Study guide
2.2 Company/Batch Header Record (Type 5) & Service Class Codes
Nacha Accredited ACH Professional AAP
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1 Chapter 1: ACH Network Overview, Participants & Transaction Flow
1.1 ACH Network Structure, Governance & History 1.2 Five Key ACH Participants: Originator, ODFI, Operator, RDFI, Receiver 1.3 Third-Party Senders (TPS) and Third-Party Service Providers (TPSP) 1.4 End-to-End Transaction Flow, Clearing & Settlement Mechanics
2 Chapter 2: ACH File Architecture & Record Formatting
2.1 File Hierarchy: 94-Character Records, Blocking Factors & File Header (Type 1) 2.2 Company/Batch Header Record (Type 5) & Service Class Codes 2.3 Entry Detail Record (Type 6) & Addenda Records (Type 7) 2.4 Batch Control (Type 8), File Control (Type 9) & Entry Hash Calculations 2.5 Exception Record Formats: Return (Addenda 99) & Notification of Change (Addenda 98) Layouts
3 Chapter 3: Nacha Operating Rules Framework & Participant Warranties
3.1 Structure of Nacha Operating Rules, Rulemaking Process & Effective Dates 3.2 ODFI Warranties, Indemnifications & Participant Obligations 3.3 RDFI Warranties, Receipt Obligations & Statement Requirements 3.4 Nacha Return Rate Thresholds & Monitoring Requirements
4 Chapter 4: Standard Entry Class (SEC) Codes: Consumer Applications
4.1 PPD (Prearranged Payment and Deposit): Direct Deposit & Consumer Debits 4.2 WEB (Internet-Initiated Entries): Authorization, Authentication & Validation 4.3 TEL (Telephone-Initiated Entries): Inbound vs. Outbound Rules & Recording Requirements 4.4 CIE, MTE, POS & SHR: Machine and Point-of-Sale Consumer Entries 4.5 Same Day ACH: Windows, Limits ($1,000,000) & Eligibility Rules
5 Chapter 5: SEC Codes: Commercial, Check Conversion & Specialized Applications
5.1 CCD/CCD+ and CTX: Corporate Payments, Addenda & EDI / ASC X12 Formatting 5.2 Check Conversion SEC Codes: ARC, BOC & POP Rules and Notices 5.3 RCK (Re-presented Checks) & XCK (Destroyed Check Entries) 5.4 IAT (International ACH Transactions): Mandatory Addenda & OFAC Screening 5.5 Non-Monetary & Specialty Entries: Prenotifications, DNE & ENR
6 Chapter 6: Authorization Standards, Authentication & Record Retention
6.1 Fundamentals of Valid Authorization: Consumer vs. Commercial 6.2 E-SIGN Act Compliance, Electronic Signatures & Oral Authorizations 6.3 WEB Debit Account Validation Rule & Fraud Detection Systems 6.4 Authorization Retention (2 Years) & Copy Provision Rules
7 Chapter 7: Exception Processing: Returns & Return Reason Codes
7.1 Return Processing Overview: Two-Banking-Day Rule vs. Extended Return Rule 7.2 Administrative & Operational R-Codes (R01-R04, R08, R16, R17) 7.3 Unauthorized Consumer Returns: R05, R07, R10, R11 & The WSUD 7.4 Unauthorized Corporate Debits: R29, Contract Rights & the UCC Article 4A Boundary 7.5 Dishonored Returns (R61-R70) & Contested Dishonored Returns (R71-R76)
8 Chapter 8: Exception Processing: Notifications of Change (NOC) & Reversals
8.1 Notification of Change (NOC / COR): Structure & Change Codes (C01-C07) 8.2 NOC Timelines: RDFI Origination & Originator 6-Day Mandatory Action 8.3 Reversing Entries & Reversal Files: 5-Day Deadline & Erroneous Reasons 8.4 Federal Reclamation Procedures & Deceased Beneficiary Handling
9 Chapter 9: ACH Risk Management, Fraud Monitoring & Exposure Controls
9.1 ACH Risk Taxonomy: Credit, Operational, Fraud, Systemic & Compliance Risks 9.2 ODFI Originator Onboarding, Underwriting & Exposure Limits 9.3 Third-Party Sender (TPS) Due Diligence, Monitoring & Registration 9.4 Fraud Schemes: Business Email Compromise (BEC), Account Takeover & Controls 9.5 The 2026 Fraud Monitoring Rules: ODFIs, Originators, TPSPs & Third-Party Senders 9.6 RDFI ACH Credit Monitoring & the False Pretenses Definition 9.7 ACH Data Security: Article One, Sections 1.6 and 1.7 & the ACH Security Framework 9.8 Nacha's Risk Management Portal: Contact Registry, TPS & Direct Access Registration, Terminated Originator Database 9.9 ACH Risk Assessments, Regulatory Expectations & Operational Resilience
10 Chapter 10: Legal & Regulatory Framework for ACH
