be linked to the original request, account reconciliation can be automated. Aside from significant savings from reduced manual processing, this enables faster posting of the payment and improves the customer experience.

Wire Transfers

The wire transfer service may be offered by your financial institution as a way of moving funds (between two bank accounts) electronically from one party to another. Wire transfers may be sent through private wire systems such as The Clearing House CHIPS network or initiated using a nonbank third-party wire transfer service (Western Union). Wire transfers are a fast, reliable and secure way to move money domestically and internationally.

Conventional bank-to-bank wire transfer funds are transmitted through wire networks. In the U.S., the Federal Reserve manages the network (Fedwire®) that banks use to send and receive funds via wire transfer. Fedwire® is a real-time settlement system of central bank money used to electronically facilitate transactions between financial institutions. Internationally, wire systems would connect with foreign central banks and communicate posting instructions through the Society of Worldwide Interbank Financial Telecommunication (SWIFT) messaging system.

Note: Request wire instructions from the Creditor (Recipient/Beneficiary) to confirm Fedwire eligibility. Some financial institutions have different routing numbers for the various payment channels (i.e., ACH, Wire, etc.)

To send a wire transfer, a sender must provide the following information:

  • Debtor’s (Originator/sender)  financial institution account and routing number
  • Debtor’s (Originator/sender) name and address, - captured in ISO structured or hybrid address fields where available
  • Creditor’s (Recipient/beneficiary) name and address, including complete town/city and country information when applicable
  • Creditor’s (Recipient/beneficiary) financial institution name and routing number or other required financial institution identifier
  • Creditor’s (Recipient/beneficiary) financial institution account number
  • Dollar amount to be sent
  • Purpose, remittance, invoice, or other payment-related information when needed to support posting, reconciliation, compliance review, or straight-through processing

Note: Could also include any For Further Credit (FFC) or special instructions

ISO 20022 Note: Fedwire® now uses ISO 20022 messages rather than the prior proprietary FAIM format. Businesses should expect their financial institution to request more precise party, address, account, financial institution, and remittance information so that wire data can be handled consistently across systems and better support fraud monitoring, sanctions screening, AML compliance, and automated reconciliation.

According to Reg CC Section 210.31, funds availability for domestic wire transfers is determined by when the Creditor Agent (Receiving Financial Institution) makes the amount of the payment available (credited to account) to the Creditor (Recipient/beneficiary) account or when the notice of credit is sent to the Creditor (Recipient/beneficiary), whichever is earlier. In other words, once it posts to the account, the wire’s funds availability is immediate and irrevocable. If the wire hasn’t been posted to an account, next business day funds availability per Reg CC still applies.

According to Regulation J Subpart B (Section 210.27), the Creditor Agent (Receiving FI) may rely on the number in a payment order that identifies the Creditor (Recipient/beneficiary), even if it identifies a person different from the person identified by name in the payment order.

A financial institution receiving a wire transfer through the Federal Reserve may rely solely on the account number. However, UCC 4A – Section 207 (1) & (2) describes situations on whether or not the Receiving FI knows that the name and account number on the payment order are different. This situation would depend entirely on whether wire transfers are manually reviewed and processed or posted automatically and straight-through using a system.

Yes. Remittance transfers is a term used for electronic funds transfers sent from someone in the U.S. (a consumer) to a person or business in another country. Consumer International wire transfers are subject to federal protection. The Consumer Financial Protection Bureau adopted a set of rules to protect American consumers when sending money abroad and are aimed at reducing consumer risk.

International wire transfers initiating in the U.S. can take one to five business days to reach their destination. Extra processing time can be attributed to additional security requirements aimed at decreasing the risk of fraud and money laundering and processing time of converting currency.

Pros: Fast, Secure and Reliable; Richer, Structured Data for Better Insights (ISO 20022)

Cons: Hard to cancel or reverse and may be expensive to send or receive

No. An example would be Fedwire® operates on a 9 pm to 7 pm basis. However, Federal Reserve member institutions may choose whether or not to accept overnight payments. Furthermore, per UCC 4A-106, financial institutions may fix a cut-off time of their choosing that is disclosed to their account holders.

Effective July 14, 2025, the Fedwire® Funds Service migrated to ISO 20022, a global financial messaging standard that uses structured data fields rather than the prior Fedwire proprietary message format. The change did not alter the basic concept of a wire transfer, but it did affect the data quality expected in wire messages. Financial institutions and their business customers should focus on complete and consistent names, addresses, account identifiers, financial institution identifiers, and remittance information. Better structured data can help improve straight-through processing, exception handling, reconciliation, sanctions screening, AML monitoring, and investigation workflows.

