Bank Routing Number - ABA Routing Number

A Bank Routing Number is a nine digits bank code appears on the bottom of any negotiable instrument such as checks, demand draft, etc. this is to identify which financial institution is associated with the account. In the world of credit card and debit card some times you may come across check to gather your online information. The bank routing number database will help you to find out the exact number whenever necessary.

Bank routing number is also known as ABA (American Bank Association) routing number. The ABA routing number is also used by Federal Reserve Bank to process transfer fund by means of Wire Transfer and Automated Clearing House for direct deposit, bill payment, etc.

Basically the bank routing number appears in 2 forms in a standard checks i.e. the fraction form and the MICR (magnetic ink character recognition) form. MICR form is printed in magnetic ink which is machine readable, it appears in the upper right part of the check and fraction form is manually readable consist of nine digits number.

A routing number can be used to look up details about the particular banks location and their Federal Reserve sources. Below are few information a routing number provides:

• The first 2 digits included in the routing number is the location of the bank.
• The third, fourth and fifth digits include the actual bank from which the checks are issued.
• The next three digits are the symbol of the 12 Federal Reserve Banks is associated with your local bank.
• The ninth digit in the routing transit number is the check digit. The check digit provides a test for transposition errors and check authenticity.
• The symbol to the right side of a routing number is the MICR E-13B transit character.

NACHA Standard Entry Class (SEC) Codes

NACHA requires that a transaction submitted to the Federal Reserve for processing must include something called a Standard Entry Class (SEC) Code to communicate exactly how the customer gave you authorization to debit/credit their bank account. There are only a few authorization methods allowed by NACHA, so this list of SEC Codes is very short. Below are some common Standard Entry Class (SEC) codes:

Consumer Applications

ARC - Accounts Receivable: This SEC code enables originators to convert checks received via U.S. mailbox location to Single-Entry ACH debits.

CIE - Customer Initiated: This code enables customer to initiate fund transfer, owed to a company, typically from a self-service banking terminal, for example, an automated teller machine, or bill payment service provider.

MTE - Machine Transfer Entry: Fund transfer through automated teller machines (ATM) supports ACH Network for clearing the transactions.

PBR - Consumer Cross Border Payment: Used for international household transactions. For example, foreign exchange conversion, origination and destination currency, country codes, etc.

POP – Point of Purchase: A check presented by the originator to a merchant for purchasing a goods or service, is presented as an ACH debit rather than a physical check.

PPD - Prearranged Payment and Deposit: This SEC code is used to credit or debit a consumer account. Generally used for payroll direct deposits and preauthorize bill payments.

POS - Point of Sale: Swapping of debit or credit card from a network, where a sales transaction occurs.

RCK - Re-presented Check: A physical check that is presented but returned due to insufficient fund in the account holder, this may represent as an ACH entry.

TEL - Telephone-Initiated: This SEC code enables a single entry debit transaction to a consumers account through an oral authorization made by a phone call.

WEB - Internet-Initiated Entry: This SEC code entry enables payment authorization is obtained from the customer via the Internet.

Corporate Applications

CBR - Corporate Cross-Border Payment: This SEC code entry is used for international business transaction. Basically these are used by giant corporate.

CCD - Corporate Credit or Debit: This SEC code entry is used for business-to-business transactions.

CTX - Corporate Trade Exchange: A fund transfer system used by corporate and government institution, to pay trading partners via the automated clearing house (ACH) system. This type of fund transfer allows payment to several parties with a single fund transfer.

ACH Fraud Protection Tips

According to the latest cyber crime ACH fraud or Automated Clearing House fraud has been experienced by many banks. An ACH transaction is a payment processed via the ACH Network to transfer funds electronically between bank a/c’s using a batch file processing system. Generally it is used for direct deposit of payroll, social security payments and corporate use it for tax payments to IRS (Internal Revenue Service). All the Rules and regulations of the ACH transactions are governed by NACHA (National Automated Clearinghouse Association).

How ACH Fraud Occurs?
ACH fraud or Automated Clearing House fraud can occur quite easily. An individual may require few details to commit this type of fraud, i.e. your checking account number and your bank routing number. These details are utilized to initiate the fraud. He may use your bank account and routing numbers to make payments by making a phone call to the vendor or through web transactions.

ACH Fraud Protection
One of the easiest ways to get protect from ACH fraud is to install ACH Blocks or ACH Filters on your bank a/c. This type of service is provided by the Bank to its clients to monitor incoming ACH activity. By using this tool you can scrutinized all the transactions. Suspicious transactions are presented directly to you. You can also set restrictions for ACH payments which will control of what payments get authorized.

What can you do if you Detect an ACH Transaction Fraud?
If any ACH Fraud is detected in your bank a/c, then you need to notify your bank within 60 days whereas corporate a/c needs to notify the fraud within 2 days. If you report the fraud within the time frame, then you will not be responsible for the fraud. According to NACHA rules the originating bank must pay compensation to the victim and then try to recover the loss from it’s customer.

One of the best way to prevent ACH fraud is to review and reconciliate your bank statement regularly, whereas corporate accounts must be reviewed daily to avoid fraud.

Advantage of Automated Clearing House & ACH Payment

The Automated Clearing House (ACH) is an electronic network system that helps banks and other commercial institutions to clear electronic payments efficiently. The network operated by the rules and regulations developed by the National Automated Clearing House Association (NACHA). Below are few benefits and advantages of ACH processing:

Get Rid of Paper Checks for Routine Payments
An a/c holder of a bank has to clear his debts on monthly basis or on a specific period of time. Previously he had to issue checks for this proposal. This was tough for the customer as well as for the banker. For processing the paper checks it take lot of time. The a/c holder needs to pay some charges if he issue checks after the due date. Even the bank had to spend some money on petty expenses like postal charges, etc. With the invention of Automated Clearing House (ACH) you can make all the transaction online. All you need to do for the whole process is to send an authorization letter to the bank.

Encourages Financial Management and Facilitates Investment
Automated Clearing House (ACH) is one of the easiest ways to maintain proper financial management and control. If an a/c holder is not having the facilities of an Automated Clearing House he may not have any control over his spending. This system transfers your fund automatically on a specific date. As a result reserved funds are kept for your savings and investment.

Minimize Paperless Operations in Banks
Without Automated Clearing House (ACH) private and public sector banks need to maintain ledgers and other books of a/c to enter all the transaction made in the bank. The banks need to maintain many books of a/c and also need to audit them regularly. By the help of Automated Clearing House (ACH) banks are relieved from all these formalities. This ACH process saves time and money but also error free transactions are made.

Is ACH Right for You?
This option can be selected only if you need to keep some fund reserved for saving or investment for any other purpose. If the fund is not available in you’re a/c during the due date the bankers will impose fine as a penalty. Consequently if you are not sure that you can maintain the fund during the due date, in such case you will need to select the traditional payment method to make sure that you are not at a loss.