10.1 Regulation E (12 CFR 1005): Consumer Protections, Disclosures & Error Resolution 10.2 Uniform Commercial Code (UCC) Article 4A: Wholesale Funds Transfers & Security Procedures 10.3 BSA/AML, SAR/CTR Reporting & OFAC Sanctions Compliance in ACH 10.4 31 CFR Part 210 (The Green Book), Reg CC, Reg D & Reg J Interactions
11 Chapter 11: Nacha Rules Compliance Audit & National System of Fines
11.1 Annual ACH Rules Compliance Audit (Article One, §1.2.2): Scope & Requirements 11.2 Auditor Independence & 6-Year Audit Record Retention 11.3 National System of Fines: Complaint Process, Panel Review & Fine Classes 11.4 The Nacha Rules Effective-Date Calendar: 2026 Through 2028
12 Chapter 12: Alternative & Complementary Payment Systems
12.1 Fedwire Funds Service & CHIPS vs. ACH Network 12.2 Instant Payments: RTP and FedNow vs. Same Day ACH 12.3 Card Networks, Check 21 & Interoperability Across Payment Rails
2.2 Company/Batch Header Record (Type 5) & Service Class Codes
Key Takeaways Explain This Topic AI
The Company/Batch Header Record (Type 5) establishes the operational parameters, legal framework, and origination attributes for all entries within the batch.
Service Class Codes strictly dictate permitted transaction directions: 200 (Mixed Debits and Credits), 220 (Credits Only), 225 (Debits Only), and 280 (Automated Accounting Advice).
All transactions within a single batch must share the exact same Standard Entry Class (SEC) Code, Company ID, Company Name, and Effective Entry Date.
The Effective Entry Date (YYMMDD) is assigned by the Originator to indicate intended settlement, whereas the Settlement Date (3-digit Julian DDD) is inserted exclusively by the ACH Operator.
The Company Entry Description (Positions 54–63) is a mandatory 10-character field displayed on the consumer Receiver's statement; specific values like REVERSAL and RETRY PYMT are mandated by Nacha rules.
Last updated: August 2026
2.2 Company/Batch Header Record (Type 5) & Service Class Codes
The Company/Batch Header Record (Type 5) acts as the internal envelope of an ACH transmission. It establishes the legal identity of the Originator, defines the payment application via the Standard Entry Class (SEC) Code, dictates directional constraints through the Service Class Code, and specifies the targeted settlement timing.
Under Nacha Operating Rules, an ODFI may package multiple batches within a single ACH file. However, batch uniformity is absolute : every Entry Detail record inside a given batch must conform to the parameters defined in its Type 5 header.
The Rule of Batch Uniformity
An ACH batch cannot contain arbitrary mixtures of payment types or dates. All entries enclosed between a Type 5 header and its corresponding Type 8 control record must share:
Identical Standard Entry Class (SEC) Code (e.g., all PPD entries or all CCD entries; an ODFI cannot mix PPD and CCD within the same batch).
Identical Company Identification and Company Name (all entries must originate from the same legal entity or corporate client).
Identical Effective Entry Date (all entries must target the same settlement date).
Permissible Service Class Code Alignment (e.g., debit transactions cannot appear in a credit-only batch).
Field-by-Field Specification: Company/Batch Header (Type 5)
Field Positions Length Type Name Contents / Validation Rules
1 01–01 1 N Record Type Code Mandatory constant 5 . Identifies record as Batch Header.
2 02–04 3 N Service Class Code Identifies debit/credit characteristics: 200 (Mixed), 220 (Credits Only), 225 (Debits Only), 280 (ADV).
3 05–20 16 A/N Company Name 16 characters. Alphanumeric name of the Originator known to and recognizable by the Receiver. Appears on Receiver bank statement.
4 21–40 20 A/N Company Discretionary Data Optional 20 characters. Internal tracking codes, department identifiers, or payroll codes for Originator/ODFI use.
5 41–50 10 A/N Company Identification 10 characters. Unique alphanumeric ID assigned to Originator (most commonly a 1 followed by the 9-digit Federal Tax ID / EIN ).
6 51–53 3 A/N Standard Entry Class (SEC) Code 3 characters. Identifies the payment application and regulatory ruleset (e.g., PPD , CCD , WEB , TEL , CTX , ARC , BOC , POP , IAT ).
7 54–63 10 A/N Company Entry Description Mandatory 10 characters. Descriptive term identifying transaction purpose on Receiver's statement (e.g., PAYROLL , GAS BILL , INSURANCE ).