Per FinCEN and the Bank Secrecy Act rule 31 CFR 103.33(g), a Debtor Agent (Sending Financial Institution (FI)) is required to send specific wire transfer information to the Creditor Agent (Receiving FI). A Debtor Agent (Sending FI) is required to provide the Debtor’s (wire originator/sender) account number, name, and address while providing the Creditor’s (recipient/beneficiary) account number, name, and address if received. Best practice is to have full account number, name, and address on both the Debtor (originator/sender) and Creditor (recipient/beneficiary) sides of the wire to assist with posting and to help with OFAC reviews of wires. On the international wire front, several countries demand that full account #, name, and address information be present and correct.

The Federal Reserve has announced a November 16, 2026 Fedwire® Funds Service ISO 20022 release that is expected to remove the fully unstructured postal address option and move to a hybrid postal address format for parties and agents across message types. Under the hybrid approach, if a postal address is used, Town Name and Country are required structured elements. Other structured address elements, such as street name, building number, and postal code, should be provided when available. 

Business impact: Businesses should begin reviewing vendor master records, customer wire templates, standing wire instructions, online banking input screens, and wire agreements to make sure address data can be captured in a structured way before the November 2026 release.

SWIFT is the company that manages Business Identification Codes (BIC), and often, the BIC is called a "Swift Code." BIC or SWIFT codes use 8-11 characters to identify a financial institution or business with a format of 4 letters for institution or bank code, 2 letters for country code, 2 letters or numbers for location code, and 3 optional letters or numbers for branch code (if unused, could be “XXX”).

IBAN (International Bank Account Number) is an account number format required by some foreign countries with up to 34 characters in the format of 2 letters for country code, 2 numbers for check digits, and up to 30 alphanumeric characters that are country-specific for the "basic bank account number (BBAN)." In other words, the IBAN number is just an account number with a few additional qualifiers per its standardized format.

All regulations pertinent to wire transfers:

  • Regulation J, Subpart B (wire through the Federal Reserve)
  • CHIPS Rules and Administrative procedures for wires through The Clearing House
  • Regulation CC
  • UCC 4A and other state laws
  • OFAC
  • BSA/AML
  • USA Patriot Act
  • Regulation E, Subpart B (if applicable)

UCC 4A’s security procedure (Section 201) and its use (Section 202) should present the Debtor Agent’s (Sending Financial Institution) own security processes and procedures which may also be listed in the Financial Institution’s Wire Policy as well. Per UCC 4A-202(c), if there is a refusal by a Debtor (wire originator) for a particular security procedure, the Sending Financial Institution should obtain that in writing.

Always verify the authenticity of each wire transfer request. Call the person, using a number you have previously called — not one from the current wire transfer request — to verbally verify it.

Implement a call-back verification process when setting up payment instructions for a new vendor or making changes to payment instructions for an existing vendor.

Implement dual control and segregation of duties.

Education is key! Understanding email scams and educating your employees on wire transfer procedures best practices is critical to protect your financial assets.

Implement a cybersecurity policy and review it often.

Review your business insurance policy. Does it cover financial losses due to cybersecurity fraud?

Note: Understand that your business may be liable for losses due to fraud or wires sent in error. A financial institution MAY be able to recover funds but may only be a partial recovery. Remember that wire transfer are irrevocable and the Creditor Agent (Receiving Financial Institution) response timeframe could vary depending on if the wire transfer is domestic or international.

Drawdown is a non-monetary message sent to a Receiving Financial Institution (FI) and they have the choice to flip it into a live dollar outgoing wire. Many HR firms utilize recurring drawdown arrangements to easily have their clients send them funds. Best practice is for an FI to have a drawdown agreement in place that captures any drawdown arrangement and provides debit authorization anytime said recurring drawdown messages arrive. Any drawdowns that arrive without an agreement in place should be questioned by the Receiving FI immediately and possibly rejected if an agreement is not going to be completed.

Yes, but it’s very tricky due to the field requirements set forth by the IRS. Information can be found on the IRS's webpage where you can download the the Taxpayer Worksheet and Financial Institution Handbook.

Note: Tax wire transfers typically have a different cut-off time at your financial institution than domestic or international wire transfers. Check cut-off timeframes with your financial institution for same day delivery.