What is an Originator Identification Number (ACH Payments)

Have you wondered, what is an originator identification number? It is a 10-digit unique number assigned to companies and organizations that debit or credit funds through ACH. This unique originator ID is unique to every company that accepts payments.

For example, if you are an insurance company and you want to setup a pre-authorized debit to bill your customer, you will need an originator ID. The 10-digit ID is provided by your bank and will not change or be shared with other customers.

In the United States, these electronic payments are called ACH, while in Canada – they are commonly referred to as EFT (Electronic Funds Transfers).

A good example of this type of payment, would be a mutual funds company debiting your account monthly. On your bank statement, you might, for example, see the description; IND ALL SAVINGS MSP.

An originator identification number for ACH payments will allow banks to trace payments as well. If you receive a credit into your account from an originator you are unaware of – the bank can trace this payment. The bank will complete an ACH trace to see who the originator of the payment is.

What is an ACH Payment and How Does it Work?

ACH payments and transfers allow for the transfer of money between different bank accounts. It is an electronic way to safely and securely send/receive money. You are likely already using a form of ACH payments if you make monthly insurance payments or receive direct deposits. Organizations and businesses can use ACH transfers to accept one-time or recurring deposits.

ACH transfers are a cost-effective PAD or PAC that can help you save money when paying for payroll or accepting vendor payments. If you are writing cheques, the costs can quickly add up.

ACH Direct Deposits and ACH Direct Payments

An ACH direct deposit is a payment that is received by a consumer from an organization, business or government. These payroll direct deposits can be in the form of employment income, employer bonuses, government payments, tax refunds, and annuity payments. If a credit is made into your account; it’s considered an ACH direct deposit. These payments are instant and available in your account as soon as it’s processed.

Can ACH Payments be Reversed?

ACH payments and transfers can be reversed within a specific period of time, depending on your bank. An ACH payment/direct deposit can be made in error or in the wrong amount – so, yes they can be reversed. It is also likely that a name and account number mismatch could occur. When this happens, the funds may arrive in the account of someone else. Usually, banks are good at detecting these and they will return/reverse the transfer.

Can ACH Payments Bounce?

ACH payments and transfers can bounce because of non-sufficient funds. If you make monthly payments for your home mortgage, this is a type of pre-authorized payment. If you have no funds in the account, the ACH payment will bounce and get returned with no funds. If this happens, some banks and mortgage accounts may charge you a $48.00 NSF fee.

How Long Does ACH Payment Take?

Most ACH payments and transfers are processed within 1 working business day. These payments are generally processed three times a day.

Do ACH Payments Post on Weekends?

ACH payments and transfers do not post on the weekend. They will be posted on the previous working business day or the following working business day. There are no ACH transfers that take place on weekends or holidays.

Can You Stop ACH Payments?

You can stop an ACH payment by contacting your bank. Usually, your bank will allow you to place a stop payment on a pre-authorized debit. You will need to provide the bank with the originator’s name, amount of transaction and date of the stop payment. It is likely the payment will still go through if the originator use’s another name to withdraw their funds. A stop payment will usually last up to 6 months on the account for most banks.

Where Do You Get the Originator ID for Direct Debit?

Your bank assigns the originator identification number, originator ID, or unique ID to your company. Every time you send or receive ACH payments, this unique ID will be used. It allows the bank to identify the company behind the transaction. Every customer will have a unique ID.

Using Originator Identification Number to Trace Payments

A Company Took Money without Permission

A business, insurance company or service provider can accidentally take money from your account without permission. These incidents occur due to the quick nature of ACH payments. They are fast ways to move money from one account to another and require little work. However, banks can make errors when posting corrections or companies can make mistakes when debiting accounts. If you notice that a company took money without permission, you have to contact your bank and let them know. Your bank will then return the payment.

Every pre-authorized debit or credit has an originator identification number, so the tracing departments of banks will be able to trace who the originator is.

Please note that there are limitations on how long after you can return an ACH payment, so please always keep an eye on your bank account. In Canada, according to the CPA (Canadian Payments Association) – pre-authorized debits and credits under $20.00 are not investigated for tracing.