8 64–69 6 A/N Company Descriptive Date Optional 6 characters. Descriptor date chosen by Originator for display on Receiver's statement (e.g., OCT 24 , 102426 ).
9 70–75 6 N Effective Entry Date Format YYMMDD . The banking day the Originator intends the batch to settle. Populated by Originator/ODFI.
10 76–78 3 N Settlement Date Format DDD (3-digit Julian day of year). Left BLANK ( ) by ODFI upon transmission ; inserted exclusively by ACH Operator.
11 79–79 1 A/N Originator Status Code Identifies originating entity: 1 = Commercial ODFI / Depository Institution; 2 = Federal Government Agency / ACH Operator.
12 80–87 8 N Originating DFI Identification The first 8 digits of the ODFI's 9-digit Transit Routing Number (check digit omitted).
13 88–94 7 N Batch Number Sequential 7-digit integer (starting at 0000001 ) assigned to each batch in the file. Must match Type 8 Batch Number.
Deep Dive: Service Class Codes (200, 220, 225, 280)
The Service Class Code in Positions 02–04 defines the permissible cash-flow directions for all entries in the batch. ACH Operators validate every Entry Detail record against this code during file ingestion. +-------------------------------------------------------------------------+
- | SERVICE CLASS CODES |
- +------+-----------------------------+------------------------------------+
- | Code | Classification | Permissible Transaction Codes |
- +------+-----------------------------+------------------------------------+
- | 200 | Mixed Debits and Credits | Debits (27, 37, 47, 57) & |
- | | | Credits (22, 32, 42, 52) |
- +------+-----------------------------+------------------------------------+
- | 220 | Credits Only | Credits (22, 32, 42, 52) & |
- | | | Zero-Dollar Prenotes (23, 33, 43) |
- +------+-----------------------------+------------------------------------+
- | 225 | Debits Only | Debits (27, 37, 47, 57) & |
- | | | Zero-Dollar Prenotes (28, 38, 48) |
- +------+-----------------------------+------------------------------------+
- | 280 | Automated Accounting Advice | Exclusively ADV entries |
- | | (ADV) | (Generated by ACH Operator) |
- +------+-----------------------------+------------------------------------+
- Operational Impact of Mismatched Codes
If an ODFI transmits an ACH batch with Service Class Code 220 (Credits Only) that accidentally contains a debit entry (e.g., Transaction Code 27 ), the ACH Operator rejects the entire batch with an acknowledgment error ( INVALID SERVICE CLASS / TX CODE MISMATCH ).
Batching corporate payroll disbursements under 220 protects the Originator from accidental debit initiation.
Recurring utility collections are batched under 225 (Debits Only).
Effective Entry Date vs. Settlement Date
A central concept tested on the AAP exam is the chronological handoff between the Originator-specified Effective Entry Date and the Operator-assigned Settlement Date .
1. Effective Entry Date (Positions 70–75)
Format : YYMMDD (e.g., October 24, 2026 is 261024 ).
Role : Populated by the Originator/ODFI to indicate the specific banking day on which funds should transfer and settle between ODFI and RDFI.
Same Day ACH Initiation : Originating a batch with the current banking day's date (or a stale date / blank under Same Day ACH rules) submitted prior to a Same Day ACH processing cutoff triggers Same Day clearing and settlement.
Forward Dating Windows :
Standard ACH Credits: May be submitted up to 2 banking days in advance of Effective Entry Date.
Standard ACH Debits: May be submitted up to 1 banking day in advance of Effective Entry Date.
2. Settlement Date (Positions 76–78)
Format : 3-digit Julian Date DDD (e.g., February 1 is 032 , August 24 is 236 ).
Crucial Rule : When the ODFI generates and transmits the Type 5 record, Positions 76–78 must be filled with three blank spaces ( ) .
Operator Action : The ACH Operator calculates the actual settlement date based on deposit windows, banking holidays, and processing schedules, overwriting positions 76–78 with the Julian day before delivering the batch to the RDFI.
Nacha Rules for Company Entry Descriptions
The 10-character Company Entry Description (Positions 54–63) is mandatory and critical for consumer disclosure under Regulation E. The Receiver's financial institution must print this description on the consumer's periodic account statement.
Special Mandatory Descriptions
Nacha Operating Rules strictly mandate specific wording for certain operational scenarios:
REVERSAL : Mandatory when originating a reversing batch or file to correct an erroneous payment (e.g., duplicate payroll or wrong dollar amount). Using any other term violates Nacha rules.
RETRY PYMT : Mandatory when re-presenting an eligible consumer debit that was previously returned unpaid due to R01 (Insufficient Funds) or R09 (Uncollected Funds).
REDEMPTION : Commonly required for mutual fund or investment liquidations.
RETURN CR / RETURN DB : Utilized in operator and RDFI return generation.